The Nation Newspaper

Tag: NNPC

  • NNPC sacks Group Executive Directors

    NNPC sacks Group Executive Directors

    •Directorates cut to four from eight

    All  the eight group executive directors at the Nigerian National Petroleum Corporation (NNPC) were sacked yesterday.

    Group Managing Director (GMD) Dr. Emmanuel Ibe Kachikwu also trimmed the directorates from eight to four —for efficiency.

    President Muhammadu Buhari on Tuesday named  Kachikwu  GMD to replace  Dr. Joseph Dawha.

    The President’s mandate is for  Kachikwu to, among others, review the structure of the NNPC.

    A statement by the Group General Manager, Group Public Affairs Division, Mr. Ohi Alegbe, confirmed the retirment yesterday. The  GEDs are: Mr. Bernard Otti (Finance and Accounts); Dr. Timothy Okon (Acting GED, Exploration and Production who also doubles as Coordinator Corporate Planning & Strategy); Adebayo Ibirogba (Engineering and Technology); Dr. David Ige (Gas and Power); Ms. Aisha Abdurrahman (Commercial and Investment); Dr. Dan Efebo (Corporate Services); Ian Udoh (Refining & Petrochemicals) and Dr. Attahiru Yusuf (Business Development).

    The statement added that the “the new Group Managing Director of NNPC, Dr. Ibe Kachikwu, who personally conveyed the Federal Government’s decision to the retiring Group Executive Directors, expressed gratitude to them for their services to the Corporation and wished them success in their future endeavours.”

    The new directorates and their GEDs,  which are expected to be announced today barring any last minute change, are Refining and Engineering with Dr. M.K Baru; Exploration and Production, Denis Nnamdi; Commercial and Investment, Mr. Gbenga Komolafe, Mr. Isiaka AbdulRazak, Finance.

    It is also believed that the Managing Director of the Petroleum Product Marketing Company (PPMC), Mr. Haruna Momoh, has been relieved of his job, as part of plans to implement the biggest shake up in the history of the state-owned corporation.

    But, as at press time last night, Ohi told our correspondent that the Federal Government had not made any replacements for the retired GEDs.

    He said that the retired GEDs were appointed at different times between 2012 and last year.

    On year of appointment, he said:  ”They were appointed at different times. Some were appointed last year, some in the last two years and so on.”

    The NNPC spokesman said:  “No replacement yet. We will confirm that by tomorrow (today). What they are writing online is all speculation.”

  • NNPC targets 90% output from refineries

    NNPC targets 90% output from refineries

    With the ongoing rehabilitation of the refineries, the Nigerian National Petroleum Corporation (NNPC) said it expects to step up their refining output to 90 per cent of the installed capacities on the completion of the repairs.

    NNPC’s General Manager Services, Abubakar Muhammed stated this at the ongoing four days and 38th edition of the International conference and exhibitions of the Society of Petroleum Engineers (SPE)  in Lagos, themed “Natural Gas Development and Exploitation in an Emerging Economy: Strategies, Infrastructure and Policy Framework.” He said the nation’s four refineries would be operating at 90 per cent capacity after the completion of the ongoing turn around maintenance (TAM).

    Muhammed said out of the 90 per cent production capacity, about 40 per cent would be premium motor spirit (petrol) adding that additional refineries would be expected in the long and short term to increase the country’s refining capacity and domestic consumption. He said the Federal Government was committed to the refinery project, gas development and revival of gas infrastructure.

    According to him, the nation is expectant of the passage of the Petroleum Industry Bill (PIB) that would define the future of the country’s oil, gas production and power generation. “The PIB has been in the pipeline for 15 years. We are hopeful that the present legislature will address the bill,” he said.

    He stated that crude oil theft has been a major challenge in the country, adding that the criminal act has impacted on the average sale of government’s equity crude putting the cost to NNPC/joint venture at an average of about $600 million per month. This  comes at a time when the cash call budget has remained unattainable in the last few years, he added.

    “Management of funding is our most immediate challenge and innovative financing approach is currently being developed to address the issue. Another challenge is the development of shale oil in Nigeria’s largest market, United States; this has forced Nigeria to look for alternative market in Asia. Despite these challenges we are focusing on strategic realignment of our crude oil exports to sustainable markets,” he said.

    Muhammed said crude theft and pipeline vandalism has impacted on oil production in the last four years (2010 to 2014) from 2.4 million barrels per day in 2010 to about two million barrels per day in 2014. He noted that significant production interruption is now a regular feature in Nigeria’s production profile, adding that an average of 250,000 bpd was deferred.

    “At a price of $100 per barrel, this amounts to a loss of about $9.1 billion yearly. Crude theft from January to April 2015 stood at 39.3 million barrels or $3.9 billion at an average price of $97.9 per barrels. The solution lies with setting up of a critical infrastructure task force with accountability measures, and with a continuation of enlightenment, empowerment and enforcement of anti-sabotage laws. In a bid to address the current sub-optimal performance of domestic refineries, a new rehabilitation strategy has been adopted,” he added.

    The Managing Director, Total Exploration and Production Nigeria Limited, Elizabeth Proust said Nigeria has very tremendous gas reserve, adding that about 46 trillion standard cubic feet (tcf) of the reported 179 tcf of discovered gas, is currently developed or under-developed.

    Represented by the Deputy General Manager, Mr. Ahmadu Kida, Proust said that a joint effort by all stakeholders is needed to unlock the remaining 133 tcf of gas so that we can power the industry and boost the economy. According to her, more than 1,400 megawatts of Nigeria’s total power generation is fuelled by diesel, which costs three times the current domestic gas price.

    The Managing Director Seplat Petroleum Development Company Plc, Mr. Austin Avuru stressed the need for the nation to optimally harness its huge gas resources to meet the national aspirations. According to him, Nigeria needs to start looking for more gas, dwell on full gas utilisation and undertake reserve audits. He said for the country to generate 32 gigawatts of electricity, it would require 7.3 billion standard cubic feet (bscf) of gas. He said it was time for the country to start looking for more gas for domestic and commercial values. He said the country needs more reserves of gas and crude oil.

