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The Nigerian National Petroleum Corporation (NNPC),Tuesday awarded 50 companies with contracts to buy Nigerian crude, with more than half being firms indigenous to Nigeria, spurring speculations it’s meant to win political points in view of 2019 general elections.
Of the 50 companies, 32 were local companies, doubling the number of awards to Nigerian firms compared to 2017, foreign and Nigerian trading sources told Reuters.
The NNPC also awarded contracts to supply crude to 12 governments, although it was not clear how many of the deals would be handled by the companies already on the list of awards.
NNPC awards the oil purchase contracts annually, but the deals this year were for two years not one year. Analysts say this is partly because 2019 is an election year.
“It is part of the Nigerian content drive. What the Nigerian government is trying to do particularly from the exploration down to crude trading is to get more Nigerian companies involved in the system,” Luqman Agboola, head of energy and infrastructure at Sofidam Capital said in a phone interview with BusinessDay.
“Prior to this time, from 2011, crude marketing arm was dominated by foreign companies, so what the government is doing now is to increase the amount of Nigerian companies participating in the field,” Agboola explained.
The move by the Federal Government (FG) foreshadows the political atmosphere.
Astute businesspersons in Nigerian have learnt how to navigate the political land mines. And to stay relevant in business “you need to be politically correct” Agboola said.
In January, 2018, 254 firms bided to lift Nigeria’s crude oil in the 2018/2019.
At the bid event, Mele Kyari, the then group general manager, crude oil marketing division of NNPC outlined some of the conditions potential off-takers under the 2018/2019 crude term contract were expected meet.
These included a minimum annual turnover of $500 million for 2016 and net worth of $250 million for 2016.
“I wish to remind the general public that the Crude Oil Term Contract is not a Procurement Contract, but a process of selecting partners for the sale and procurement of NNPC Equity crude oil,” Baru said.
On January 4, 2017 NNPC’s list of 2017/2018 crude term contract comprised 39 winners with 18 Nigerian companies, 11 international traders, five foreign refineries, three National Oil Companies (NOCs) and two NNPC trading arms. A total of two hundred and twenty four (224) bids were submitted by companies seeking to purchase and lift Nigerian crude oil grades for the period.
STEPHEN ONYEKWELU & DIPO OLADEHINDE
