Neiti Clarifies FG’s Crude Swap Arrangement As Taleveras Tasks Media On Accurate Reporting

Posted by African Examiner Featured, Latest Headlines, News Friday, March 28th, 2014

The management of TALEVERAS has reacted to an erroneous news report in a Nigerian news daily of March 25, 2014, which it said wrongly published that the Nigerian Extractive Industries Transparency Initiative (NEITI) credited the group with 152,308,878 litres of undelivered gasoline under the federal government’s Crude Oil Swap Arrangement.

This is totally false. What NEITI listed against TALEVERAS in the document it made public at the House of Representatives hearing showed a product value of $52, 308, 878. 00, with NEITI noting that the Pipelines and Products Marketing Company has clarified that these figures for 2011 have been fully reconciled and all outstanding accounts addressed.

Recall that NEITI’s Director of Communication, Dr. Orji Ogbonnaya Orji, had previously refuted another erroneous news report, which claimed that agency said the nation was losing $8 billion annually from the crude swap arrangement.

“The media report from that presentation attributed to NEITI that the nation loses $8 billion annually through crude oil Swap is not only wrong but misleading. What NEITI presented and explained at that hearing was that there is no cost efficiency in the transactions with the offshore processing organizations,” the Director said in his statement refuting the report.

TALEVERAS Petroleum in a statement to the media by Mr. Leonard Kwentua, a Senior Trading and Supply Executive, said, “TALEVERAS supply of Gasoline under the swap arrangement are on- going activities and accounts are reconciled quarterly to determine what is oversupplied or under supplied.

“This Barter Arrangement is a major factor responsible for the sustainability of supply and availability of Gasoline across Nigeria.

“International Financial Institutions are very sensitive to sensational media reports and most recently these inaccurate reports do more harm than good in structuring finance for petroleum product supply into Nigeria.

“Furthermore, it is on record that TALEVERAS is one of the most active supplier of refined petroleum products in and out of Africa as a whole and in particular, PPMC under the Duke/Taleveras arrangement, we are often than not, used as a Performance Example.

“Secondly, for the swap transaction, there is an underlying security in form of a standby letter of credit in Favour of PPMC, so if you don’t deliver the products, PPMC are in a position to cash your Letter of Credit, these letters of credits are issued in favour of PPMC by first Class Banks and must be Bank Confirmed Prior to an off take of the Crude, so in essence NO Letter of Credit, NO Lifting of Crude.

“As an example: The NEITI report showing 2011 under delivery of about USD 52 Million in their table, does not reflect the actual sum, as inventory warehousing cost is not applied to this figure. Balance on account of this on- going term deal is fully secured, at all times, due to the fact that there is an underlying security, always in place, by way of an active Bank issued letter of credit, which in this instance stood at 200 Mil USD in favour of PPMC during the period stated. As at December 2013, the balance on account shows TALEVERAS has over supplied in its delivery obligations, subject to reconciliation with PPMC.

“There has always been an issue when indigenous companies are empowered or encouraged to partake in a business that has had international dominance for several years. These Swaps and Offshore Processing Arrangements have been done in Nigeria many years ago and dominated by International Oil Companies, in more recent times, we have seen British Petroleum Plc, operate through a subsidiary an Offshore Processing Agreement in Nigeria with the NNPC/PPMC, there was never any backlash as we have seen now.

“Nigerian companies should be encouraged as we strengthen our economy by the size these activities bring to our balance sheet, which in turn gives us an opportunity to enlist the confidence of Local and International Financial institutions, as we strive to diversify our portfolios to other sectors of the economy, that needs development, this undoubtedly leads to more employment opportunities for Nigerians.

“Never before have we seen the growth of Nigerian companies in the Oil and Gas Sector in Africa, where business activities are increasingly done under International Best Practices. TALEVERAS has nowhere to go this is our country.

“Lastly, TALEVERAS is made up of Young Enterprising Nigerians, the journey for us spans over 13 years of active and gradual growth, conducting our various business activities diligently and professionally, we employ a great number of Skilled and Unskilled dynamic Nigerians, we have built a strong brand that has attracted serious international recognition doing business in various parts of the world and with top class counterparts, so we take our reputation and perceptions seriously.” The statement explained.