In what may become a trigger for a possible overall oil sector probe by the present administration of President Muhammadu Buhari after the ongoing Defence sector probe, the revelations coming out of the several days of public hearing, which is still ongoing, organised by an adhoc committee of the House of Representatives under the chairmanship of Hon. Zakari Mohammed (APC, Kwara) are pointers to what may become the fate of the sector and its operators in some time to come.

The Ad-hoc Committee is saddled with responsibility of investigating Nigeria’s Crude Oil Swap and Oil Processing Agreements (OPA) between Pipelines and Products Marketing Company (PPMC), which is a subsidiary of the NNPC and some local and foreign oil companies.

Recall that the controversial oil swap agreements and offshore crude oil processing agreements were all terminated in September 2015 and to end in January 2016. The swap concept is to be replaced with Improved Offshore Processing Arrangement (IOPA).

At the first day of the hearing last week Tuesday, it was revealed that Trafigura, one of the foreign companies involved in the arrangement, took 12.5 million metric tons of crude oil out of the country without actually returning a single litre of refined product in line with the swap arrangement.

Assistant Comptroller-General of Customs in charge of Tariffs and Trade, Mr. Alu Sule, made the disclosure while making presentation before the committee.

Sule’s revelation suggests that the transaction without an official waiver for non-return of refined products represents a massive crude oil theft perpetrated by the company under the watchful eyes of relevant government agencies.

He said, “The Nigerian Customs Service is not aware of any swap arrangement or OPA with any company. If we are going to make any comment on it, it would be in a position of ignorance, and we are here to give the facts as they are. The only government policy we are privy to is the non-collection of duties on petroleum products.

“But as far as our records can show, we only know that Trafigura exported a total of 12.5million metric tons of crude without importing any refined product. If the importation was done in a different name is what I can’t say, but there was no record of them bringing in any refined product”.

For his part, while making a submission on the losses arising from the transaction on the nation’s economy, the chairman of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler put the amount at N1.1billion of payable tax, which was evaded by Trafigura.

“While Duke Oil Limited was registered internationally via the NNPC as a subsidiary and made a payment of N26.5million in tax, the service was not aware of the said transactions involving Trafigura because Trafigura is a non resident company just like Duke but is not registered with the FIRS for payment of tax. Therefore, it has never made any tax return to the FIRS”, Fowler said.

He added that the agency was planning to do a comprehensive audit of all major agencies of government arising from suspicion of under-declaration of income. He added that it is only such an audit that can really ascertain how much is due to government in tax from the activities of corporate bodies doing business in Nigeria. It is no gainsaying that Fowler’s revelation simply brings to the fore how Nigeria was short-changed in the crude oil swap agreement by twin ways of tax evasion and the outright refusal to import refined product to the country in exchange for crude exported.

Lawmakers however frowned at the admission of FIRS, that it was not aware of Trafigura doing business in Nigeria. They said that it smacks of incompetence on the part of the agency to have claimed ignorance of the existence of a company that has been doing business in the country without paying taxes.

Also, in his presentation same day, the acting Executive Secretary of the Nigeria Extractive Industry Transparency Initiative (NEITI), Mr. Orji Ogbonnaya Orji, explained to the panel that the idea of crude oil swap which began in 1980 involves a batter arrangement where crude resources are given out to companies who now refine them and return refined products as an exchange. He said NNPC entered into this arrangement with Trafigura wherein it delivered crude to the company with associated cost of freight and supply.

NEITI, which was established to serve as watchdog for the extractive industry, said it had advised the NNPC to discontinue the swap arrangement as it has resulted in more losses with little or no benefit to the nation’s economy.

Earlier, declaring the hearing opened, Speaker of the House of Representatives, Hon. Yakubu Dogara, advocated for a more efficient management of the crude oil resources in a bid to reposition the oil sector and make its dealings transparent in the face of dwindling oil prices. Dogara noted that the investigation was not aimed at witch-hunting anybody or organisation but to ascertain how the nation’s resources have been managed.

He said, “This is with a view to revitalising the sector and to make it more efficient and transparency driven. The issue of transparency in the management of the oil sector considering its significance to the economy of Nigeria is at the very heart of our Nation’s development challenge, especially at this time of dwindling revenue resulting from the continued drop in oil prices.

“You don’t have to be an economist to observe that if we do not improve on the management of available resources and effective utilisation of oil/petroleum resources to drive the economy, our developmental aspirations will continue to emaciate. It is in recognition of this pivotal role which the oil sector plays in aiding development that the present House of Representatives decided to place enormous emphasis on the improvement of the sector especially.

