Firm Refutes Report on Domestic Transportation of Crude Oil Contract

RE: PREMIUM TIMES PUBLICATION OF SEPTEMBER 16, 2015 REGARDING DOMESTIC TRANSPORTATION OF CRUDE OIL CONTRACT BY PPP FLUID MECHANICS LIMITED (PPPFM) AND OCEAN MARINE SOLUTIONS LIMITED (OMS)

 Our attention has been drawn to the report of an online news platform-PREMIUM TIMES of Wednesday, September 16, 2015 regarding the above-captioned contract of PPPFM and OMS with the Nigerian National Petroleum Corporation (NNPC).  The publication  contained largely in all material facts false assertions, misinformation

and outright misrepresentation of facts regarding the said contracts. 

Read the report HERE

The writer of the publication obviously to make it attractive to the readers linked some of our promoters including Captain Idahosa Okunbo and Dr. Olatunde Ayeni with the immediate past president, Dr Goodluck Jonathan and the immediate past Honourable Minister for Petroleum, Mrs Diezani Alison-Madueke.

 The intention of this publication is to correct the false impression that PREMIUM TIMES sought to create while also putting the appropriate facts in the public domain.  We state with all sense of responsibility that the facts stated in this publication are verifiable with NNPC.  While the companies have nothing to hide, we state that the sponsors of this offensive publication, whosoever they are, know themselves and the reasons  for the malicious report.  But it is important to state that PREMIUM TIMES does not need to pull down our companies and/or our promoters in an attempt for some others to rise.

 It is astonishing that the writer of the so-called investigative report never met with any official of our companies or the promoters named in the  story before the said publication.

 STATEMENT OF FACTS

 1.      Contrary to the publication, our companies wish to state that the contracts awarded them by NNPC followed due process and complied with the relevant extant provisions of the Public Procurement Act.  We state unequivocally that there is nothing illegal in respect of the security contract awarded to OMS and the movement of crude oil by marine vessels contract awarded to PPPFM from inception to date.

 2.      Before the award of these contracts, following a detailed study and analysis by NNPC management, a report indicated that it became uneconomical to transport crude oil from Escravos to Warri refinery through the pipeline in view of Government’s huge expenditure of about $121 million for the maintenance and repairs of the Escravos-Warri broken crude oil pipeline. Furthermore, the report also indicated an estimated 40 percent loss of crude oil pumped through the Escravos-Warri pipelines due to persistent pipeline vandalisation and oil theft.

 3.      Besides the specific losses stated above, it is public knowledge that the Warri and Kaduna refineries before the engagement of PPPFM had been shut down for about 48 months due to lack of supply of crude oil feedstock to make the refineries functional.  For the avoidance of doubt, these facts are also verifiable in the records of NNPC.

 4.      The above circumstances made the sourcing of alternative means of transportation of crude oil other than through the pipeline inevitable, according to the report, in order to minimize the negative impact.  This fact is also verifiable.

 5.      PPPFM was originally owned by some Israelis who incorporated the company in 2008. NNPC records will confirm that they were the first to secure the contract for the transportation of crude oil by marine vessels from Escravos terminal to Warri refinery from the NNPC in December 2010 through an international competitive bidding with 13 other companies for the transportation of crude oil by marine vessels from Escravos to Warrirefinery.

 6.      It is therefore totally untrue to claim as PREMIUM TIMES did that the contract was awarded without due process.  PPPFM insists that due process was followed in the award of the contract.

 7.      In June 2011, the present owners acquired the company (PPPFM) from the  original owners through share purchase agreement and inherited the contract, contrary to PREMIUM TIMES’ allegation of hostile acquisition of the company.

 8.      We wish to state categorically that contrary to the assertion in the publication under reference also to the effect that the contract was awarded at the cost of $15.4 per barrel, the contract for the transportation of crude oil using marine vessels was indeed awarded at the cost of $2.79 per barrel, which was later negotiated and reviewed to $3.87 per barrel.  The review was undertaken by NNPC special team from five different departments of the corporation. Consequently, the review was a product of mutual negotiation.

 9.      At this time, the dedicated security surveillance for the provision of six security boats awarded to OMS was running at an average cost of $1.5 per barrel.

 10.     Further to satisfactory performance of our companies with Warri experience, NNPC invited our companies to consider rendering similar services to Port Harcourt refinery, which understandably has suffered a greater fate in the hands of pirates than Warri refinery before our

 companies’ intervention under a similar arrangement.  Indeed, NNPC added issues of statutory NPA port and cargo charges, ship dues, NIMASA cabotage fee, offshore sea protection levy, offshore compulsory terminal pilotage dues and dedicated security surveillance.  All these led to another negotiation painstakingly carried out by officials of NNPC with our

 company.

 11.     As at the time of PREMIUM TIMES publication, the contract between our company and NNPC, which now includes the provision of dedicated security patrol boats, was at a total cost of $5.68 per barrel contrary to the $15.4 per barrel alleged in the publication.

 12.     In the course of our operations during the pendency of these contracts, PPPFM has had cause to incur operational losses of US$ 5,790,482.74 and NGN 207,230,168.10 in 2011 and another loss of about $32 million in 2012.  In spite of these losses, the company has soldiered on because of the positive impacts of the company’s initiatives and services to the nation.  From 2011 till date, a total of 65,597,698 barrels of crude oil have been delivered to the refineries by our company under the contract without any loss.

 13.     It is important to state that with our company’s intervention as stated above, it is estimated that the nation has been saved about $1.6 billion based on NNPC’s admittance of an average loss of about 40 percent of crude oil pumped through the Escravos-Warri pipeline due to vandalisation and crude oil theft.  This saving is definitely more if the  analysis were to be based on the 70-80 percent estimated loss of crude oil pumped through the Port Harcourt-Bonny-Okrika pipeline.

 15.      Our companies came into these contracts at the height of piracy in our country.  We believe that NNPC’s initiative in this direction was a product of the grave situation occasioned by the illegal act of piracy in the Niger Delta at the period and the devastating consequences it had on the economy of the nation.  Ours was and is a patriotic act to our fatherland, and the companies do not think that they should be repaid with orchestrated campaign of calumny, neither do we think the promoters of the companies deserve sponsored blackmail and attack on their persons or their reputations which have taken them several years to build. The promoters are known to be men of high integrity and impeccable character both intheir private and public life.

 SIGNED

 MR KUNLE OYELAKUN

 MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER.

Dear Stella,

We noticed you ran this story: http://www.stelladimokokorkus.com/2015/09/ex-president-jonathan-diezanitunde.html

We would like our own side to be heard on your platform as well. Kindly help use. Many thanks.