Shipowners Association of Nigeria (SOAN) expresses its concerns and said that $100 million is lost to capital flight as the Nigerian National Petroleum Corporation (NNPC) recently contracted coastal and bunkering vessel services to a foreign shipping company, Messrs UNIBROS. The shipowners urged the lawmakers to carry out a thorough investigation into the contract.
According to them, the action is in total breach of the Nigerian content laws, the Coastal and Inland Shipping Act (Cabotage Act) and the Presidential Executive Order No.5 and executed in exclusion of Nigerian Shipowners and operators.
Nigerian owned and flagged vessels are made to pay full customs duty and appropriate taxes on earnings, which foreign shipping companies have continually evaded. UNIBROS and/or any other foreign shell company do not pay any tax to FIRS.
While SOAN are expressing their grievances, oriental news nigeria, reports that the NNPC turned to swaps in 2010, in part to avoid domestic fuel shortages and now a reoccurrence is taking place by August 2021 which will last for a year. The Nigerian National Petroleum Corporation (NNPC) has reportedly selected 16 consortia for its new crude-for-fuel swap contracts, the list includes major trading firms Trafigura, Vitol and Mercuria, oil major Total TOTP.PA as well as large Nigerian traders like Sahara Energy SAH.V, Oando LG and MRS Oil, reports Reuters quoting credible Industry sources. The contracts, known as direct sale, direct purchase (DSDP) are coveted since they are used to supply nearly all of Nigeria’s gasoline needs as well as cover some of its diesel and jet fuel consumption.
In response, NNPC entered into two different types of swap agreements, the first is a crude-oil-for-refined-product exchange agreement (RPEA). Under an RPEA, crude is allocated to a trader and the trader is then responsible for importing specified products worth the same amount of money as the crude, minus certain agreed fees and expenses, the value of which the trader keeps.
The second type of swap is an offshore processing agreement (OPA). Under this type of deal, the contract holder either a refiner or trading company is supposed to lift a certain amount of crude, refine it abroad, and deliver the resulting products back to NNPC.
The contracts lay out the expected product yields (i.e., the respective amounts of AGO, PMS AND DPK.) that the refinery will produce.
The refining company also can pay cash to NNPC for any products that Nigeria does not need.
Source: Oriental News, Arise news, Thisdaylive
