The Civil Society Network against Corruption (CSNAC), a coalition of over 150 anti-corruption organizations, has urged the chairman of the Economic and Financial Crimes Commission, (EFCC), Mr. Ibrahim Lamorde, to thoroughly investigate the circumstances surrounding the award of illegal crude oil deals carried out by the administration of former President Goodluck Jonathan.

Diezani Alison-Madueke

In a petition addressed to the EFCC chairman and signed by the coalition’s chairman, Olanrewaju Suraju, the group called for the prosecution of the masterminds and beneficiaries of illegal contracts, stating that the deals were the worst forms of corruption during the administration of the former President.

Taking its lead from a publication of an online Newspaper, Premium Times of 16th September, 2015, the group said the report from the news medium uncovered one of the most fraudulent crude oil deals carried out by the administration of former president Jonathan, adding that allies of the president pocket billions of naira through a crude oil transportation contract which violated Nigeria’s procurement and economic regulations.

It stated, “our estimate indicates that the contracts, which the Nigerian National Petroleum Corporation has now admitted were unnecessary exorbitant and inappropriately awarded cost Nigeria N509.3 billion.”

The report states further that the deal later disguised as security contract and channeled through the NNPC saw two companies belonging to Idahosa Okunbor and Tunde Ayeni illegally rack up billions of naira to purportedly transport crude oil from Escravos to Warri refinery, and Bonny Island to Port Harcourt refinery by ship since 2011. The deal involved the transportation of five million barrels of crude oil monthly from drilling terminals to the refineries using ships, and circumventing direct linking pipelines, at the cost of N3,063.00 ($15.4) per barrel of crude.

“The cost of the contract was several times higher than it takes to transport crude oil through the more efficient pipelines which PPMC, a subsidiary of the NNPC operates; the cost of transporting a barrel of crude through the pipeline is a slow as N5.97. The administration continued with wanton plundering of the nation’s resources by choosing an expensive alternative to transporting crude oil, which was economically unjustifiable.

“The Escravos-Warri Refinery arm of the project was conceived in 2010, shortly after Goodluck Jonathan became president. The contract kicked off properly in January 2011 and NNPC insiders say it was explained to them as a way of circumventing vandalized pipelines to keep Nigeria’s refineries amply fed with crude oil. The contract was never advertised and no competitive bidding was done, a clear violation of Nigeria’s procurement law. 

“Two companies PPP Fluid Mechanics and Ocean marine Securities were awarded the job by presidential and ministerial discretion. The two companies initially got N1.1 billion monthly payment each by NNPC for a three months trial, documents sighted by premium Times show.”

The Newspaper report further states that when contacted, the NNPC spokesman Ohi Alegbe said he did not have details of the contract. 

“After the former minister of petroleum Diezani Allison-Madueke, got the deal approved in 2010 got Goodluck Jonathan to approve the deal, the NNPC secretly invited bids from international shipping contractors. PPP FM managed by two isrealis was handpicked for the logistics part of the job, OMS managed by Messers Okunbo and Ayeni was invited to handle the security aspect. OMS never bid, they were selected by a board led by Mrs Madueke, which also had NNPC Group Managing Director at the time, Austin Oniwon, and eight others, including the legal adviser to the corporation.

“These local crude oil transportation contracts were fraught with illegalities and irregularities as was the opinion of experts in the industry. The NNPC Board had no business approving the initial contract in December 2010 because the cost exceeded their approval limit of N5 million allowed by its laws and $20million allowed by Nigeria’s procurement laws. In an attempt to regularize the contract in October 2013, the NNPC published an invitation to tender bids for the two crude oil transportation contracts in major Nigerian dailies which was later withdrawn without any official explanation,” the report said.

The group noted that,  “It is quite unfortunate and saddening that the resources of the Nigerian State could have been so plundered under the watchful eyes of the President and Commander-in –Chief, who swore to ensure the economic growth and development of Nigeria amongst other issues. In a country where millions of its citizens live below the poverty line, the high level of corruption and wanton disregardfor the rules cannot be allowed to hold sway.

