REVEALED: Shell raised ‘transparency’ issues over Intels’ contract

One year before the Nigerian Ports Authority terminated its pilotage agreement with Integrated Logistic Facilities & Services (Intels), Shell Petroleum Development Company (SPDC) of Nigeria recommended that agents, including Intels, should not be involved in its dealings with NPA, TheCable understands.

Until the revocation of the boat pilotage contract over alleged breach of treasury single account (TSA), Intels was one of the agencies used by NPA.

It was collecting statutory charges on behalf of the government agency. The agreement with NPA allowed Intels to receive revenue on behalf of the agency for seven years.

In a letter dated May 4, 2016, Steve Okwuosah, a business manager at Shell, wrote to the managing director of the government agency, trying to make a case for not paying charges to Intels.

Okwuosah argued that dealing with NPA directly would not only save cost but encourage transparency.

He said SPDC made payments to the Nigeria Maritime Administration and Safety Agency (NIMASA) and the Nigeria Customs Service, without going through intermediaries, making the process “more transparent, quicker, and brings significant cost savings in this low price era”.

“As you are aware, the Shell Petroleum Development Company of Nigeria Limited (SPDC) has been paying pilotage dues and other NPA statutory charges through NPA’s agent, Intels Nigeria Limited (INTELS),” read the letter seen by TheCable.

“This process is quite challenging as it is difficult to maintain clear records of payments made by SPDC through to NPA. In addition, the inclusion of such an intermediary step introduces the payment of an additional mark-up of between 13-20 % of the statutory payment to be made to NPA. This not only distorts the record of payment to NPA, but it also constitutes additional cost to SPDC.

“We wish to enquire if we can make direct payment of all NPA statutory charges to NPA’s institutional account, instead of the current practice of paying through nominated intermediaries. Should this be possible, we would appreciate you provide us with detailed information of the NPA account into which payment of such statutory charges are to be made.”

On October 27, 2016, Okwuosah wrote a follow-up letter. He requested detailed information of NPA’s institutional account into which statutory payments were to be made.

Bayo Ojulari, managing director of Shell Nigeria Exploration and Production Company Limited, also wrote to Usman on the same issue.

“The elimination of intermediaries/agents would not only ensure transparency which aligns with the drive of federal government, but will also bring about significant cost saving opportunity in this low oil price era. For example, between 2014 and 2016, SNEPCo paid over $7 million in commissions on charges to NPA agents,” he wrote.

A source said apart from the directive of Abubakar Malami, attorney-general of the federation, on the termination of agreement, Shell’s pressure also played a key role in the review of arrangement with Intels.

TheCable could not verify this claim.

Gabriele Volpi, co-founder of Intels, has apologised to the federal government over the dispute that resulted in the termination of his company’s pilotage agreement, promising that Intels will “comply with the directive of government” and transfer all the revenue collected from the boats monitoring and supervision services in Nigerian maritime waters to the TSA.