(Ecofin Agency) - Few weeks after the Nigerian National Petroleum Corporation (NNPC) annulled the crude oil delivery contract for its refineries with Ocean Marine Transport (OMT) quoting exorbitant costs and inappropriate process of engagement; it plans to retender the contract which will now be awarded on a stop-and-go basis.
As a substitute measure, NNPC engaged its subsidiary, NIDAS Marine Limited to provide crude delivery service to its refineries on a negotiated industry standard rate, awaiting the establishment of a substantive contract.
A source according to Thisday, stated that OMT and other firms, including oil multinationals, will be invited to tender for the contract, but whichever firm is appointed to deliver crude oil to the Port Harcourt and Warri refineries would do so on a stop-and-go basis, meaning the company shall only be called in to deliver crude to the plants in the event the integrity of NNPC’s crude oil pipelines have been compromised.
He explained that the approval to retender the process was given by President Muhammadu Buhari who was concerned about the exorbitant nature of the contract entered into with OMT in the past adding that the primary focus of the corporation was to effect repairs to the pipelines for the delivery of crude oil to the refineries, as this is a more cost-effective way of getting crude to the plants than the use of marine vessels.
“We have looked at the issue very carefully and come to the conclusion that it will be better for us to outsource the hire of 20 patrol boats to the navy once the crude pipelines are fixed, because if you look at the opportunity cost of losing 250,000 barrels of crude oil daily to oil thieves, it would be better to lease patrol boats to secure the pipelines and other infrastructure. This notwithstanding, with the president’s approval, we intend to invite companies to tender for the crude delivery contract to the refineries so that they are available to deliver crude oil on a stop-and-go basis, that is, on a temporary basis, in the event the pipelines are compromised,” the source said.