    The Chairman of SPE Nigeria Council Mr. Emeka Ene said that oil and gas plays important role in the economy of the country. He assured that all contributions of stakeholders at the conference would be submitted to the Federal Government for assessment.

  • How NNPC should be reformed, by institute

    How NNPC should be reformed, by institute

    The Natural Resource Governance Institute, an independent, non-profit organisation, which specialises in helping people benefit from their countries’ oil, gas and mineral wealth through applied research, in a report released yesterday, details the Nigerian National Petroleum Corporation’s (NNPC’s) dismal legacy of lost revenues, inefficiency and corruption.  From its estimates over $30b, which if converted at 200 to a dollar comes to over N6tr, was lost through the NNPC under the immediate past administration

    Nigeria’s national oil company, the Nigerian National Petroleum Corporation (NNPC), sells around one million barrels of oil a day, or almost half of the country’s total production. NNPC oil was worth an estimated $41 billion in 2013, and constitutes the government’s largest revenue stream. Early in 2014, Nigeria’s central bank governor Lamido Sanusi raised an alarm that $20 billion in NNPC oil sale revenues had gone missing.

    Our report picks up this story, and offers the first in-depth, independent analysis of how NNPC sells its oil. It identifies the most pressing problems—including several largely ignored by the prior government’s response to Mr. Sanusi’s allegations—and offers  recommendations for their reform.

    NNPC’s approach to oil sales suffers from high corruption risks and fails to maximise returns for the nation. These shortcomings also characterize NNPC as a whole. Over 38 years, the corporation has neither developed its own commercial or operational capacities, nor facilitated the growth of the sector through external investment.

    Instead, it has spun a legacy of inefficiency and mismanagement. Its faults have been described by a number of scathing reports, many commissioned by government itself.

    Despite NNPC’s debilitating consumption of public revenues and performance failures, successive governments have done little to reform the company.

    We find that management of NNPC’s oil sales has worsened in recent years—and particularly since 2010.  The largest problems stem from the rising number of ad hoc, makeshift practices the corporation has introduced to work around its deeper structural problems. For instance, NNPC entered into poorly designed oil-for-product swap deals when it could no longer meet the country’s fuel needs. Similarly, it began unilaterally spending billions of dollars in crude oil revenues each year, rather than transferring them to the treasury, because NNPC’s actual budget process fails to cover operating expenses. Some of these makeshift practices began with credible goals. But over time, their operation became overly discretionary and complex, as political and patronage agendas surpassed the importance of maximizing returns.

    These poor practices come with high costs. Average prices for the country’s light sweet crude topped $110 per barrel during the boom of 2011 to 2014. Yet during that same period, as shown below, treasury receipts from oil sales fell significantly. While volumes lost to oil theft explain some of the decline, NNPC’s massive revenue withholdings and an increase in suboptimal sales arrangements are also to blame. Mismanagement of NNPC oil sales also raises commercial, reputational and legal risk for actors worldwide:  the sales involve some of the world’s largest commodity trading houses, are financed by top banks, and result in the delivery of crude to countries across the globe.

    President Muhammadu  Buhari took office in May 2015, following his election victory over an incumbent  government with a very poor record on oil sector governance.  Expectations are high that the Buhari government will tackle the problem of NNPC performance. The president and other high-level figures in his APC party have made statements to that effect.

    We recommend that the government make the most of this window of opportunity by pursuing two tracks of reform.  The first involves urgent reforms to NNPC’s management of oil sales (to “stop the bleeding”), targeting the five issues outlined below. At the same time, however, the government should also pursue a course of deeper structural reforms to NNPC (to “cure the patient”). If it does not, a new round of costly, ad hoc coping mechanisms will emerge.

    A few cross-cutting points underlie our recommendations:

    • NNPC oil sales are Nigeria’s largest revenue stream and face severe problems. Fixing them should come first in the reform queue, before revisiting upstream contracts with international oil companies.
    • Repairing oil sale governance does not require omnibus legislation like the Petroleum Industry Bill (PIB). Rather, a bold and targeted agenda with a one-to- two-year timeline better suits Nigeria’s political timetables.
    • When overhauling oil sales, the government should prioritise simplicity throughout. Current governance problems thrive on byzantine arrangements which only a handful of people understand.
    • The bad practices that undermine NNPC oil sale performance all have political interference at their root. Only sustained leadership from the very top will shift incentives towards performance and away from patronage.

    The domestic crude allocation (DCA) has become the main nexus of waste and revenue loss from NNPC oil sales.  The government allocates around 445,000 barrels per day to NNPC in so-called “domestic crude.” NNPC sells this oil to the Pipelines and Product Marketing Company (PPMC), one of its subsidiaries. PPMC is supposed to send the oil to Nigeria’s four state-owned refineries, sell the resulting petroleum products, and pay NNPC for the crude it received, and then NNPC is supposed to pay the government. In practice, the refineries only process around 100,000 barrels per day. NNPC ultimately re-routes most DCA oil into export sales or oil-for-product swaps, and payments enter separate NNPC accounts, which NNPC officials then draw upon freely.

    The DCA facilitates some of NNPC’s worst habits, and no longer serves its intended purpose. NNPC’s discretionary spending from domestic crude returns has reached runaway, unsustainable levels, averaging $6 billion a year between 2010 and 2013.

    Especially now that Nigeria faces major budgetary and savings shortfalls, unchecked off-budget spending on this scale threatens the nation’s economic health. In 2004, NNPC retained around $1.6 billion, or 27 percent of the DCA’s full assessed value. By 2012, the amount had jumped to $7.9 billion—or 42 percent of the value of the domestic oil for that year.

    The DCA revenues spent by NNPC deliver poor value for money. A large portion of NNPC’s withholdings is spent on fuel subsidy payments, which are vulnerable to misappropriation and excessive spending. KPMG for example found that in three years, NNPC paid itself roughly $6.5 billion to fund the subsidy on 15.6 billion liters of products that “apparently were not available to the Nigerian market.”

    NNPC has also spent hundreds of millions of dollars in DCA revenues on pipeline protection, but levels of theft from some crude oil pipelines have risen—in some cases by over 500 percent in a year.

