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Nigeria's Spends $1.8billion On Fuel Imports Quarterly / Foreign Suppliers Blacklist Nigeria From Fuel Imports / Massive Fuel Imports Continue As Refineries Fail (2) (3) (4)
Wikileaks Cable On Nigerian Fuel Imports by Olisa74(m): 1:50am On Jan 12, 2012 |
US embassy cable - 04LAGOS767 SCANDAL BREWING OVER NIGERIAN FUEL IMPORTS Identifier: 04LAGOS767 Wikileaks: View 04LAGOS767 at Wikileaks.org Origin: Consulate Lagos Created: 2004-04-08 08:33:00 Classification: CONFIDENTIAL//NOFORN Tags: EPET EINV EFIN PGOV NI Redacted: This cable was not redacted by Wikileaks. This record is a partial extract of the original cable. The full text of the original cable is not available. C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 000767 SIPDIS NOFORN E.O. 12958: DECL: 04/07/2014 TAGS: EPET, EINV, EFIN, PGOV, NI SUBJECT: SCANDAL BREWING OVER NIGERIAN FUEL IMPORTS Classified By: J. GREGOIRE FOR REASONS 1.5 (B), (D), AND (E). 1. (C) SUMMARY. A scandal is brewing in Nigeria over prices paid by the government for imported fuel. International fuel traders have been falsifying the dates of bills of lading to reflect particularly high market prices, overcharging the Nigerian National Petroleum Corporation (NNPC) by $300 million or more. END SUMMARY. 2. (C N/F) On April 2, Chris Finlayson, Chairman and Managing Director of Shell Petroleum Development Corporation of Nigeria (SPDC), told Consul General and Econoff that a scandal is brewing within the NNPC over payments made to international fuel marketers. Finlayson said some marketers have been changing the dates when fuel shipments bound for Nigeria were loaded in order to take advantage of particularly high market prices. He said the total overpayment by NNPC may be as high as $330 million. Finlayson noted that Shell is not one of the marketers in question, but is becoming a leading fuel supplier for NNPC. 3. (C N/F) On April 6, Femi Otedola, President and CEO of Zenon Petroleum and Gas, the largest supplier of diesel fuel in Nigeria, essentially corroborated Finlayson's report. Otedola said over $300 million has been overpaid by NNPC for fuel imports, and that many leading international traders are involved. According to Otedola, NNPC contracts to pay its suppliers the market price on the day a ship is loaded with fuel. He said NNPC recently discovered, however, that bills of lading were altered to reflect loading on days of high market prices. Discrepancies were found when comparing dates on the bills of lading with dates of landing in Lagos. 4. (C N/F) Pointing to examples, Otedola said that while a tanker loading fuel at a refinery in Bahrain usually takes four weeks to arrive in Lagos, comparisons between the bills of lading and dates of arrival of some shipments reflected only a four-day difference, and in other cases, if taken at face value, indicated the journey took nine months. Otedola said 73 shipments from refineries in the Persian Gulf, England, and Venezuela listed delivery times of only one day. NNPC is attempting to get compensation for the over-charge. Otedola went on that most of the fuel traders supplying Nigeria are implicated in over-charging NNPC, and showed a list of 17 companies that supplied fuel in the first quarter of 2004, several of which, he said, are significant players in international markets, such as Trafigura and Vitol. Otedola added that three companies clearly not involved in the scandal are British Petroleum, ChevronTexaco and Shell. 5. (C N/F) Otedola recommended that NNPC stop contracting with international fuel traders and negotiate purchases directly from refineries worldwide. According to him, such a move would have two positive effects. Otedola calculates that NNPC would save some four billion dollars a year in expenditures on imported fuel. (Note: Prior to deregulation in October 2003, NNPC, then the sole importer of fuel, lost two billion dollars per year because it sold stock to retailers below purchase price. After October 2003, NNPC initially stopped subsidizing fuel sales, letting marketers import fuel to be sold at market prices. However, sources agree that NNPC is back in the business of subsidizing gasoline sales while it maintains a facade of deregulation by encouraging private marketers to import fuel that NNPC purchases at market price. NNPC then sells the fuel to marketers and retailers at a reduced price to ensure that those companies maintain a profit margin while holding consumer prices to informal caps set by the Department of Petroleum Resources. End Note.) 6. (C N/F) Otedola added that by cutting out the international traders, NNPC would also enhance the environment in which Nigeria's refineries could be restored and operated. Otedola said he believes international fuel trade "mafias" are behind the failure to bring Nigeria's refineries back on-line and to capacity. Otedola is convinced these traders arrange for the vandalization of crude oil feeder pipelines, which keep the refineries at Port Harcourt, Warri and Kaduna closed or under-capacity. He said the international traders generally receive at least one million dollars per shipload of fuel to Nigeria and have grown accustomed to the easy money Nigeria offers as long its refineries remain down. 7. (C N/F) As an example, Otedola described an arrangement the National Electric Power Authority (NEPA) had with Sahara Energy for the provision of diesel to an emergency power generation plant in Abuja. He said that while a pipeline was under construction to deliver fuel to the main power plant, NEPA paid some five billion dollars to Sahara over four years for diesel to the back-up plant. It was later discovered that NEPA had received only about one billion dollars worth of fuel, according to Otedola. Otedola said that he, too, was contracted to deliver diesel fuel to the plant on occasion; however, he petitioned the president to investigate the matter after becoming suspicious of NEPA's ongoing contract with Sahara and the fact that the pipeline for the power plant was never finished. He said his intervention led to an investigation that ultimately resulted in the cancellation of NEPA's contract with Sahara. 