Its quite Long but Interesting
Between Diezani, Jide omokore And Kola Aluko: Inside The Oil Deals That Cost Nigeria Billions
Despite
elaborate efforts to sweep it under the carpet, facts have shown that a
strategic alliance agreement between the Nigerian Petroleum Development
Company (NPDC) and Atlantic Energy Drilling Concepts Nigeria Limited
Limited (AEDCNL) has helped parties in the agreement to swindle the
country. After wide-ranging investigations, Assistant Editor ADEKUNLE
YUSUF of saharareporters uncovers the details of the deal that set back
the country by about $2b.
It is
an adventure laced with shoddiness. That perhaps is the most fitting
silhouette for the Strategic Alliance Agreement (SAA) between the
Nigerian Petroleum Development Company (NPDC) and Atlantic Energy
Drilling Concept Nigeria Limited. From all available documentary
evidence, the SAA, which paved the way for Atlantic Energy to operate
some oil blocks during the administration of former President Goodluck
Jonathan, has left the country short-changed of about $2billion,
excluding hundreds of millions of dollars as bank loans and money owed
to workers and contractors. After four years of the alliance, everything
suggests that NPDC and Atlantic Energy owe Nigerians a lot of
explanations regarding how some oil blocks – OMLs 26, 30, 34, 42, 60,
61, 62 and 63 – were handled between 2011 and 2014, including outright
theft of proceeds from all the millions of barrels of crude oil lifted
during in the four years.
A portfolio company
Like a
well-choreographed movie, it all started on a measured pace. On July 19,
2010, Atlantic Energy Drilling Concept Limited (AEDCNL) was
incorporated as a portfolio company. That was barely three months after
Mrs Diezani Alison-Madueke, former Minister of Petroleum Resources,
assumed office after her redeployment from Mines and Steel Development
Ministry. Curiously, the company changed its name to Atlantic Energy
Drilling Concepts Nigeria Limited (AEDCNL) on October 27, 2011.
However,
Atlantic Energy, even without prior record of successful experience in
the oil and gas sector, announced that it had entered into a Strategic
Alliance Agreement (SAA) with the Nigerian Petroleum Development Company
(NPDC) in April 2011. That was exactly six months before AEDCNL was
legally born. In a capsule, the company that claimed to have signed the
SAA with NPDC was not legally in existence when the deal was shoddily
consummated in April 2011. As unknown portfolio company, Atlantic Energy
was operating from a temporary office accommodation before it opened
office in 2012 at 32a Adetokunbo Ademola Street, Victoria Island, Lagos,
after the NPDC fortune had smiled on it.
With
the NPDC contract in its kitty, Atlantic Energy embarked on a massive
recruitment exercise, poaching good hands in the oil industry, which it
used to actualise its planned scheme to play big in Nigeria’s highly
shady oil and gas sector.
But all
that never dissuaded partners in the deal from embarking on a hot
business romance at the expense of the country. The SAA covered 4 Oil
blocks: OML 26 – FHN; OML 30 Shoreline; OML 34 – Niger Delta Oil, and
OML 42 Neconde, all sold by Shell /Agip and Total. It was obvious that
the NPDC granted the SAA in absolute secrecy without following any due
process as stipulated in the government procurement laws and policy.
With
the sale of the four oil blocks, in which the Federal Government owns 55
per cent, the National Petroleum Investment Management Services
(NAPIMS), which oversees national investments in Joint Venture Companies
(JVCs), Production Sharing Companies (PSCs), and Services and Services
Contract Companies (SCs), transferred the ownership to NPDC as the
upstream producing arm of the NNPC. Although the NPDC should have paid
NAPIMS a signature bonus, no payment was made, leading to a loss of
asset by the federation and loss of revenue that should have accrued to
national coffers.
This
was confirmed by the recent PwC audit report, which audited remittances
from NNPC to the Federation Account after the allegations by Sanusi
Lamido Sanusi, former governor of the Central Bank of Nigeria (CBN) who
is now the emir of Kano. The audit findings showed that remittances into
the Federation Account were not up to date.
An unholy alliance?
The SAA
is to enable Atlantic Energy provide fund and technical services and
lift oil. Being a funding mechanism, the SAA is meant to enable the
owner (NPDC) to accept its strategic partner (Atlantic Energy) to
partake in the production sharing of the oil field at a fee called
signature bonus, while the strategic partner is expected in return to
fund the operations and provide technical support so that it can be
reimbursed directly from the production in subsequent periods.
Although
a good idea that is said to be critical to the survival of the
country’s oil and gas industry, the SAA was obviously not managed in the
national interest, for it has helped parties in the deal to embark on a
stealing spree of public fund after production liftings.
Up till
now, industry watchers are still in a shock over how NPDC, which is
peopled with some of the best engineers and technical experts, granted
the SAA to a company that paraded no track record of requisite
experience in the sector – all without following any process as
stipulated in the government procurement laws and policy. Besides
documentary evidence, findings within the sector showed that the deal
was an unholy arrangement between Alison-Madueke, top NPDC officials and
the duo of Kola Aluko, who is a known business ally of the ex-Minister,
and Jide Omokore, a controversial business mogul who is a Peoples
Democratic Party (PDP) stalwart, financier and kingmaker to some
governors as well as many senators and members in the House of
Representatives. Aluko and Mrs Alison-Madueke have denied any business
ties.