“CSNAC is therefore by this petition requesting that a thorough investigation be conducted into the circumstances surrounding the award of these illegal contracts and the prosecution of the masterminds and beneficiaries of these contracts that reeks of corruption at its peak. This will go a long way in deterring potential corrupt individuals who will stop at nothing in plundering the resources of this nation.”


 

 

23rd September, 2015

The Chairman,

Economic and Financial Crimes Commission,

No. 5, Fomella Street,

Off Adetokunboh Ademola Crescent,

Wuse II, Abuja.

 

Dear Sir,

REQUEST FOR THE INVESTIGATION OF FORMER PRESIDENT GOODLUCK JONATHAN AND HIS ALLIES MR. TUNDE AYENI AND MR. OKUNBOR FOR THE ILLEGAL CRUDE OIL TRANSPORTATION CONTRACTS TO WARRI AND PORT HARCOURT REFINERIES

Civil Society Network against Corruption (CSNAC) is a coalition of over hundred and fifty Anti-corruption organizations whose primary aim is to constructively combat corruption vigorously and to ensure the effective monitoring of the various Anti-graft agencies in the fight against corruption and contribute towards the enthronement of transparency, accountability, probity and total commitment in the fight to eradicate corruption in Nigeria.

In its publication of the 16th day of September, 2015, Premium Times revealed that it uncovered one of the most fraudulent crude oil deals carried out by the administration of former president Goodluck Jonathan which saw allies of the president pocket billions of Naira through a crude oil transportation contract which violated Nigeria’s procurement and economic regulations.

It stated “our estimate indicates that the contracts, which the Nigerian National Petroleum Corporation has now admitted were unnecessary exorbitant and inappropriately awarded cost Nigeria N509.3 billion.” The report states further that the deal later disguised as security contract and channeled through the NNPC saw two companies belonging to Idahosa Okunbor and Tunde Ayeni illegally rack up billions of Naira to purportedly transport crude oil from Escravos to Warri refinery, and Bonny Island to Port Harcourt refinery by ship since 2011. The deal involved the transportation of five million barrels of crude oil monthly from drilling terminals to the refineries using ships, and circumventing direct linking pipelines, at the cost of N3, 063.00 ($15.4) per barrel of crude. The cost of the contract was several times higher than it takes to transport crude oil through the more efficient pipelines which PPMC, a subsidiary of the NNPC operates; the cost of transporting a barrel of crude through the pipeline is a slow as N5.97. The administration continued with wanton plundering of the nation’s resources by choosing an expensive alternative to transporting crude oil which was economically unjustifiable.

The Escravos-Warri Refinery arm of the project was conceived in 2010, shortly after Goodluck Jonathan became president. The contract kicked off properly in January 2011 and NNPC insiders said it was explained to them as a way of circumventing vandalized pipelines to keep Nigeria’s refineries amply fed with crude oil. The contract was never advertised and no competitive bidding was done, a clear violation of Nigeria’s procurement law. Two companies PPP Fluid Mechanics and Ocean marine Securities were awarded the job by presidential and ministerial discretion. The two companies initially got N1.1 billion monthly payment each by NNPC for a three months trial, documents sighted by premium Times show. 

The Premium Times report further states that when contacted, the NNPC spokesman, Ohi Alegbe, said he did not have details of the contract. After the former minister of petroleum, Diezani Allison-Madueke, got the deal approved in 2010, the NNPC secretly invited bids from international shipping contractors. PPP FM managed by two Israelis was handpicked for the logistics part of the job , OMS managed by Messrs.  Okunbo and Ayeni was invited to handle the security aspect. OMS never bided, they were selected by a board led by Mrs. Madueke, which also had NNPC Group Managing Director at the time, Austin Oniwon, and eight others, including the legal adviser to the corporation.

Contract documents indicated the contract to last only three months were issued on December 2, 2010, shipping began the following month, January after PPP FM provided one mother vessel and three smaller shuttle vessels. As reported, contract documents seen by Premium Times showed the each arm of the contract for the trial period was to cost NNPC N1.1billion ($5.82million) monthly which was at rate of N900 per barrel ($5.2 per barrel) split equally between shipping and security. However, shortly after the project began, Messers Okunbor and Ayeni sought to own the entire project and initiated a hostile takeover of PPP FM. 

