- President Muhammadu Buhari on 13th August cancelled the controversial offshore processing and oil swap deals initiated in January this year by the outgone administration of Dr. Goodluck Jonathan.
- The agreement was earlier billed to last till December 2016.
- President Buhari’s approval is in a bid by the new leadership of the Nigerian National Petroleum Corporation (NNPC) to ensure transparency and due process.
- In a memo to the President on August 12, the NNPC sought approval to terminate all such current contracts following a presidential directive.
“This memo purports to seek Mr President’s approval to terminate all current Offshore Processing and SWAP contracts and commence a fresh re-tendering process to ensure transparency, due process and optimized contract terms in favour of the NNPC,” stated the letter signed by Ibe Kachikwu, the Group Managing Director of NNPC.
- Responding, the president approved the request in a memo dated August 13 and signed by the Permanent Secretary of the State House, Nebolisa Emodi.
- The NNPC currently swaps a part of its allotted 445,000 barrels of crude per day to some oil companies and in return receives refined products.
- Oil swap derives from the fact that Nigeria’s four refineries operate mostly below 50% installed capacity and since 2003, the NNPC has continued to allocate them 445,000 barrels of crude oil per day, which corresponds to 100% capacity. The oil swaps have come under criticism following allegations that they have been opaque and the government has been short-changed in the deals.
