NewsReps Order Investigation Into Invalidation Of $2.4bn Forward Contracts By CBN, Reject...

Reps Order Investigation Into Invalidation Of $2.4bn Forward Contracts By CBN, Reject NNPCL’s OVH Acquisition Probe Report

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February 28, (THEWILL) – The House of Representatives has ordered its Committee on Small and Medium Size Enterprises (SMEs) to investigate the cancellation of $2.4 billion worth of forward contracts sold to manufacturers by the Central Bank of Nigeria (CBN).

This is as the lawmakers turned down the report of its Ad hoc Committee that investigated the alleged irregularities and corruption in the acquisition of OVH Energy Marketing by the Nigerian National Petroleum Company Limited (NNPCL).

Recently, the CBN announced the invalidation of approximately $2.4 billion worth of forward contracts sold to manufacturers. According to the apex bank, the decision was informed by the discovery that the affected businesses failed to fulfil certain conditions.

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However, the House, while adopting a motion of urgent public importance, sponsored and moved at plenary on Wednesday, by Zakaria Dauda Nyampa, Ojema Ojetu and Obed Shehu, mandated its Committee to invite the affected manufacturing companies alongside Central Bank Governor, Olayemi Cardoso, to examine their documents with the view to identify genuine companies with legitimate transactions.

Moving the motion, Nyampa noted that the invalidated forward contracts were originally entered into about a year ago between various Nigerian manufacturing companies and the CBN to hedge against currency fluctuations and risks associated with exchange rates.

According to him, having entered into the agreements, affected companies’ bank accounts debited in Naira equivalents and letters of credit issued by the participating commercial banks, the CBN decided to dishonour the contractual obligations and cancelled the transactions one year thereafter.

Nyampa expressed concerns that the cancellation of forward contracts was coming at a time of worsening national economic challenges such as galloping inflation, unemployment, increased poverty level and hardships.

He expressed worry that if sustained, the cancellation of the said transactions will cause the widespread collapse of small and medium companies and the exit of large corporations from Nigeria with all the attendant consequences thereof.

Following the adoption of the motion, the House gave three weeks to the Standing Committee to carry out the investigation and report back for further legislative action.

Meanwhile, the House has rejected the report of its Ad hoc Committee that investigated the alleged irregularities and corruption in the acquisition of OVH Energy Marketing by the Nigerian National Petroleum Company Limited (NNPCL).

The Hassan Abubakar Nalaraba-led Committee’s report was turned down after it was debated at plenary on Tuesday, due to fresh evidence, which emerged that the exercise was not properly conducted.

The House of Representatives was shocked to receive documents written by a foreigner, Huub Stokeman, who is the MD of NNPCL Retail and former MD of the OVH company that was acquired by the same NNPCL, wherein he requested NMDPRA to renew the licence of the same OVH company which the NNPCL has acquired in the name of the company even before the acquisition.

The situation had raised serious suspicion and required the lawmakers to find out how a company that was acquired two years ago has not merged completely while the MD of the acquired company is now the MD of the NNPCL Retail that acquired them.

The House has, therefore, ordered that the entire acquisition transactions be thoroughly reviewed with details and terms of the acquisition agreement, the financials and valuation reports scrutinised to ensure that the Nigerian public was not shortchanged in any way.

Consequently, the House mandated its Standing Committee on Petroleum Resources (Downstream), chaired by Barr. Ikenga Imo Ugochinyere, to conduct a forensic investigation into the acquisition deal running into hundreds of billions of Naira and report back to the House for immediate action.

Recall that the House had in July 2023 asked the NNPCL to suspend the acquisition of OVH Energy Marketing after deliberating on a motion by Miriam Onuoha and other lawmakers on the “need to investigate the irregularities and alleged corruption in the Nigerian energy security provider, NNPC Retail Limited and the acquisition of OVH Energy Marketing.”

Onuoha had expressed concern that: “Before the acquisition, OVH Energy claimed to have about 380 company-owned stations, a jetty (ASPM) WITH240,000 MT, Eight (8) LPG plants, three (3) Lubricants blending plants, three (3) aviation and fuel depots and twelve (12) warehouses whereas they had owned only 72 stations as others were leased or owned by third parties, all 8 LPG plants were leased, 12 lubricant warehouses listed were leased.

The NNPCL had on October 1, 2022, announced the outright acquisition of OVH Energy (OVH) and Apapa SPM Limited (an affiliate of OVH Energy) to strengthen its downstream business portfolio, enhance profitability and guarantee national energy security.

The House consequently constituted an Ad hoc Committee, with Nalaraba as chairman, with the mandate to probe the alleged irregularities and corruption in the Nigeria energy security provided by the NNPC Limited and the acquisition of OVH Energy Marketing.

While the Ad-hoc Committee was awaiting consideration of its report by the House, a group known as Nigeria Transparency Council (NTC) dragged the Mele Kyari-led NNPCL management and NNPCL retail group to the House Committee on Downstream over the alleged shoddy acquisition deal between the company, Nueoil and OVH Energy, which is alleged to have cost hundreds of billions of Naira caused by alleged over bloated assets with the merger of the acquired company not yet formalised.

According to NTC, NNPCL GCEO, Mele Kyari, had told the Ad-hoc Committee that the acquisition of OVH Energy was properly done and it gave the NNPCL over 30 per cent control of the downstream sector with a profit of N18.4 billion in the first quarter of 2023, a position which has been disputed by industry players as not backed by any documentary evidence.

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