    “NNPC should stop selling oil to companies, whether Nigerian or foreign, that never sell their allocations to refiners; that routinely sell to big trading companies that are already NNPC term customers; or that have ties to PEPs”

    Since 2011, NNPC has spent as much as $7.52 per barrel to transport oil to the refineries by ship under an opaque, multi-vessel arrangement (as compared with $0.03 per barrel in pipeline fees), yet refinery outputs during the period did not improve.

    Moreover, NNPC administers the DCA with few rules and weak oversight, causing chronic confusion. Debates abound on whether NNPC can legally retain DCA revenues, as seen in the controversy about whether it had permission to withhold several billion dollars annually for a kerosene subsidy that a prior government had slated for elimination.

    There is no contract between NNPC and PPMC for DCA sales, despite their huge value.

    In terms of reporting, NNPC’s explanations about where the money goes are incomplete and contradictory: past audits showed the corporation claiming hundreds of millions of dollars in duplicated or undocumented expenses—$2.07 billion in nineteen months, PwC found.

    We saw no evidence that NNPC includes the amounts actually paid by buyers of domestic crude in its reports to other government agencies.

    Controversies and competing claims, such those kicked off by Sanusi’s accusations that the treasury was “missing $20 billion,” thrive in such a context.

    Most countries adopt an explicit set of financing rules for their national oil companies. Nigeria, by contrast, allows NNPC to cobble together funds from different sources, usually outside of formal budget processes. Along with retaining billions each year in DCA oil sale revenues, NNPC withdraws funding intended for joint venture cash calls to cover unrelated expenses—off-budget spending that totaled $4.2 billion from 2009 to 2012.

    Some of NNPC’s subsidiaries also retain their revenues, or transfer them to NNPC’s central accounts. NNPC has also sourced third-party financing to cover further expenses at unknown costs to the nation. This makeshift system at once impoverishes

    NNPC and gives it far too much discretion to retain ever-growing sums. In the area of oil sales, the retention of revenues by two sets of NNPC subsidiaries raises particular concern. The first are NNPC’s five oil trading subsidiaries, headquartered mostly offshore. Originally set up to market crude and products for NNPC, after decades they function like passive middlemen, flipping the crude allocated by the corporation to experienced trading houses like Vitol or Glencore. NNPC routed 144,010 barrels per day through two offshore subsidiaries, Duke and Calson, in 2012 – oil worth $5.9 billion. Neither NNPC nor the subsidiaries themselves disclose how much they earn or how they distribute their earnings.

    The other subsidiary which warrants scrutiny is the Nigerian Petroleum Development Company (NPDC), NNPC’s main upstream division. Available records suggest that when the corporation sells oil from blocks owned by NPDC—which produced a reported 80,243 barrels per day in 2013—it does not forward the resulting proceeds to the treasury. The revenues it holds on to are substantial: in its review of the Sanusi accusations, PwC sorted through three sets of conflicting figures, and estimated total earnings from NPDC oil sales at $6.82 billion over a 19-month period in 2012 and 2013.

    NPDC does not need such large withholdings: the majority of its blocks are developed under contracts—including one service contract and several Strategic Alliance Agreements—that require private partners to cover its share of operating costs.

    NNPC has not explained how the funds it retains are spent. A case in point is offshore OML 119, a NPDC block governed by a service contract.  NNPC sold around 33,000 barrels per day of OML 119’s Okono grade crude in 2014.

    Our research found no evidence that NNPC forwarded to the treasury any revenues from sales of Okono crude between 2005 and 2014, volumes which totaled over 100 million barrels with an estimated value of $12.3 billion. In other words, the corporation has provided no public accounting of how it used a decade’s worth of revenues from an entire stream of the country’s oil production.

    The government should develop a new, legally mandated mechanism for funding NNPC operations. A successful financing model would be established in law and resolve the conflict between the country’s constitution and the NNPC Act concerning revenue withholdings; create a binding budgetary process for NNPC with adequate checks and balances; and place strict limits on extra-budgetary spending. Clear rules on revenue retention by subsidiaries are also needed.

    Currently, NNPC routes around 210,000 barrels per day, or one-tenth of the country’s  entire production, through deals with unacceptably high governance risks. Seven swap deals have been signed since 2010.

    Currently, NNPC operates two 90,000-barrel-per-day OPAs. We find that this type of deal is less suitable for Nigeria than its alternative, the RPEA. An OPA’s higher complexity makes it more opaque—and more open to abuse. Whether Nigeria receives good value depends on many technical factors that are difficult to negotiate and monitor. OPAs supply a wide slate of products when NNPC only requires two, gasoline and kerosene.  Also, the structure of the OPAs, which envisions the oil being refined by a particular refinery, does not align with their actual operations. Moreover, our analysis of two OPA contracts, the 2010 deal with SIR/Sahara and the 2015 deal with Aiteo, reveals a number of underspecified, unbalanced provisions. We estimate Nigeria may have lost up to $381 million in a single year of operations (or $16.09 per barrel), if just three of the inappropriate provisions were fully exploited. RPEAs better suit Nigeria’s needs: traders that hold RPEAs deliver specified products that equal the value of the crude they receive, minus agreed fees and expenses.

    Nigeria will likely continue using oil-for-product swap agreements until its debts to fuel importers are brought under control or it solves its refining woes. During this period, NNPC should improve the structure and execution of the swaps. Specifically, NNPC should close out the OPAs with Sahara and Aiteo as soon as possible, and should not sign any more OPAs. RPEAs should be used for future swap deals. However, to obtain fair returns for Nigerian citizens, NNPC should award the RPEAs through competitive tenders to capable companies; and ensure that the RPEAs contain certain updated terms—particularly on fuel pricing—and that they contain stronger reporting and oversight requirements. Annex B details these recommendations.

    Critically, traders holding NNPC-PPMC swap contracts deliver fuel into the existing supply chain for Nigerian fuel imports. As the 2012 fuel subsidy scandal revealed, the complexity of the supply chain serves a number of entrenched, lucrative rackets around shipping, distribution and sales of fuel. These include smuggling, selling locally refined products back to NNPC at import prices, over-charging for deliveries, and outright theft.