NewTable
New1 Of the two promoters of Atlantic Energy, Omokore had no easily
traceable previous experience in the oil and gas industry, while Aluko
had.
However,
drawing on its connections in high places, Atlantic Energy swung into
plum business, having won the hearts of those at the helms of affairs –
from the ministry and the Presidency. As contained in the SAA document,
Atlantic Energy was supposed to pay a signature bonus of $245 million to
NPDC, but it ended up paying $135 million – no thanks to legal
terminology and simple mathematics that only parties in the deal could
explain. The balance was remitted to the account of unknown people.
Inside the raw deals
Atlantic
Energy approached two Nigerian banks for loans. Going by the books of
Atlantic Energy, the loans were meant for the payment of signature bonus
and cash calls to NPDC. Therefore, in 2011, it took a loan of
$490million, with First Bank contributing $370million and Skye Bank
$120million. At the beginning of the deal, Atlantic Energy actually paid
the signature bonus of $135 and cash calls of $68 to NPDC from the
loan, totalling $203 million out of $490million lifeline provided by the
two banks.
But
another weighty, if not damning evidence that was to expose the
shoddiness of the SAA came in the early life of the deal. In 2011,
shortly after securing the juicy contract, it was NPDC that lifted crude
oil (947,096 barrels) on behalf of Atlantic Energy and remitted $102m
into the coffers of its strategic partner; instead of Atlantic Energy to
lift oil and remit proceeds. Why? It was because Atlantic Energy, a
mere portfolio company at the time it was handed the sweetheart
contract, was still too new and untested to even secure an export permit
for such a venture as at the time, thus showing the level of
involvement of the top echelons of the Petroleum Ministry and NPDC
officials.
A
detailed scrutiny of the cash calls schedules and other papers also
showed that the plundering galore continued till 2012 and 2013. For
example, in 2012 alone, Atlantic Energy paid cash calls worth $168m, but
lifted crude oil of about 3million barrels valued, conservatively at
over $350 million. Despite the differentials in remittances, NPDC
continued to look the other way as Atlantic Energy lifted about 2million
barrels of crude oil in 2013, valued at about $240million, but paid
cash calls of $68million. In 2014, records also revealed that Atlantic
Energy paid zero cash calls and lifted about 500,000 barrels of crude
oil, valued at $54 million, with all the funs siphoned abroad as
payments for vendors sources say are phony.
Table2Again,
the promoters incorporated the Atlantic Brass Development Company
Limited on February 5, 2013. As usual, it was hurriedly granted another
set of SAA. The SAA covered another set of 4 blocks: OML – 60; OML – 61;
OML – 62; OML – 63. Unlike in the previous deals in 2011 and 2012, when
it paid a fraction of obligatory funds, the company simply pocketed all
the proceeds, paying pay no signature bonus or any cash calls at all
despite lifting about 8 million barrels of crude oil, valued at $800
million at the time. Instead various amounts of money were transferred
to the accounts and investment companies in UK, Dubai and Switzerland.
They also opened mirror accounts of Atlantic Energy Brass in the UK and
Switzerland (see the table on foreign accounts).
However,
with the fall of the administration of Jonathan, the chicken seemed to
have come home to roost, as the NPDC, which seemed to have condoned all
the infractions of its strategic partner, has suddenly woken from
slumber. In a letter from NPDC, dated May 6, Atlantic Energy was asked
to pay its outstanding indebtedness OMLs 26, 30, 34, and 42, totalling
$573,668,090 (five hundred and seventy three million, six hundred and
sixty eight thousand, ninety dollars).
“This
is to inform you that we have not yet received any payment on
outstanding cash call obligations after our reconciliation sign-off,
dated August 28, last year. Kindly remit the sum of $573,668,090 (five
hundred and seventy three million, six hundred and sixty eight thousand,
ninety dollars) only, being amount due to OMLs 26, 30, 34, and 42,”
said the NPDC.
An
analysis of the reconciliation sheet revealed that the $573,668,090 was
just a fraction of the cash calls, as some huge returns that were yet to
be subjected to technical and financials by the two parties were not
included.
But the
bad state of finances on OMLs 26, 30, 34, and 42 paled when compared
with that on OMLs 60, 61, 62 and 63 where Atlantic Energy owes NPDC a
staggering $1,250,644,474.54 (one billion, two hundred and fifty
million, six hundred and forty four thousand, four hundred and seventy
four dollars).
In another letter from NPDC, dated May 6, Atlantic Energy was reminded of its outstanding indebtedness.
Table3“This
is to inform you that we have not yet received any payment outstanding
cash call obligations after our reconciliation sign-off, dated August
28, 2014. Kindly remit the sum of $1,250,644,474.54 (one billion, two
hundred and fifty million, six hundred and forty four thousand, four
hundred and seventy four dollars) only, being amount due on OMLs 60, 61,
62 and 63,” the letter said.
