12 December 2012

Liberia: 'Secrecy' Over Oil Deal With Kuwait

Following revelation by the Liberian government that it has signed an oil agreement with the government of Kuwait, public concerns continue to mount over the details surrounding the oil deal.

Very little is known about the oil agreement between Liberia and Kuwait. However, information about the oil deal started to surface in November when some lawmakers confided in some senior editors about the deal.

While the investigation was ongoing, the Liberia Petroleum Refining Company (LPRC) was contacted as well as relevant officials of the government to comment on the Kuwaiti oil deal. Initially, LPRC's public affairs office declined to comment and pleaded with the media to hold on until the company's Managing Director, T. Nelson Williams was briefed.

However, there was no response until last week when LPRC announced that Liberia and the Kuwaiti government have signed an oil deal.

Last week, LPRC disclosed that it had discussions with the Kuwaiti Petroleum Company (KPC) for the supply of petroleum products at concessionary price.

In a release, the management of LPRC said discussions held with the Kuwaiti followed a request made by President Ellen Johnson-Sirleaf during her last visit to Kuwait early this year.

LPRC management indicated that the request made by Liberia was based on a special commercial arrangement between the company and the Kuwaiti for the supply of petroleum products at discount price to enable LPRC bring relief in the form of fuel subsidy to the Liberia Electricity Corporation (LEC), National Transit Authority (NTA) and the John F. Kennedy Hospital (JFK), among others."

LPRC said the intention of the contract is to help these institutions reduce the high cost of fuel and pass on the savings by expanding services to larger segments of the population, including vulnerable sectors.

The company added that the deal would assist LEC in expanding power access to low income families. The NTA will pass on its savings by reduced fares to certain categories of customers including students, security personnel in uniform and the elderly.

"As this is a special bilateral commercial arrangement, only the Ministry of Foreign Affairs and the Liberian Ambassador in Kuwait are assisting the Liberia Petroleum Refining Company (LPRC) in monitoring the progress of these discussions at this time," the release said.

But lawmakers who hinted the media about the oil contract revealed that a deputy minister was part of the Liberian government delegation that negotiated the oil agreement.

The lawmakers would not remember the name of the deputy minister but assured the media that the information was cogent.

However, concerns about the Kuwaiti oil deal come in the aftermath of the ADDAX oil deal with Nigeria and Japanese oil contract.

Some Liberians are raising transparency and accountability concerns, pointing to the Addax and Japanese oil contracts. To present, the amount realized from the Nigerian and Japanese oil contract remains unknown. At the time, former LPRC Managing Director Harry Greaves said there was a "confidential" clause surrounding the Addax agreement hence he could not reveal details of the agreement to the media.

Due to the apparent shady nature of the Nigeria-Liberia oil agreement, a member of the Nigerian parliament Representative James Abiodun Faleke in 2011 called for investigation into alleged vanishing of over 1 million barrels of crude oil which Nigeria supplied Liberia in 2006.

The Daily Trust Newspaper reported on November 21,2011 that former Auditor General John S. Morlu indicted the Nigeria National Petroleum Corporation (NNPC) for reckless handling of oil shipment to Liberia in 2006 in which the Liberian Petroleum Refining Company [LPRC] was over supplied one million barrels of crude oil.

Rep. Faleke is quoted as saying that the Nigerian and Liberian Governments through the NNPC and LPRC had entered into a contract for the supply of 10,000 barrels of crude oil per day for a year to the Government of Liberia through Addax Oil Company in 2006-2007, but that Addax ended up lifting an excess of 1,002,796 barrels.

The report said there was no legally binding contract which might have provided the legal basis for Addax to lift the excess in the name of the Government of Liberia through LPRC.

According to the report, the revenue raised for the Government of Liberia through the deal was understated by US$104,991.32 while Addax overpaid fees on its crude lifting as recorded by LPRC to the tune of US$6,599.88. Against this background, a net shortfall in revenue reported was US$98,391.44.

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