July 21, 2024

NNPC or NNPCL? Time to shake up the behemoth!

Adebayo Obajemu

NNPC has transmuted into a commercial, profit-driven entity, yet it’s behaving like the old oil behemoth, a department of government it was before. What has changed? Nothing underscores this anomaly than its recent intervention to help rescue the naira from a free fall. While these interventions may seem like Mozart’s choral work- soothing and pleasing to the government’s ears, the implications are that NNPC’s metamorphosis into NNPCL is a mirage

Sad that the federal government was happy about the interventions, as it secured a $3 billion emergency crude oil repayment loan from the African Export-Import Bank to help “stabilise the naira” and help in reducing petrol prices.

Many analysts and stakeholders spoken to by EnergyDay are disturbed that the intervention is not a good omen because the posture is that NNPCL is still a government agency or department, ” and for an entity that has become a business concern, a commercial, profits- driven limited company to make such intervention on behalf of the government is like it’s playing the role of the Central Bank”, says Dr. Olufemi Omoyele, an economic commentator.

Dr. John Adeyemi, a political economist told EnergyDay that ” Tiinubu was supposed to be strong in the area of the economy, thus the NNPCL’s foray to help the administration secure 3 billion emergency crude oil repayment loan from the African Export-Import Bank to help stabilise the naira was not expected from this administration given it’s promise to make economic reforms, deepen best practices, and build a strong, virile economy. The idea of helping the Central Bank to do its job gives the impression that the oil giant is still a department of government, thus making a mincemeat of its commercial, profit- orientation as a private limited company.

Omoyele stated that what the government thought of the intervention was a temporary relief and the administration should have looked for long term national interest, initiate broad reform and let NNPCL remains within the purview of its new outing. As it’s now, oil giant is like the mythical Janus with a binary face- NNPCL behaving like NNPC.

For years, the oil giant has been accused of fiscal recklessness and lack of accountability as detailed in multiple reports by domestic and international agencies and via revelations at numerous parliamentary hearings, yet nothing has come out of it.

Thus many Nigerians including stakeholders were ready to give a benefit of doubt with the makeover last year of NNPC in line with the provisions of the Petroleum Industry Act ordering its metamorphosis from a state corporation to a limited liability enterprise.

Nigeria’s economy is in unprecedented meltdown as naira as a habit tumbles from one valley to another with reckless abandon. Last week N1400 exchanged for US$1.

More distressing , petrol prices have in the last three weeks climbed to N590-N620 per litre before receding to N570-N600/litre last week.

Poverty and widespread suffering have been the lot of many Nigerians, and these have been pervasive in the last eight months as a result of removal of subsidy on petrol amidst diminishing revenues, depleted foreign reserves, huge debt and servicing obligations, thus the Tinubu administration failed to see the big picture and narrowed on the immediate gain, the short term benefits of the intervention.

Dr Omoyele insists that the intervention was a misadventure, ” though it may look attractive and good for the government. As explained by the Presidency, the loan is a cash loan against proceeds from a limited amount of future crude oil production. It insists that the risk is very low, both for the NNPC and the treasury, and comes with no encumbering sovereign guarantees.

It’s almost a consensus among financial experts that the loan should have been contracted by the Central Bank of Nigeria, the recognised monetary authority, not the NNPC.

Far beyond the hoopla and the back and forth arguments, there’s a need for this administration to take a second look at multiple allegations of slimy rot at NNPCL.

The giant leviathan is long due for a thorough transformation beyond the scratching of the surface, cozying up to Meles Kyari either for political correctness or strategic personal reason will have long time negative implications.
The new NNPCL should stand on a tripod of decency, best practices and propensity for profit, but that can not happen unless there’s internal cleansing, else it will be like the proverbial old wine in a new bottle.

NNPC or its new nomenclature – NNPCL’ has never come clean on figures, if it has succeeded in doing anything, it’s its dexterity in total befuddlement, and in making blue black and black blue. One, no one knows the actual quantity of petrol Nigeria has been importing and for which the NNPC had been unilaterally paying itself subsidy over the years and denying the Federation Account of revenues.

Speaking with EnergyDay, Dr. Albert Ayorinde, an oil expert said ” In 2022, NNPC unabashedly made zero remittances, its alibi was that the government owed it N2.8 trillion. But the Revenue Mobilisation Allocation and Fiscal Commission said the NNPC withheld N8.4 trillion from the treasury.

” We should not forget, or gloat over a 2016 audit report which emphatically stated that the national oil company did not properly give account for crude it lifted worth N102.6 billion.
Corroborating this suspicion of sleaze and likely corruption, the Nigerian Extractive Industries Transparency Initiative 2020 report showed that N106.9 billion subsidy payments paid by the NNPC in 2020 reflected a huge deficit in accountability.

