NNPC broadcasts oil contract bids as 278 firms jostle for deals

About 278 bids were on Tuesday received from indigenous and foreign firms interested in being selected for the sale and purchase contract for Nigeria’s 26 crude oil grades on offer.

The bid process was relayed live by all major broadcast networks as part of effort of the new management at the Nigerian National Petroleum Corporation, NNPC, to make the oil company more transparent.

The exercise was witnessed by representatives of the Bureau of Public Procurement, BPP; Department of Petroleum Resources, DPR; Nigerian Extractive Industry Transparency Initiative, NEITI and Nigerian Content Development and Monitoring Board, NDCMB.

The Group Managing Director of the NNPC, Ibe Kachikwu, said at the opening of the bids that the exercise was anchored on the tenets of transparency, efficiency by the President Muhammadu Buhari for the oil and gas industry.

“The essence is to ensure that nobody needs to call me personally for him to get crude allocation,” Mr. Kachikwu said. “You can imagine the burden the exercise has taken off my shoulders. It means a good amount of my time will now go into other relevant areas of operation where the country needs me most.”

Group General Manager, Crude Oil Marketing Division of the NNPC, Mele Kyari, said the open bid process adopted by the corporation would make the incidence of brief case companies and hawking Nigerian crude oil a thing of the past.

“The idea is to select companies that are credible and capable, with track record and would not hawk the country’s crude oil,” Mr. Kyari explained.

“We are going to get as close as possible to the end users of our crude oil. What this means is that we are going to eliminate all those transactions that are not necessary,” he said.

The representative of the DPR, Folashade Odunuga, commended the transparent manner the bid process was conducted, noting that as the regulator of the industry, the DPR was happy that the new wave of transparency has come to stay in the Corporation.

The 26 grades of Nigerian crude oil on offer, representing the various blends of the commodity produced from various locations within the country’s operational area, include Bonny Light, Forcados, East Area (EA), Bonga, Qua Iboe Light, Yoho, Erha and Escravos Light.

Others included Pennington Light, Agbami, Brass, Abo, Oyo, Okono, Amenam, Akpo Condensate, Usan, Atam, Okwori, Okoro, Ima, Ukpokiti, Obe, Okwuibome, Ebok and Asaratoru.

The contract for the engagement of qualified and reputable companies for the sale and purchase of Nigerian crude oil grades was conducted in consonance with the provisions of the Public Procurement Act 2007 and the BPP bid guidelines.

As part of the pre-qualification requirements, interested companies are expected to demonstrate the possession of minimum annual turnover of$750 million and net worth of at least $300 million.

The requirements also include ability to establish an irrevocable Letter of Credit (LC) for the payment of any allocated crude oil subject to the contract terms as well as the ability to pay an initial deposit of $2.5million representing the first lifting deposit upon signing of the contract agreement among other requirements.