Home Headline Nigeria loses $966m in 4 years to crude oil swap deal

Nigeria loses $966m in 4 years to crude oil swap deal


The Nigeria Extractive Industries Transparency Initiative (NEITI) on Friday said the Federal Government lost 966 million dollars in revenue from the crude oil swap deal between 2009 and 2012.

NEITI’s Communications Director, Orji Ogbonnaya-Orji, made the disclosure in Lagos at a forum on subsidy organised by Media for Oil Reform in collaboration with School of Media Communication, Pan Atlantic University.

Crude Oil Swap is an arrangement by the Federal Government whereby the Nigeria National Petroleum Corporation (NNPC) supervises the trading of the nation’s crude oil for refined products.

Ogbonnaya-Orji said that there had been public concern about the objective of this arrangement was being compromised.

He explained that in 2012 alone, the cost of crude oil swapped was 6.4 billion dollars, while value of refined products returned to Nigeria was 6.3 billion dollars.

This, he said, left the sum of 100 million dollars as revenue loss incurred by government.

He maintained that similar concerns were raised with subsidy payment, noting that NEITI’s audit reports disclosed that N4 trillion was oil subsidy payments between 2006 and 2012.

Ogbonnaya-Orji said that in 2006, N219.72 billion was spent on subsidy, in 2007 N236.64 billion; 2008 N360.18 billion; 2009 N198.110 billion; 2010 N416.45 billion, 2011 N1.9 trillion and in‎ 2012 N690 billion.

“The subsidy payments in 2012 amounting to N690 billion when compared with N1.9 trillion paid in 2011 showed a 29 per cent reduction.

“This reduction may be due to the January 2012 national protest against oil subsidy,’’ Orji said.

The NEITI media director ‎said that the transparency initiative audit also revealed that NNPC had claimed that a total sum of N1.7 trillion was paid as subsidy between 2006 and 2012.

“NNPC deducted this sum directly from domestic crude oil proceeds before remitting the balance to the federation account.

“Subsidy deductions by NNPC increased by 110 per cent from 198 billion in 2009 to N416 billion in 2010, and 89 per cent in 2011 from N416 billion to N786 billion.

“The increase between 2009 and 2011 alone was 186 per cent from N198 billion to N786 billion,’’ Orji said.

He said that government needed to conduct an indepth investigation into the management of subsidy payments and ensure that NNPC followed due process in the PSF scheme.

Orji urged the government to deregulate the downstream sector and ensure that refineries worked to their full capacity.