    The 2012 fuel subsidy investigations focused mainly on the mismanagement of standard import contracts, but we find that swap imports carry many similar risks.

    Unless the worst rackets around fuel imports are eradicated, the swaps will hemorrhage considerable amounts of fuel and money no matter how they are structured.

    The marketplace for NNPC crude is uncommonly crowded with intermediaries. By our count, Nigeria is the world’s only major oil producer (i.e., with average outputs of well over 1 million barrels per day) that sells almost all of its crude to middlemen, rather than end-users (with the exception of highly unstable countries like Libya). Over 90 percent of the barrels NNPC allocated in 2014 went to trading companies rather than end-users.

    The names on NNPC’s lists of approved buyers, numbering 43 in 2014, include a small group of large, experienced Nigerian and foreign commodity traders and many low-profile, inexperienced “briefcase companies.” This latter group poses especially high governance risks. For instance, some reportedly help buyers of the oil to avoid taxes and channel payments to politically exposed persons (PEPs). Involving middlemen who serve no commercial function creates a marketplace with greater commercial, reputational and legal risks for its legitimate participants, which include some of the world’s leading trading houses, banks and refiners. Past NNPC oil sales to the governments of Zambia and South Africa are good examples: in both, NNPC sold to intermediaries that lacked basic capacities, which led to corruption scandals in those countries.

    Going forward, NNPC should stop selling oil to companies, whether Nigerian or foreign, that never sell their allocations to refiners; that routinely sell to big trading companies that are already NNPC term customers; or that have ties to PEPs.  To further protect against favouritism, patronage and inappropriate payments, NNPC should grant its next round of term contracts through openly competitive and rule-bound procedures that include a strict pre-qualification process, robust due diligence checks, and restrictions on the use of offshore vehicles by buyers. The corporation should also publish written rules for parceling out cargoes each month to buyers and stop allocating export contracts for more crude than it has to export. This will help end the monthly jockeying for allocations that occurs now, which is highly prone to corruption. Over the medium term, NNPC should rework its buyer selection process to secure more reliable global demand for Nigerian crude, and to sell more oil directly to refineries.

    NNPC’s management has a history of resisting outside scrutiny. The corporation discloses very little about its finances and operations, even though more than half of public revenues flow through it. Officials from other government bodies say they cannot independently verify or challenge the oil sale figures provided by NNPC.

    Past reviews described NNPC’s internal oil sale data management practices as disorganised, secretive and inaccurate. For example, one government task force found two separate sets of oil sale books that diverged at times by more than $100 million per year.

    Corporation officials have faced few consequences for mismanagement—at most, they tend to be retired or transferred to other posts.

    Reforms in several areas can help reverse this trend. To reduce perceptions of impunity, the government should commission independent performance audits of areas of concern, including: the DCA; oil-for-product swaps; NPDC oil sales and related operations; NNPC’s oil trading subsidiaries; the refinery crude oil transport arrangement; and the JV cash call account.

    Transparency and accountability must also advance. The government should require NNPC to regularly disclose detailed and prompt cargo-by-cargo data on all its crude oil liftings, and issue a 2015 annual report that includes its audited financial statements, operational data, the financial positions and earnings of its subsidiaries, and disclosures on quasi-fiscal spending.  Independent audits should occur regularly, and NNPC should publish the resulting reports. Moreover, we recommend that NNPC establish clear work programs and performance benchmarks, so that oversight actors like the National

    Assembly, auditor-general, and others can then assess whether those benchmarks are regularly met. The NNPC board should meet regularly, include independent members, and have a chair other than the petroleum minister.

    Solving Nnpc’s

    Underlying Problems

    As we argued at the outset, maximizing full returns from NNPC oil sales will depend on pursuing two trajectories of reform – the measures described above, and a broader agenda of NNPC restructuring. Without the latter, the Buhari government will end up relying on a range of stop-gap measures, and NNPC’s performance will plateau at best.

    The high oil prices of the early 2000s allowed NNPC to “muddle through,” as extra cash flows masked the inadequacies of its various short-term workarounds. Now that this luxury has ended, the Nigerian government should revise the NNPC joint venture cash call system; eliminate the fuel subsidy; remove NNPC as a commercial player from the downstream sector; tackle crude oil theft; and develop and implement a road map for restructuring and commercializing NNPC. The final section of the main report offers deeper analysis and recommendations on each of these points.

    Nigeria can no longer afford to leave NNPC’s dysfunctional and costly oil sales system as it is. The status quo, characterized by convoluted, under-policed deals with weak commercial justifications, has cost Nigeria revenues that it needs for its development priorities.

    The reforms recommended in this report would significantly increase the returns to the Nigerian government from the sale of its crude oil, even at today’s lower prices. More broadly, improved oil sale functions would help create a solid foundation for remaking NNPC into a company that serves Nigeria’s citizens, rather than the interests of a privileged few.

     

  • Buhari picks Kachikwu as new NNPC chief

    Buhari picks Kachikwu as new NNPC chief

    … Appoints new Executive Vice Chairman for NCC

    President Muhammadu Buhari has appointed Dr. Emmanuel Ibe Kachikwu as the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC).

    Dr. Kachikwu, who was the Executive Vice Chairman and General Counsel of Exxon-Mobil (Africa), will take over from Dr. Joseph Thlama Dawha.

    Dr. Kachikwu, according to a statement issued by the Special Adviser on Media and Publicity to the President, Femi Adesina, hails from Onicha-Ugbo in Delta State.

    The statement reads: “He is a First Class Graduate of Law from the University of Nigeria, Nsukka and the Nigerian Law School.

    “The new NNPC Chief Executive also has Masters and Doctorate Degrees in Law from the Harvard Law School.

    “He started his working career with the Nigerian/American Merchant Bank before moving on to Texaco Nigeria Limited from where he joined Exxon-Mobil.

    President Buhari has also approved the appointment of Prof. Umaru Garba Danbatta as the new Executive Vice Chairman and Chief Executive of the Nigerian Communications Commission (NCC).