Three years ago, an audit firm, KPMG, called in question NNPC and other revenue generating agencies for grossly underpaying the Federation Account of the sum of N526 billion and $21 billion. Another audit by PwC in 2015 unearthed the reality that accounting and reconciliation systems for oil revenues by government agencies, including the NNPC, were out of date, inaccurate, and weak. PwC also found that $1.48 billion was used for unsubstantiated cost, duplicated subsidy payments and computational errors.

NNPC’s management of its four refineries is another study in perfidy and lack of accountability, as it serially made losses, producing nothing, yet, gulping billions for failed Turn Around Maintenance contracts.

Kyari himself has been called out and fingered in a couple of controversies involving high-wired alleged corruption in the national oil company, but has always been politically shielded from prying eyes .
But in recent months, the constellation of events has forced a renewed interest from several quarters of our national life especially the National Assembly.

A couple of months back, Nigerian Newspaper, ENigeria Newspaper reported the alleged involvement of Mele Kyari in the multi-billion-naira pipeline surveillance contract awarded to ex-militant, Tompolo , the various attempts by the National Assembly to dig deep into the matter hit the brick wall as nothing was heard further.

As if the series of damning report on the national oil company is endless, another report said Kyari’s NNPC was allegedly involved in another multi-billion-naira tax fraud among others as seen in the report first published by Saharareporters.

NNPC, it was reported by Sahara Reporters, was accused of stealing N20 billion allegedly paid to ghost consultants as Ogun State Government sues the firm over theft of multi-billion naira tax.

Then a staff member of Ogun state government said, “The Economic and Financial Crimes Commission is turning a blind eye to the “massive fraud going on in NNPC because most of the principal actors involved are their people.

“The present leadership of NNPC stole triple more than their predecessor because the majority of the top management is from a certain part of the country, so there is no check and balances.”

About the same time, the leadership of the Northern Youth Council of Nigeria (NYCN) charged Kyari with manipulation of fuel subsidy regime.

NYCN asked the NNPCL Group Chief Executive Officer to step aside to allow for an unfettered probe by the House of Representatives into the payment of N20 billion to a “ghost consultant”.

According to the President of NYCN, Isah Abubakar, the NNPC manipulated the fuel subsidy regime which was seen during the acute fuel scarcity that lasted over 6 months.

“During the dark period, Nigerians were buying fuel at about N400 per litre, while the Federal Government spending on subsidy was skyrocketing. Amid the excruciating fuel scarcity, NNPC said it was spending N400 billion monthly as subsidy.

“We are therefore urging the House of Representatives to probe the NNPC beyond the N20 billion contract scam. We will embark on a massive civil protest if the GCEO refuses to step aside”.

Isah further urged other civil society organisations to join his group in the struggle to “hold the NNPC accountable for its actions” adding that, “a thorough investigation into the payment of N20 billion to a ghost consultant is necessary to ensure transparency and accountability in the management of Nigeria’s oil and gas industry.”

“We are committed to ensuring that the NNPC is held accountable for its actions and that the management of Nigeria’s oil and gas industry is transparent and accountable.

“We are committed to ensuring that the NNPC is held accountable for its actions and that the management of Nigeria’s oil and gas industry is transparent and accountable.

Earlier, the Senate indicted the same NNPCL for poor record-keeping for crude oil deliveries to Warri Refinery and Petrochemical Company and Kaduna Refinery and Petrochemical Company worth $376, 655,589 (N102.6bn).

The query reads, “From the review and examination of domestic crude oil lifting sales profile presented for audit verification, it was noted that several deliveries were stated to be jointly lifted by or delivered to Warri Refinery and Petrochemical Company and Kaduna Refinery and Petrochemical Company without necessary details or breakdown of what was delivered to respective companies.

“From the examination carried out, a total oil lifting of 8,399,017bbls with a total sales value of $376,655,589 (N102.6 bn) was stated to have been lifted jointly by these two companies.”

According to the Senate, the failure to properly separate the deliveries and charge directly to each company makes it difficult to reconcile and account for each lifting.

The Senate, therefore, upheld the recommendation of its committee, asking the Group Managing Director of NNPC, Mele Kyari, to ensure specific details of crude delivered to the two refineries for audit.
It’s time to reposition NNPCL.
Is it NNPC or NNPCL? Nigeria certainly has voted for the latter through the Petroleum Industry Act, therefore any intervention on behalf of the federal government is illegal.