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Publish Date : 30-Oct-2015

The Nigerian National Petroleum Corporation (NNPC), started the auctioning of yearly crude term contracts on live television, and promised to decrease the number of contract holders by a third in a drive to increase transparency at an institution dogged by corruption. The contracts cover the bulk of Nigerias almost 2 million barrels per day (bpd) of crude oil exports, which are a important contributor to the countrys economy.

President Muhammadu Buhari, who was chosen on March 28, and opened on May 29, 2015, on a campaign to fix Africas biggest economy, has promised to end graft at NNPC where billions of dollars were alleged not to have been remitted to state coffers in the past. The tender as in previous years was published in newspapers, inviting bidders to take part.

However the bidding process itself and the tender awards, which used to take place behind closed doors, were now live on television.
An NNPC official said during the televised round said, This is not business as usual. This is going to be different. NNPC Group Managing Director, and Chairman of the Tenders Board, Dr Emmanuel Ibe Kachikwu, said the new bidding process would help the sprawling firm to become more efficient.

The essence of this really is that you can go to this process and sign off your long-term contracts, Kachikwu stated bidders assembled at the NNPC headquarters in Abuja. The company plans to cut the current number of 43 contract holders to just 16, which NNPC officials said, would make sure companies get oil when they need it. NNPC in the past has allocated more oil to companies than it in fact produced, meaning some contract holders did not get everything they were promised. A total of 278 companies submitted bids before the deadline previous week. After approximately an hour and a half of proceedings, 75 bids had been opened.

Oil traders said that the pressure would also be on NNPC to award contracts only to companies with the ability to sell or process it themselves in order to maximise Nigerias income. One oil trader said, Some contracts used to go to companies that didnt have the background to trade 950,000 barrels of crude. The trader added in the current oil price environment that NNPC could no longer justify such arrangements.

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