    “Prof. Danbatta, who holds a Doctorate Degree in Electronic Engineering, takes over from Dr. Eugene Juwah whose tenure expired on July 29.

    “The new NCC Chief Executive’s other academic qualifications include a Bachelors Degree in Electronic Engineering and Telecommunications as well as a Masters Degree in the same field.

    “He is a Fellow of the Nigerian Society of Engineers and has had a meritorious career in which he rose to become Professor of Electrical Engineering and Electronics at Bayero University, Kano, specializing in Telecommunications Engineering and Information and Communications Technology.

    “Before his new appointment, Prof. Danbatta held top management and leadership positions at different times including Head of Department, Dean Of Faculty, Director, Centre for Information Technology, Chairman of the Nigerian Society of Engineers (Kano Branch), Deputy Vice Chancellor and Acting Vice Chancellor,” the statement added.

     

  • Buhari should overhaul NNPC oil sales – Report

    Buhari should overhaul NNPC oil sales – Report

    President Muhammadu Buhari should overhaul how the government sells its share of the Nigerian National Petroleum Corporation crude oil output to save billions of dollars in wasted and lost revenues, a report by an international governance watchdog said on Tuesday.

    About half of Nigeria’s two million barrel per day (bpd) crude output goes to NNPC, the state-owned oil company, while the corporation sells half that oil to its subsidiary Pipelines and Product Marketing Company for the country’s refineries, Reuters says.

    The poorly maintained plants are however unable to process the bulk of the oil and over the years this allocation has devolved into a “nexus of waste and revenue loss,” according to the report by Natural Resource Governance Institutes (NRGI), a non-profit organisation.

    The other half of NNPC’s oil share is mostly sold to “unqualified intermediaries,” earning significant margins for little or no added value, rather than directly to the end-users, NRGI said.

    A spokesman for NNPC declined to comment on the report.

    Reducing losses in crude oil sales has become even more crucial with the slump in global oil prices that has crushed Nigeria’s currency and forced the government to borrow just to cover salaries. Oil sales account for about 70 percent of government revenues.

    Buhari won the end-March election in large part to his tough stance on corruption that is rife in Africa’s biggest oil producer.

    Since his May inauguration, the President has revealed little about how he will restructure Nigeria’s oil industry but he is bent on recovering “mind-boggling” sums of stolen oil money.

    The mismanagement and corruption surrounding NNPC’s sales lie at the heart of the problem and former Central Bank governor Lamido Sanusi was sacked after pointing out that $20 billion had not been remitted between January 2012 and July 2013.

    Constitutionally, NNPC is meant to remit all revenues to the country’s treasury but the act establishing the state firm allows it to keep what it needs to cover costs with little oversight.

    The result is a legal grey area that has been open for abuse for decades.

  • NNPC, others get deadline on queries

    NNPC, others get deadline on queries

    President Muhammadu Buhari has directed all Ministries, Departments  and  Agencies (MDAS) to respond to all outstanding queries within 30 days or face sanctions.

    The development has created anxiety in more than 50 MDAs, including Nigerian National Petroleum Corporation, Department of Petroleum Resources and the Petroleum Products Pricing Regulatory Agency (PPPRA) – all indicted in the 2012 Auditor-General’s Report.

    The report questioned the deduction of N2,308,749,174,308.54 Excess Crude Oil/PPT/Royalty from oil and gas revenue before the balance was paid into the Federation Account.

    The Office of the Auditor-General was finalising the compilation of 2013 Report.

    Worried by the refusal to answer audit queries , Buhari threatened to wield the big stick.

     He also directed that henceforth, all audit queries must be answered within 24 hours.

    A statement by the Senior Special Assistant on Media and Publicity  to the President, Mallam Garba Shehu, said Buhari was irrevocably committed  to tackling administrative and bureaucratic corruption.

    The statement said: “President Muhammadu Buhari has directed the Auditor-General of the Federation to ensure that all outstanding audit queries are conclusively resolved within 30 days.

    “President Buhari has also ordered that henceforth, all audit queries must be answered within 24 hours.

    “The orders followed the President’s displeasure on hearing that audit queries  remained unanswered for long periods, sometimes running into years, under previous administrations.”

    Shehu said those who violate financial regulations will henceforth pay a heavy price.

    He said: “The era of impunity is gone. The President is taking the war on corruption to the civil service. He is not happy that standard operating procedures and financial regulations  are no longer being observed as they should.

    “President Buhari will ensure that public officials and civil servants in the service of the Federal Government pay a heavy price from now on for violating financial regulations or disregarding audit queries.”

    He added that the President was determined to “put an end to the present situation in which, rather than respond to legitimate audit queries, violators of financial regulations in government resort to threatening, bribing or mounting other forms of social pressure on auditors.

    “On his watch, President Buhari wants to see firm action against those who violate extant financial regulations, not the prevarications and shenanigans that went on in the past in the form of endless probes and public inquiries.”

    Some of those with outstanding queries in 2012 AGF Report are:

    *NNPC -(1) Deduction of N2,308,749,174,308.54 Excess Crude Oil/PPT/Royalty from oil and gas revenue before the balance was paid into the Federation Account.

     (2) Failure to  remit revenue from domestic crude oil sales totaling N936,027,634,479.81 as well as $998,881.77 interest earned on the Joint Venture Cash Calls in 2012

    *DPR——(a)  N377,264, 685, 789.54 questionable deductions  in favour of Department of Petroleum Resources (DPR).

    (b) $706,880,265.22 unpaid by 21 oil companies as royalties on oil.

    *The Federal Inland Revenue Service (FIRS) got N1, 454,035, 989,899.78.

    *PPPRA——Payment of N229,740,438,597.27  as subsidy

    *Office of the AGF———To explain the difference of N41,856,530,921.54 as well as pay back total sum of N1,901,213,713,587.07 into the Federation Account.

    The Nation had exclusively reported some of the outstanding queries from the Auditor-General of the Federation in connection with NNPC and some of its subsidiaries.