Atlantic
Energy has also defaulted on the bank loans from First Bank Plc and
Skye Bank. Instead of moving the proceeds of the liftings to the two
banks to repay the loans and pay the obligatory cash calls, Atlantic
Energy has transferred the funds through various related party
companies. As at now, the loans have not been paid while the mounting
interest element is also long overdue.
In a
letter from Skye Bank, dated April 10, Atlantic Energy was reminded of
repayment its outstanding obligations ($39,232,428.16) on the $120
million loan facility it took from the bank.
“Kindly
refer to our various correspondence and discussions regarding your
outstanding obligations on the above subject facility ($120 million).
This is to remind you that the total sum of $39,232,428.16 plus accrued
interest is past overdue for payment on your facility,” the letter said.
The
letter was signed by Tutu Alu, manager, corporate banking group, and
Tosin Faniro-Dada, relationship officer, corporate banking group.
Another
letter from First Bank, dated February 20, tacitly refused a request
from Atlantic Energy seeking to restructure the loan facilities it has
received from the bank, hinging it on some stringent conditions.
“We
refer to the meeting held on 19th February 2015 and your request for a
restructure of your facilities coupled with lenders’ consent to change
the ownership structure of Atlantic Energy. We wish to state that, even
as we are mindful of the set timeline, we are constrained to progress
your request further until we receive the following documents: (1) copy
of the executed NPDC/Atlantic Energy reconciliation, (2) copy of
executed NPDC repayment plan, (3) addendum to the SAA, (4) NPDC consent
to the restructure of the company.”
The FBN
letter also included the following conditions that must be met before
considering Atlantic Energy’s request: “provision of standby Letter of
LC to secure crude oil liftings, and payment of all overdue obligations,
coupled with the injection of $100 million to reduce exposure to
lenders.”
The
letter was signed by Deji Abisola, business manager, corporate banking
group (energy and utilities), and Jide Ayeronwi, group head, corporate
banking group, (energy and utilities).
Also,
in spite of the billions of dollars it has enjoyed over the years,
Atlantic Energy has not filed its accounts with the Federal Inland
Revenue Service (FIRS) as stipulated by law. Using an influential
lawyer, who sources said is the company’s legal backbone, Atlantic
Energy has continued to hold on to the legal advice that it is not
liable to tax.
In a
letter from FIRS, dated February 17 , Atlantic Energy was warned of the
consequences of its refusal to submit the accounts and returns within
the next ten days. It was signed by the duo of Okeowo Taiwo, and Ocheja
E.F., FIRS’ manager (tax) and deputy manger (tax) respectively.
It
reads: “It is worrisome to note that we are yet to receive the draft
accounts/returns as promised. Let me remind you that the
accounts/returns are long overdue for submission. You are advised to
submit the accounts/returns within 10 days from the date of receiving
this letter, failing which FIRS shall enforce compliance with the
relevant tax laws.”
Transfers, cash withdrawals
Sadly, a
company that could not meet its financial obligations was on a spending
binge, with its directors living ostentatiously (owing private jets and
armoured jeeps) and transferring huge sums – sometimes in billions and
millions of naira and dollars – into accounts of both local and foreign
organizations. And if the local transfers raised some red flags, so were
the numerous transfers of millions to foreign accounts (see a table on
foreign accounts) of Expedia Marine Company Limited, Energy Property
Development Ltd, Petrochemicals Offshore, SPOG Petrochemicals Limited,
Premium Aviation Services Ltd, Ibalex Nigeria Limited, and numerous
others, where funds were paid at different times.
Interestingly,
Atlantic Energy is enmeshed in huge debts – albeit self-imposed. But it
seems the embattled company is not ready to go down alone. Not only has
it closed its office, it also did not pay its staff for more than one
year. It has equally defaulted in the payment of workers’ pension and
PAYEs, leading to a mass resignation crisis that swept the company even
before it closed its shop recently. Even business partners were not left
out, as Atlantic Energy, which kept booking flight tickets and enjoying
services from international and reputable companies, did not meet its
obligations to its numerous clients, wrecking havoc on several
businesses. Now, Atlantic Energy owes NPDC about $2billion, banks
$550million, workers $5million, and other vendors $20million. This
explains why the banks as well as NPDC appear helpless, as Atlantic
Energy is frantically looking for investors to buy the company and the
massive debts to boot.
The
Nation learnt that the promoters of Atlantic Energy are negotiating a
soft-landing with some people that are very close to the corridors of
power with a view to refunding a paltry amount. Their stratagem is to
sway the new administration to avoid the “unnecessary controversies”
that a probe may generate so that they can be asked to go and sin no
more. As part of a grand strategy to achieve their objective, some foot
soldiers have been enlisted, including some highly-placed Nigerians, to
reach out to President Muhammadu Buhari to strike a deal on their
behalf, fearing that any inquiry into the books of NPDC and other
agencies in the highly opaque oil and gas sector will most likely
unearth a can of worms.
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