March 2, 2024

Future of NNPC Ltd. under an unaccountable management

EnergyDay Editorial

The bold moves by the National Assembly in calling into question the endemic flaws in the nation’s oil industry give a glimmer of hope that all is not lost yet, as the country wobbles on primary issues bordering on incompetence and lawlessness.

Although there are laws, rules and regulations for the country, the executive arm of government has always been found wanting to enforce those rules, particularly against the vested interests of the ‘elites”.

Therefore, the citizenry will continue to watch in perplexity and awe as the country declines on a steady slope on all fronts.

The energy sector, particularly the performance of the NNPC in terms of accountability, service delivery , value propositions and its impact on transforming the country’s economic fortunes, is a basic indicator that baffles those who are not familiar with the extent to which corruption, incompetence, religious bigotry and lawlessness have ruined the nation.

While JP Morgan-the global financial services provider-may not control the kind of influence the World Bank commands, its professional opinion is considered weighty and worth contemplating.

In the opinion of JP Morgan last week, the rating agency said that NNPC’s failure to take full advantage of the current spike in crude oil prices is a clear indication that the country’s capacity to attract investors is as good as negative.

More bluntly, JP Morgan went further to say that the NNPC has been unfaithful in remitting funds into the federation account as required by law.

This indictment touches on credibility, trustworthiness, accountability, and more simply, integrity.

The Auditor General of Nigeria informed the nation about two months ago that the Nigerian National Petroleum Corporation Limited (NNPC)Ltd , being the successor of the defunct NNPC, was unable to account for 107 million barrels of crude oil it lifted for the domestic market during the period of 2019.

In the same period, about 23 million litres of PMS valued at N7 billion supposedly delivered to two depots in the country were not actually received by any of the depots as claimed by the NNPC. This is a major indictment and the logical explanation for the incessant scarcity of petroleum products across the country.

Nigeria has been losing no less than Usd30 million every day due to underutilization of production capacity, but, only a forensic audit will reveal the total revenue income that the NNPC may have received, lost or disbursed thus far in the course of managing the country’s crude oil and gas affairs.

EnergyDay’s check re-confirmed the sad statement of The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in March of this year that the country’s average production has dropped to about 1.24 million bpd

The National Assembly last week, invited the Group Managing Director of the NNPC Ltd, Mele Kyari, to provide answers to questions on issues of funds , the direct sale of crude oil , Direct Purchase of petroleum products in swap arrangements and, more specifically, the volume of Premium Motor Spirit that the company receives in exchange for crude oil given to refiners in Europe. These are the fundamental components concerning the country’s petroleum subsidy saga.

The NNPC was blank and, at best, opaque in providing answers to questions that ordinarily should be available in the public domain.

The Nigerian National Petroleum Corporation was founded on principles that were meant to achieve economic prosperity , infrastructural development, and to secure a place of honour for the country within the international economic community.

However, from 1985 till date, the corporation has become a melting pot of corruption , abuse of office, blatant disregard for international best practice and a source of wealth for organised criminals.

These factors have created the unending turmoil in the country’s Niger Delta region and the ruthless scramble for what’s left of the country’s hydrocarbon resources.

On three consecutive occasions , the GMD of NNPC Ltd has been drilled by the country’s Lower Chamber on several issues concerning transparency, financial impropriety, and the lack of competence to effectively manage the country’s oil industry.

EnergyDay is unequivocal as we call on President Muhammadu Buhari, because he doubles as the Minister for Petroleum Resources , to rise up in courage and take charge of reversing the country’s misfortune by the following corrective steps.

We strongly suggest that the President should change the entire management composition of the Nigerian National Petroleum Company and all of its subsidiaries.

We want the NNPC Ltd and its subsidiaries to produce a comprehensive financial audit report.

We recommend that full public disclosure be made available concerning the proposed recapitalization of the NNPC Ltd.

That details of the subsidy regime (overshadowed by doubts) which will cause the country a loss of N700 billion within this financial quarter be published in terms of volume, consumption, costs, and players that are involved in the exercise , including offshore refineries and shipping companies.

Unfortunately, history will be delayed in telling the President the truth about his performance as the country’s Minister for Petroleum Resources, but in good faith, EnergyDay holds the strong view that the President could do better and should improve on his performance.