    The 2012 Auditor-General of the Federation (AGF)  report questioned the deduction of N2,308,749,174,308.54 Excess Crude Oil/PPT/Royalty  from oil and gas revenue before the balance was paid into the Federation Account.

    The query came on the heels of the inability of the Auditor-General to obtain a legal authority for the creation of the Excess Crude Oil/PPT/ Royalty Account.

    Of the deductions,  N477,448, 498,6 19.22 was drawn in favour of the Nigerian National Petroleum Corporation (NNPC) and N377,264, 685, 789.54  in favour of the Department of Petroleum Resources (DPR). The Federal Inland Revenue Service (FIRS) got N1, 454,035, 989,899.78.

    The report also discovered payment of various sums of interests to the Federal Government’s excess proceeds of PPT/Royalty  Account  accruing  from fixed term deposits that could not be established.

    It was also reported that $219,247,398 .77 was credited to the FGN Excess Proceeds Crude oil sales account and $443,844,581.47 was credited to PPT/Royalty Account as interest on fixed term deposits.

    “In addition, $221,219.79 was credited to the FGN Excess Proceeds of crude oil sales account; $453,803.13 was credited to PPT/Royalty Account as interest on ordinary deposits.

    “However it was noted in the report that ‘the authority for placing the funds’ which yielded the above interests in deposit account was not made available as requested.

    “The banks where the deposits were made, principal sums deposited, tenor and rate were also not made available for audit verification as requested.

    “During the examination of the statements of the Bank for International Settlement Account of FGN Excess Proceeds of PPT/Royalty Account, the AGF also observed that ‘an amount of $500m was debited into the account on the 29th August 2012 and described as interest on fixed term deposit’.

    “The Accountant General of the Federation, in the report, was queried to explain the difference of N41,856,530,921.54 as well as pay back N1,901,213,713,587.07 into the Federation Account, out of which N1,132,619,890,792.96 is for joint venture cash calls (JVCs); N260b is for petroleum subsidy; N477,448,498,619.22 is for excess crude sale and N31,145,324,174.89 under remittance of revenue deducted at source by NNPC from the revenue proceeds in accordance with Section 162(1) of the 1999 Constitution.”

    A Presidency source said: “By this directive, President Muhammadu Buhari is only asserting the  roles of the Auditor-General of the Federation as enshrined in the 1999 Constitution.

    “You can see that we have suffered a systemic collapse over the years. When Buhari said he inherited rot, some Nigerians thought he was crying wolf.  In fact, since 1999,  MDAs have been treating AGF queries with disdain.”

    Section 85 (4-6) of the constitution states: “(4) The Auditor-General shall have power to conduct checks of all government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly.

    “(5) The Auditor-General shall, within 90 days of receipt of the Accountant-General‘s financial statement, submit his reports under this section to each House of the National Assembly and each House shall cause the reports to be considered by a committee of the House of the National Assembly responsible for public accounts.

    “(6) In the exercise of his functions under this Constitution, the Auditor-General shall not be subject to the direction or control of any other authority or person.”

  • NNPC probe: What mother tick told its children

    According to a certain African folklore, mother tick, the wizened matriarch of the blood-sucking specie of mites is said to have told her little ones to always stay calm and take cover each time humans begin to act up and begin to switch on the heat.

    “Stay quiet and lie low my children,” mother tick would admonish her fledgling parasites in hushed tone, “whatever is heated up would eventually grow cold.”

    Could this be the unfolding scenario in Nigeria today? Is the new All Progressives Congress (APC) government losing the momentum that brought it to office or is it actually planning diligently to unleash the real transformation?

    Apart from the fact that 30 days after inauguration, the President’s core backroom team (chief of staff and all the secretaries) is not yet in place and running, people fear there may be some disorientation when they eventually come on board.

    The civil servants may just get used to reporting directly to number one to the detriment of the appointees. This will mean that there may be so much bad blood that crucial tasks requiring urgent action may be jeopardised.

    One notable example is the ongoing attempt to probe the Nigerian National Petroleum Corporation (NNPC). After the inauguration of the National Economic Council (NEC) last Monday, President Muhammadu Buhari set up a four-member committee to probe an alleged misappropriation of about N3.5 trillion by the NNPC and another N2 trillion from the Excess Crude Account (ECA).

    The panel comprises the governors of Edo (Adam Oshiomhole), Gombe (Ibrahim Dankwanbo), Kaduna (Nasir el-Rufai) and Akwa-Ibom, (Emmanuel Udom).

    NEC is a conclave of all the governors of the land and the president; it meets every month to deliberate on broad national issues. Now the matter of NNPC is crucial being Nigeria’s most strategic asset and again, being at the core of the unbridled corruption that ravaged the country in the last few years. Flashing a searchlight on this body is neither an ad-hoc affair nor a matter for busy governors.

    NNPC is Nigeria’s putrid honey pot. It requires a truly forensic audit of its affairs in the last five to 10 years. There is need to ascertain the true picture and completely revamp and upgrade its processes. There is need for even a forensic review of an earlier forensic audit by a certain accounting firm. NNPC is the heart and soul of the nation; it is an elaborate enigma, a jigsaw puzzle that would solve most of Nigeria’s problems if handled right.

    This is why Hardball is worried that after 30 days of the CHANGE administration and after all we know about this bastion of corruption, we can only come up with this kind of committee. If we mismanage the NNPC affair, it means that we are not gonna  get much else right. With this excited crowd of panelists to probe NNPC, the blood-suckers, like mother tick, would take one look and chuckle to themselves: “We thought these fellows were serious!”

  • NNPC: The final days of a behemoth

    NNPC: The final days of a behemoth

    The national oil company, the Nigerian National Petroleum Corporation (NNPC) is currently in the eye of the storm, what with the orchestrated calls for the outright scrapping of the public corporation considered a behemoth that has remained a drainpipe on the economy thus far. In his report Ibrahim Apekhade Yusuf examines the issues

    To say that the corporate existence of the Nigerian National Petroleum Corporation (NNPC) is under severe threat is an understatement. Truth is, the over 38 years old corporation, which has had a rather chequered existence thus far and literally surviving on a life-support machine may well be on its way out for good if the President Muhammadu Buhari administration has its way.

