As the federal government concludes plans to remove oil subsidy, pressure
\nis mounting on President Muhammadu Buhari to retain the crude oil swap
\narrangement in order to save cost.<\/p>\n
The crude oil swap deal in lieu of subsidy may however be guided by
\ntighter regulations and control.<\/p>\n
However, security agencies have fingered some international oil companies
\n(IOCs) in the controversial oil swap deal currently\u00a0 being investigated.<\/p>\n
The development has caused experts and stakeholders in the industry to ask
\nfor a comprehensive investigation to avoid \u201cmaking local oil firms
\nscapegoats of a policy of former President Goodluck Jonathan.\u201d<\/p>\n
A highly placed source said: \u201cIt is apparent that the federal government
\nmay withdraw petroleum subsidy based on the report of the Ahmed Joda
\nTransition Committee.<\/p>\n
\u201cThe development has put pressure on President Buhari to retain the oil
\nswap arrangement to save cost in the light of the falling oil price in the
\ninternational market. Some experts and stakeholders are behind the latest
\npressure.<\/p>\n
\u201cRecently the Independent Petroleum Marketers Association of Nigeria
\n(IPMAN) said that oil swap is a better option for government to end
\nscarcity and keep off subsidy payment. IPMAN also presented its
\nassociation to government to partake and handle this oil swap
\narrangement.\u201d<\/p>\n
He, however, noted that the Buhari administration was leaving all options
\nopen until the ongoing investigation into the oil swap deal by the
\nimmediate past administration of ex-President Jonathan was concluded.<\/p>\n
Another source said the oil swap arrangement was not new to the country,
\nhaving been adopted between 1977 and 1986.<\/p>\n
Quoting a document, the second source added: \u201cCrude swap\/offshore
\nprocessing arrangements have been a federal government initiative since
\n1977 in partnership with international oil companies.<\/p>\n
\u201cNigerians must know that the supposed interim policy of the NNPC to
\nbridge the gap between petroleum products demand and supply was initiated
\nover three decades ago between 1977 and 1986 when Nigeria needed heavy
\ncrude from Venezuela to feed the recently opened Kaduna refinery. We as a
\nnation swapped Venezuela heavy crude for Nigeria\u2019s light crude. The scope
\nof crude swap was later broadened specifically because our refineries
\nbegan to produce below their stipulated name plate capacity.\u201d<\/p>\n
Meanwhile, there are indications that security agencies are looking into
\nthe involvement of some IOCs in the oil swap deal.<\/p>\n
It was learnt that the agencies made the discovery in some of the
\npresentations made by those currently under probe.<\/p>\n
One of the documents reads in part: \u201cThe ongoing investigation of oil swap
\nagreement is incomplete without looking at the involvement of some IOCs.
\nThe probe should be holistic.<\/p>\n
\u201cIt is very curious to see all of these negative reports and also the
\nexclusion of the names of foreign and international companies that have
\nfor many years taken part in these swap and offshore processing contracts
\nabsent from all of these news items and reports.<\/p>\n
\u201cWhen foreigners (multinationals) were handling crude swap and delivering
\nPetroleum Products on Open Account for Nigeria, our government was buying
\nrefined products at PLATTS plus $136-180\/metric tonne from these
\nmultinationals. The government was equally required to pay interest to the
\nmultinationals on delayed receivables. The government incurred the cost of
\nlogistics and handling unlike the arrangement where we have local players
\nparticipating\u2026<\/p>\n
\u201cBut local companies sell at PLATTS plus $82\/metric tonne and the
\ngovernment does not pay interest on delayed receivables.<\/p>\n
\u201cThese foreign companies create wealth and employment for their countries,
\nwhy can\u2019t Nigeria do the same with its own people and companies? Instead,
\nNigerians let envy get their better part by fighting their very own.\u201d<\/p>\n
The offshore processing agreement entails the allocation of crude oil by
\nNNPC for processing in a refinery, depending on the crude type and yield
\npattern, resulting in refined petroleum products, mainly gasoline and
\nkerosene, delivered by the contract operators into the country.<\/p>\n
The by-products not required are paid in cash to NNPC. A refining fee is
\npaid for this refining. The contract operator presents a letter of credit
\nfrom a bank before it is allowed to lift the crude, as a form of security.<\/p>\n
The SWAP is a very straightforward arrangement, which simply means you
\nload the crude oil and you deliver refined petroleum products on a
\nvalue-to-value based contract.<\/p>\n","protected":false},"excerpt":{"rendered":"
As the federal government concludes plans to remove oil subsidy, pressure is mounting on President Muhammadu Buhari to retain the crude oil swap arrangement in order to save cost. The…<\/p>\n","protected":false},"author":1,"featured_media":39810,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[17],"tags":[],"class_list":["post-39809","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-exclusive"],"yoast_head":"\n