Hot Air Without Substance

Alison-Madueke, Petroleum Minister
Alison-Madueke, Petroleum Minister

A joint House Committee probing allegations that the NNPC got $1.5 billion without National Assembly approval, has been told by a consortium of banks the money they paid was for crude oil sales

|  By Maureen Chigbo  |  Mar. 18, 2013 @ 01:00 GMT

Andrew Yakubu, GED, NNPC
Andrew Yakubu, GED, NNPC

THE Nigerian National Petroleum Corporation, NNPC, has had a respite over the controversy trailing its proposal to sell crude oil to banks to enable it clear its debt. A consortium of banks which gave the money to the NNPC, said the $1.56 billion facility given to the corporation was not a loan but forward sale of crude oil with advance deposits made to the corporation on standard NNPC sales terms at the prevailing market prices. This explanation probably made Muraina Ajibola, chairman of Petroleum Resources Upstream, to adjourn the public hearing on the alleged loan indefinitely.

Before the adjournment, Ade Adeola, managing director, project and export finance, Standard Chartered Bank, on behalf of the consortium, told the Joint committees of the House of Representatives probing the alleged loan procurement without the approval of the National Assembly, that the sales agreement which was brokered by four Nigerian banks, was designed to enable the NNPC reduce the debts accruing from petroleum products imports.  The banks are First Bank Plc, UBA Plc, EcoBank Plc and Standard Chartered Bank Plc.

“The key idea is to enable the NNPC to immediately raise the sum of $1.5 billion to pay down outstanding debts. This is based on a forward sales arrangement which allows a sale of agreed quantities of 15,000 barrels per day of crude oil for a period of five years in consideration of an advanced amount of $1.56 billion paid to the NNPC,” Adeola said.

The sale of crude oil by the NNPC will be a true sale for which the price is calculated on the basis of the open market Nigerian crude oil selling price. According to Adeola, “The structure is the same as implemented on both international and other recent NNPC Joint Venture transactions and is therefore well understood by the international and local financing market.”

Ade Adeola
Ade Adeola

Peter Nmadu, group executive director, Corporate Services of the NNPC, who stood in for the Andrew Yakubu, group managing director, NNPC, told the committee that as a public entity, the NNPC is always willing to cooperate with the National Assembly in the execution of its constitutional oversight function.

Previously, Diezani Alison-Madueke, minister of Petroleum Resources, and Yakubu had in separate presentations to the House Committee explained that the $1.56 billion instrument was not a loan but a proposed forward sales agreement to enable the NNPC settle outstanding debt obligations.

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