    Of course, the reason for this decision may not be far to seek, chief among which borders on the growing level of malfeasance associated with the national oil company over the years by successive governments.

    But how did NNPC, established on April 1, 1977 as a merger of the Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel, came to this sorry past? A short anecdote will suffice.

    The unraveling of NNPC

    It is anybody’s guess why the NNPC remains the subject of public interest anytime, any day.

    Although not much was known about its methods and processes due largely to high bureaucracy, the first attempt at unraveling the corporation began few years ago when the Nigeria Extractive Industries Transparency Initiative, NEITI had revealed that the management of NNPC ran a largely opaque organisation whose guided secret was kept by a few men in the corridors of power.

    A Pandora’s Box

    The first indication that all was not well with the NNPC was made public by the Nuhu Ribadu-led Petroleum Revenue Special Task Force in 2012.

    The Ribadu panel detailed how the Nigerian government and national oil company, NNPC, treat huge oil revenues accruing to the federation as a reserve of money that could be used for illicit purposes without accountability.

    In its 178-page report, the committee had revealed how oil money in the custody of the NNPC was spent on extra-budgetary purposes such as the acquisition of a N2.23billion chopper for the president and a purported sponsorship of the World Cup.

    The NNPC, the committed revealed, also gave out N700.5million in loan to Sao Tome & Principe based on instruction from the presidency. It also made a curious payment of N2.421billion to a foreign company, Royal Swaziland Sugar Company. The reason for the payment is unclear.

    The corporation also claimed to have underwritten a N521million expenses incurred by the Federal Ministry of Petroleum Resources. This is in addition to the N250million the agency told the committee it spent on court cases involving the ministry.

    The ministry has its own budgetary allocation and it is unclear why the NNPC is paying for its expenses. The nature of some of the expenses are also unclear.

    The committee also found that the NNPC was being used as illegal lender to presidential committees, ministries and parastatals. For instance the corporation claimed it incurred about N20billion on the Presidential Implementation Committee on Maritime Safety and Security, based on instruction from the presidency.

    The Ribadu committee also disclosed that about $1billion in signature bonuses, discrepancies in payment by the NNPC, and debts from oil companies were unaccounted for by the NNPC and the Department of Petroleum Resources.

    The allegation came weeks after the then Central Bank Governor, Sanusi Lamido, blew a whistle on the NNPC, accusing it of diverting not less than $20billion of oil revenue.

    Expectedly, in its quest to unravel these mounting allegations, the federal government had sought a audit of the NNPC accounts but the outcome was only made public at the end of twilight of the then President Goodluck Jonathan’s administration.

    Naturally since his assumption of office, President Buhari, himself a former Minister of Petroleum, has met the top hierarchy of NNPC management and the Ministry of Petroleum Resources to express his concern over the huge impact of crude oil theft on the country’s economy.

    NNPC’s swansong

    Apparently worried by the corruption that has bedevilled the NNPC, Kaduna State Governor, Malam Nasir el-Rufai, had a fortnight ago called for the scrapping of the corporation as a panacea for putting the country’s oil sector in good stead.

    Delivering a lecture: “Nigeria and the Oil fortune” at the 2015 Wole Soyinka Centre’s Annual Media Lecture, in Abuja, El-Rufai said: “We need a mix of fresh strategic thinking and a firm commitment to reform. We need to define exactly what we want the oil industry to be and to achieve, and then define the structure that can best deliver it.”

    According to him, “An efficient and productive oil sector, able to create jobs, spur industrialisation and earn more revenues requires that we tackle the monster that the NNPC has become.

    “This country can no longer afford to maintain an NNPC that arrogantly, unlawfully and unconstitutionally spends an unhealthy proportion of national oil earnings on itself.

    “We should replace the NNPC with brand new organisations that are fit for purpose, among others, a commercialised and corporatised national oil company and new industry regulators. This new national oil company should be capitalised once and for all, and then freed to fend for itself like other national oil companies do, seeking its financing independently from the financial markets and paying due taxes and royalties.

    “The corruption and nonchalance that have hobbled the NNPC are symptoms that its best days are over. We should give it a deserved funeral so that a new institution, active and nimble, can promptly replace it. NNPC’s subsidiaries and associated companies can be reviewed, restructured and privatised or commercialised as appropriate consistent with national interest and objectives.”

    The governor noted that, “The long and short of the situation of our oil industry is best exemplified by the parallel government called the NNPC. In 2012, it sold N2.77 trillion of ‘domestic’ crude oil but paid only N1.66 trillion to the Federation Account. In 2013, it earned N2.66 trillion but paid N1.56 trillion to FAAC; in 2014, N2.64 trillion (was earned) but remitted N1.44 trillion, while between January and May 2015, it earned N733.36 billion and remitted only N473.2 billion! That means that the NNPC only remitted about 58% of the monies earned between 2012 and the first half of 2015. A company with the audacity to retain 42% of a country’s money has become a veritable parallel republic.”

    On the way forward, the governor said, “Government should review the Joint Venture strategy, with the governing principle being to shift the financing and operational risks to the markets and operators respectively. Government should avoid owing the oil companies, and should more proactively review the terms and implementation of the Production Sharing Contracts (PSCs) and concentrate on collecting the royalties and taxes due to it.

    “No one is better qualified to do this than the person that birthed the NNPC through the merger of the NNOC and the Ministry of Petroleum in 1977  President Buhari himself. No one can appreciate the gap between the vision of NNPC’s founding fathers, the beautiful baby of 1977 and the 38-year-old monster it has become better than President Buhari. The NNPC of today must make Chief Sunday Awoniyi of blessed memory squirm in his grave. Something fundamentally decisive must be done to tame this monster.

    “We must have the political will to make all oil industry transactions transparent. There should be clear rules and processes for licensing, concessioning, procurement and contracting. Opaque systems tend to be corrupt, and it is time to shine the light.

    “The president has already taken the commendable step of directing that all revenues be remitted either to the Federation Account or the consolidated revenue fund as required by sections 80 and 162 of the Constitution. President Buhari is, therefore, clear that oil industry revenues will no longer be treated as some slush fund of the Federal Government.

