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Indigenous firms Win Majority of $ 60 Billion Crude supply contracts

By on July 3, 2012

The Federal government has favoured indigenous companies over foreign companies in the award of crude oil supply contracts worth over $ 60 billion (N 10 trillion).

According to information gleaned from Reuters, the government has awarded over 75% of its daily production, approximately 1.6 million barrels of oil, to 50 companies, including 21 Nigerian companies. This amounts to over 580 million barrels valued at close to $ 60 billion using current Brent market prices.

The allocation came after a tender submitted in April, and over 45% of the firms selected have Nigerian ownership.

Nigerian National Petroleum Corporation subsidiary, Duke Oil had its allocation increased by 100% to 60,000 barrels per day whilst oil trader giants Glencore, Vitol and Trafigura had their allocations halved to 30,000 barrels per day. These firms actually had the biggest allocations last year.

Volumes for Swiss traders Mercuria and Guvnor remained at 2011 levels of 30,000 barrels/day.

Some international observers have expressed skepticism at the transparency involved in the selection process that saw many small Nigerian firms win contracts as the selection criteria was thought to be designed to favour foreign companies.

The criteria included that companies involved in the tender process should have 10 years experience, a minimum annual turnover of $ 600 million and should provide a $ 5 million deposit.

Alexandra Gillies, head of Revenue Watch Institute has called on intense scrutiny of the list of awardees in order to ensure that all the firms were fairly chosen.

“The desire to encourage Nigerian participation is understandable, but it only helps the country if these are legitimate companies, chosen in a manner that was competitive and free from patronage,” she said.

One Comment

  1. Pamach

    July 3, 2012 at 2:25 pm

    Since when did the choice of who the Nigerian government wants to award allocation become an issue of debate. Particularly by a foreigner. If they want to talk of fair, are they even suppoesed be doing business in such a critical sector. It is even because of the lack of transparency that such companies came into the system in the first place. It is also because of such people and companies that local capacity is yet to be explored. FOREIGN POWERS TAKE ADVANTAGE OF THE GREED OF A FEW NIGERIANS WHO AID THEM TO PILAGE THE COUNTRY AND MAKE NIGERIANS BEGGARS. WHEN WILL IT END?