“And to insist on the transparent, professional, and efficient management of all resources. This is the only way the Change of Agenda of this administration can be actualized,” Dogara added.

On the second day of the investigative hearing, more cans of worm were uncovered. The committee members were shocked when the newly appointed managing director of PPMC, Esther Nnamdi-Ogbue, told them that there was no document to show that there were other processes taken other than Presidential and Ministerial directives regarding lifting of oil in the swap deals between Duke Oil and Trafigura.

She said, “We don’t know under what circumstances it (the contracts) was done as all of us are new, most of the dealings were done before our appointment. Before us, a lot of things happened, we met a lot of things as inconclusive, and this has led us into reconciliations which are still on-going.

“We discovered that some contractual agreements were not favourable to PPMC which was why we went into the reconciliations. I don’t want to jump into conclusions, but I should be clear that oil swap is practiced globally”.

When the committee asked if due process was followed in the selection of trading companies involved in the deals, the Petroleum Resources Ministry’s team said records at their disposal showed that the arrangement was carried out through presidential approvals. The committee requested to see the presidential approval in question and PPMC eventually presented one, which was rejected by the committee on the ground that it was a wrong approval being an Offshore Processing Agreements and not oil swap agreement.

The committee was therefore informed that there was a ministerial approval for the swap arrangement in August 2010. It was also revealed that lifting of crude oil began before the contract was consummated. The Committee then inquired if a Minister has the legal power to approve contracts of such magnitude.

It was at this point that the committee resolved to summon some former NNPC and PPMC chief executives involved in the arrangements in the past years. Former NNPC Group Managing Directors (GMD), Austine Oniwon and Joseph Dawha along with the immediate past Managing Director of PPMC, Haruna Momoh, were consequently summoned by the committee.

Oniwon, Dawha and Momoh are to appear before the panel alongside other key officers connected with the crude oil swap arrangement since 2009. Although no date has been fixed for their appearance by the Hon. Zakari Mohammed-led committee, but their invitation followed the apparent disregard for due process in the consummation of oil swap agreements with the oil companies contracted.

By last week Thursday, which was the third day of the public hearing, the investigation couldn’t continue, as some key stakeholders stayed away while others sent in their lawyers, a development that was frowned at by the parliamentarians.

The adhoc committee equally vowed that it would not allow its assignment to be truncated through what it called frivolous antics of some trading companies under investigation in the oil swap deals even as it threatened to get their chief executive officers arrested by Wednesday next week if they disobey its summons. The development followed the refusal of some of the trading companies involved in the deals under probe, AITEO and one other to appear before the committee

The defiant oil companies were said to be challenging the investigative hearing in court, hence their refusal to honour the committee’s prior invitation.

At a press briefing on Thursday last week, the chairman of the committee told journalists that the trading companies in question were initially invited to attend the public hearing meant to expose the underhand dealings in the crude oil swap arrangement and that having failed to attend, they have been consequently summoned to appear by Tuesday next week when the hearing will resume failure of which the Inspector-General of Police will have to executive warrant of arrest against their chief executives by Wednesday.

Mohammed added that the committee being constitutionally empowered to carry out the assignment, will not succumb to blackmail.

Meanwhile, earlier at the continuation of the hearing the previous day, counsel to Aiteo and Ontario, Chika Onyebuchi Uko said a non-governmental organization (NGO), Center for the Rule of Law, had instituted a legal proceeding against the investigative hearing which makes the continuation of the hearing prejudiced.

She said her clients, Aiteo Nigeria Ltd and Ontario would not appear before the Committee until the case is dispensed with.

The chairman of the committee however told Uko that being an independent arm of government, what the House is doing was constitutional.

Mohammed cited Section 89 (I) (d) of 1999 Constitution to back his assertion and subsequently asked the lawyer to provide court’s restraining order against the public hearing, which she couldn’t.

According to the records of the FIRS, Aiteo was owing N256,073,201.82 in tax arrears while Trafigura Nigeria Ltd, a non-resident company has refused to register with the FIRS or filed any tax claims with the agency. Its representative at the investigation, James Juslin said being an international company that cobtributes to the nation’s foreign reserve, it is not obligated to pay tax.

Furthermore, the two trading companies as well as Trafigura were indebted to the Petroleum Products Marketing Company (PPMC) for unreturned products from the 30,000 barrels of crude they got from the deals. Trafigura was to return $2.5m while AITEO will return $37m. But Trafigura insisted that since it is being owed about $30m over the years by the PPMC, its $2.5m debt be deducted from its own outstanding money with the PPMC.