8. (C N/F) COMMENT: The allegation that international traders bilked NNPC of hundreds of millions of dollars is yet another example of the poor management of Nigeria's energy sector, and highlights the complex links between crude sales, fuel importation, refinery maintenance, and energy production here. Otedola is probably right in suggesting that long-standing sweetheart deals between the NNPC and a variety of fuel traders is keeping the system inefficient. That may also explain why the GON just can't seem to get its refineries running even after spending a billion dollars or more on maintenance contracts over the last four years. Otedola said he initially bid to purchase the Port Harcourt refinery offered for privatization, but he recently told President Obasanjo he will not invest in the refinery so long as NNPC purchases fuel from traders instead of negotiating directly with refineries in other countries and leasing ships itself to deliver fuel to Nigeria. It is not clear if Otedola's assumption that the international traders' stake in Nigeria's current fuel market is the main driver behind the country's refinery woes. But it is clear that the fundamentals of infrastructure security, interim supply stability, and transactional transparency must still be addressed if the GON is to be taken seriously about its efforts to deregulate and largely privatize Nigeria's downstream petroleum sector. END COMMENT. HINSON-JONES |
Re: Wikileaks Cable On Nigerian Fuel Imports by Olisa74(m): 2:03am On Jan 12, 2012 |
So the question I ask is why can't NNPC cut out the international traders and buy the refined products directly from the suppliers, hence doing away with the middlemen and all the corruption that dealing with them entails? |
Re: Wikileaks Cable On Nigerian Fuel Imports by Beaf: 2:16am On Jan 12, 2012 |
Olisa74: NNPC too, is being scrapped as part of the deregulation. Here's a link for anyone that wants an original copy: http://wikileaks.org/cable/2004/04/04LAGOS767.html Or http://www.look4leaks.net/showCable.php?id=04LAGOS767&title=SCANDAL+BREWING+OVER+NIGERIAN+FUEL+IMPORTS&lang=en 1 Like |
Re: Wikileaks Cable On Nigerian Fuel Imports by Olisa74(m): 2:28am On Jan 12, 2012 |
@Beaf, but the question remains. Why hasn't the government acted sooner in curbing the problem. According to the cable, alarm bells have been blowing for almost a decade. |
Re: Wikileaks Cable On Nigerian Fuel Imports by Beaf: 2:32am On Jan 12, 2012 |
^ That question should not arise. The current govt is led by a totally different person than those that led other govts in the past decade. This govt is doing something about it and very strangely, people are protesting the steps. |
Re: Wikileaks Cable On Nigerian Fuel Imports by Olisa74(m): 2:53am On Jan 12, 2012 |
@Beaf how does it seem very strange to you? The mistakes where created by the government. The mistakes enriched those in government and those close to the government. In correcting those mistakes why punish the common man for the ineptitude of government ( be it this one, or the previous ones). The common man suffered for the initial waste, and is being told to suffer again in order to seek a solution. Yes there is a problem. Yes it needs to be fixed. The truth is this current government is going about it in a very wrong way. Where in the world have you heard that prices double overnight? That is complete insanity. I live in the UK, and no government here will survive if they brought out a policy that led to 100% inflation. So what I would kindly like to know is why the reaction of Nigerians seems strange to you? 1 Like |
Re: Wikileaks Cable On Nigerian Fuel Imports by hahn(m): 1:16pm On May 27, 2015 |
This is a very interesteing topic @ lalasticlala, ishilove, passingshot, seun I believe this topic really needs to see front page because at this time in Nigerian history we really need such questions answered. Where does Nigeria import fuel from? How much does it cost? And other relevant questions 1 Like |
Re: Wikileaks Cable On Nigerian Fuel Imports by PassingShot(m): 1:19pm On May 27, 2015 |
hahn: I laugh in Swahili at those who consistently argue that there is subsidy. I hope when they read this leak, they will come to their sense. Subsidy only exists to put million of our dollars in pockets of wicked cabals and not to benefit the poor masses. |
Re: Wikileaks Cable On Nigerian Fuel Imports by RockMaxi: 1:21pm On May 27, 2015 |
After reading this all I could eventually conclude is that GEJ's subsidy window is a scam The minister for petroleum was totally incompetent in handling that sensitive position. This is seriously pathetic. |
Re: Wikileaks Cable On Nigerian Fuel Imports by PassingShot(m): 1:33pm On May 27, 2015 |
Olisa74: Because the top GMDs, ministers and other government officials benefits from the practice of using marketers. These cabals have eaten away at least two future generations of Nigerians. 1 Like |
Re: Wikileaks Cable On Nigerian Fuel Imports by realborn(m): 2:28pm On May 27, 2015 |
Sad! |
Re: Wikileaks Cable On Nigerian Fuel Imports by Islie: 2:40pm On May 27, 2015 |
Who ate these cabals Are they Nigerians or other nationality that our laws can be applied on them Why is it a thing of joy for some faceless individual who a minute in composition iinflicting hardship on the rest populace |
Re: Wikileaks Cable On Nigerian Fuel Imports by hahn(m): 4:28pm On May 27, 2015 |
PassingShot: The "poor masses" really need to start asking the right questions or they will always end up with the short end of the stick. I'm certain that when the real figure of the exploitation of Nigeria's resources eventually come out it will be hard for some people to walk in broad daylight |
Re: Wikileaks Cable On Nigerian Fuel Imports by superstar1(m): 4:48pm On May 27, 2015 |
Olisa74: Can't believe Otedola said this over 10years ago. |
Re: Wikileaks Cable On Nigerian Fuel Imports by Nobody: 5:01pm On May 27, 2015 |
Ok |
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