Govt Officials Colluded With Oil Companies To Cheat Nigeria Of Tens of Billions Of Dollars – Says Ribadu Committee Report
Chaired by Nuhu Ribadu, the pioneer chairman of the Economic and Financial Crimes Commission, the 17-person committee produced the 146-page confidential report, which was seen by Reuters.
Some of the highlights of the report, according to Reuters, include:
• Nigeria loses out on $29 bln on cut-price gas deals
• State-oil company sells itself cheap oil and gas
• Oil ministers hand out discretionary oil licences
• Hundreds of millions in missing bonuses, royalties
• Traders buy crude oil “without formal contracts”
Although Mrs. Alison-Madueke admitted receiving the report last month, she told Reuters yesterday it was only a draft. Reuters said the one it saw was marked “Final Report.”
The Reuters story, as reported by Reuters Joe Brock:
ABUJA, Oct 24 (Reuters) – Nigeria lost out on tens of billions of dollars in oil and gas revenues over the last decade from cut price deals struck between multinational oil companies and government officials, a confidential report seen by Reuters says.
A team headed by the former head of the anti-corruption agency Nuhu Ribadu produced the 146-page study on an oil ministry request. It covers the year 2002 to the present.
Nigeria is Africa’s largest crude oil exporter, shipping more than 2 million barrels per day (bpd), and is also home to the world’s ninth biggest gas reserves and one of its largest Liquefied Natural Gas (LNG) export terminals.
The report provides new details on Nigeria’s long history of corruption in the oil sector, which has enriched its elite and provided the oil majors with hefty profits while two thirds of people live in poverty.
Oil Minister Diezani Alison-Madueke told Reuters on Tuesday she had received the report last month but that it was a draft and the government was still supposed to give input. The one seen by Reuters was labelled “Final Report.”
The report concluded that oil majors Shell, Total and Eni made bumper profits from cut-price gas, while Nigerian oil ministers handed out licences at their own discretion. This, while not illegal, did not follow best practice of using open bids. Hundreds of millions of dollars in signature bonuses on those deals were also missing, it said.
“We have not seen this report and are, therefore, unable to comment on the content, but we will study it if and when it is published,” a Shell spokesman said.
The report alleges international oil traders sometimes buy crude without any formal contracts, and the state oil firm had short-changed the Nigerian treasury billions over the last 10 years by selling crude oil and gas to itself below market rates.
There was no suggestion that the oil majors or traders had done anything illegal, but the report highlighted a lack of transparency in their dealings in a nation rife with graft.
“It is a draft,” Alison-Madueke said. “There will be some areas where the government … may have a slightly different opinion … (and) will put its point of view to the committee.”
She said she expects the final report to be with President Goodluck Jonathan within two weeks.
Ribadu’s probe was among several set up following a week of nationwide strikes against a rise in fuel prices in January, which morphed into a campaign against oil corruption.
Billions of dollars of revenue was missing in unpaid debts from signature bonuses and royalties, the report found.
Nigeria LNG, a company jointly owned by the NNPC, Shell, Total and Eni had paid the country for gas at cut-down prices before exporting it to international markets, the report said.
Total and Eni declined to comment because they invest in but do not operate Nigeria LNG, the role played by Shell.
“The estimated cumulative of the deficit between value obtainable on the international market and what is currently being obtained from NLNG, over the 10 year period, amounts to approximately $29 billion,” the report said.
It also said foreign oil firms had outstanding debts.
Addax, now a unit of China’s state-owned Sinopec, owes Nigeria $1.5 billion in unpaid royalties, part of a $3 billion black hole of unpaid bonuses and royalties owed by oil firms.
Addax did not respond to requests for comment, but the report noted it disputes owing the signature bonuses.
Shell owes Nigeria’s government 137.57 billion naira ($874 million) for gas sold from its Bonga deep offshore field, the report said, while oil majors owed $58 million between them for gas flaring penalties. They were also not adhering to newer higher fines.
The probe also said Nigeria was the only nation to sell all its crude through international oil traders rather than directly to refineries, adding that such trades were often opaque.
Read more: Reuters