With the exit of the Israelis, the NNPC jacked up the cost of the deal to N1,496.10 ($7.52) per barrel for transportation and the same amount for security which raised the cost of the contract to N6.7billion monthly. In August 2014, the former petroleum minister admitted to an oil and gas audience in the U.S that NNPC was spending an average of $7.52 per barrel to transport crude oil locally to refineries by ship, while remaining silent on the security costs, which sources confirmed is just as much as that of shipping. In four years, the NNPC shelled out at least N303 billion to the two companies owned by Messers Okunbor and Ayeni for the Escravos-Warri arm of the deal alone. The sums were paid despite the oil corporation reporting that it kept pumping crude oil from Escravos to Warri refinery through the pipeline concurrently with the shipping deal.

The report further stated that during the opening of the renovated Port Harcourt refinery, Mr. Okunbor confirmed to Thisday that his company did not even ship the total amount projected by the contract but they got paid even while not shipping crude. “Currently, we lift 950,000 barrels to Warri refinery twice a month”. While the deal was supposed to supply Warri Refinery with 105.6 million barrels of crude, NNPC records show that the refinery only received 61.2 million barrels combined, at least half of what was expected was not delivered.

After running the Escravos-Warri Refinery deal successfully and secretly for two years, the NNPC opened the Bonny Island-Port Harcourt Refinery route under the same cover. The Bonny Island –Port Harourt Refinery route was to transport 2.8 million barrels of crude oil monthly at the same cost with the same contractors, PPP FM and OMS and there was no competitive bidding before Mr. Ayeni and his partners were handed the contract. With the Bonny –Port Harcourt Refinery route added to the portfolio, the Messers Okunbor and Ayeni were charged with transporting five million barrels of crude oil to the two refineries, via ships, monthly, at the rate of N15.3 billion paid by NNPC.  Like in the Warri case, the companies did not deliver the full amount of crude expected of the illegal contract.

These local crude oil transportation contracts were fraught with illegalities and irregularities as was the opinion of experts in the industry. The NNPC Board had no business approving the initial contract in December 2010 because the cost exceeded their approval limit of N5 million allowed by its laws and $20million allowed by Nigeria’s procurement laws. In an attempt to regularize the contract in October 2013, the NNPC published an invitation to tender bids for the two crude oil transportation contracts in major Nigerian dailies which was later withdrawn without any official explanation.

The report states further that the NNPC data of crude received monthly by the refineries obtained by PREMIUMTIMES showed that in the last four years, the refineries rarely received crude oil close to the volumes awarded for shipment alone from both Messers Okunbor and Ayeni. Also no security boats escorted the ships deployed by PPP FM to transport the crude from production terminals to refinery jetties despite the huge sums paid for security. Mr. Tunde Ayeni is a long ally of former Bayelsa state Governor Depreiye Alamieyeseigha and former President Goodluck Jonathan. He gained notoriety following the corruption trial of Alamieyeseigha and was briefly arrested by the EFCC over the matter and later mentioned in court documents where he admitted helping Mr. Alamieyeseigha execute some deals. He was however never convicted. he is currently the chairman of Skye Bank Plc. and his law firm Legal Resources Alliance also doubles as the company secretary to PPP FM. When contacted by PREMIUM TIMES, he turned away its reporters. The NNPC has however announced a cancellation of the illegal contracts in order to cover up its tracks. 

It is quite unfortunate and saddening that resources of the Nigerian State have been so plundered in conspiracy with a President and Commander-in –Chief, who swore to ensure the economic growth and development of Nigeria amongst other issues. In a country where millions of its citizens live below the poverty line, the high level of corruption and wanton disregard for the rules cannot be allowed to hold sway.  

CSNAC is therefore by this petition requesting that a thorough investigation be conducted into the circumstances surrounding the award of these illegal contracts and the prosecution of the masterminds and beneficiaries of these contracts that reeks of corruption at its peak. This will go a long way in deterring potential corrupt individuals who will stop at nothing in plundering the resources of this nation.

Thanks in anticipation of your cooperation.

Yours faithfully,

 

Olanrewaju Suraju

Chairman 

Cc: President Muhammadu Buhari,

President, Federal Republic of Nigeria

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