    “It is the national consensus that we arrive at regarding the oil sector that we can finally codify in a new petroleum act, which should be a simply worded, concise piece of legislation that spells out the general governing principles for the industry. Specific matters can then be based on subsidiary legislation, regulations and agreements. Complex and densely worded laws conduce to opacity and should therefore be avoided.”

    Meanwhile, the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Hajiya Zainab Shamsuna Ahmed, had last Wednesday handed over the dossier on the sharp practices in the Corporation to El-Rufai at the Government House in Kaduna.

    El-Rufai is one of the four governors appointed by National Economic Council (NEC) to investigate the management of the accounts of the NNPC and the Excess Crude Account (ECA) by the administration of former President Goodluck Jonathan.

    The committee of four has a mandate to unravel the whereabouts of the N3.8 trillion not remitted to the Federation Account by the NNPC between 2012 and May  as well as the $2.1bn said to have been deducted from the ECA without proper authorisation by the Federal Accounts Allocation Committee (FAAC).

    In her presentation on how billions of dollars of oil revenue not remitted to the Federation Account by the NNPC, the NEITI chief said about 160 million barrels of oil, valued at $13.7 billion, were stolen between 2009 and 2012.

    Calling on the Federal Government to privatise the nation’s refineries, Hajiya Ahmed said there was no proof that the $11.631 billion subsidy payment captured from 2005  2012, was remitted into the Federation Account by the Corporation.

    Hajiya Ahmed said: “Crude product swap of $866m was lost from 2009 to 2011 and $82.43m in 2012. Total amount expended on subsidy payment from 2005 to 2012 as captured, $11.631m have been paid to the NNPC. However, there is no evidence this amount was remitted to the Federation Account.”

    Divergent views

    Expectedly, the El-Rufai’s argument for the scrapping of the NNPC did not resonate with a lot of people.

    Specifically, oil workers, under the umbrella of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), said it was clearly opposed to the scrapping of the corporation.

    Speaking on behalf of the group, its scribe, PENGASSAN, Lumumba Okugbawa, said that instead of “kill the NNPC,” the body should be insulated from undue political interference that often distract it.

    Okugbawa noted that corruption issue in the NNPC mentioned by El-Rufai is a problem hindering Nigeria’s growth and development in the oil and gas sector as a whole, adding, that the gov­ernment should deal with the corruption in the system but not to ‘throw away the baby with the bath water.’

    He said that NNPC, cre­ated by an Act of Parliament in 1977 and made up of the holding office, subsidiaries and service units, had been subjected to undue political interference, which hinders its autonomy for effective running and competitiveness in the past six years, noting that, that should not be a yardstick for the scrapping of the corporation as demanded by the governor.

    He said, “If you look at the NNPC as it is today, it has been politicised, with most of its decisions and operations being influenced with political motives and at times, executive fiat. The corporation is so much tied to the apron of the political office holders but not the technocrats that are at the helm of its affairs,” PENGASSAN said.

    Some of the areas of interference listed by Okugbawa include; appointment and removal of the Group Managing Director (GMD), Group Executive Directors (GED) and Managing Directors of NNPC subsidiaries at the whims and caprices of the President, and limited financial autonomy for its operations.

    The unionist said, “NNPC should be a national oil corporation that can compete globally like Saudi Aramco of Saudi Arabia, Petronas of Malaysia, Petrobras of Brazil and Statoil of Norway, among others, given the opportunities and market potentials.

    “If we take a look at NNPC contemporaries in the world, such as Saudi Aramco, Petrobras, Petronas and Statoil, we will notice that their holding governments give those companies freedom to grow and expansion of the companies to the great benefits of the citizenry and their respective governments.

    “Operations and administration of NNPC comes under several masters and conflicting instructions, some of which defy the national objectives and aspirations for setting up the national oil corporation and its subsidiaries,” the union argued.

    Other stakeholders in the petroleum industry admonished the Buhari administration to ensure continued existence of the NNPC, just as they canvassed structural reform for the oil giant.

    In a statement signed by the Centre for Petroleum Information (CPI) in Lagos, it said NNPC holds great prospects for development of the nation’s oil sector.

    The forum’s Chairman, Chamberlain Oyibo, and the Executive Director of CPI, Victor Eromosele, who spoke at a public forum, said “Nigeria will always need a national oil company, by whatever name, to achieve desired goals of the government for the oil industry.”

    While making a case for the diversification of NNPC, Oyibo said other national oil companies like Statoil of Norway, operate on higher profile by engaging in activities in 25 countries, while Petronas of Malaysia operates in 34 countries, but NNPC operating only in one country (Nigeria).

    According to the CPI, for NNPC to operate as a commercial entity and run like other national oil companies as an accountable, commercial entity,  it must be given the freedom to operate and without the undue constraint imposed by remote influence. “NNPC can be efficient and can create substantial value, currently lost.”

    According to the forum, if the dearth in investment in recent years in Nigeria’s petroleum industry, reflected in declining production and static hydrocarbon reserves, is to be reversed, some form of industry-wide restructuring is imperative.

    High turnover of GMDs

    Besides government interference, it is instructive to note that between 2009 and now, there have been five GMDs for NNPC, namely, Dr. Moham­med Barkindo (2009-2010); the late Alhaji Shehu Ladan (April-May 2010); Austen Oniwon (2010-2012); Andrew Yakubu (2012-2014) and Dr. Joseph Dawha (Aug 2014 till date).”

    Commenting on the turnover of CEOs, Mr. Odein Ajumogobia, former Minister of State for Petroleum, disclosed that Nigeria’s petroleum policies have always been incoherent, due to the constant change of key officials, in the NNPC and the Department of Petroleum Resources, DPR.

    According to him, this instability brought about by the constant changes of key officials is not a recipe for coherent policy making.

    He said, “Petroleum policy is not always entirely coherent due in part to the frequent change of important officials. Since NNPC was created 38 years ago, we have had 16 Group Managing Directors (GMD). In 30 years, from 1977 to 2007, there were nine, average of one every three years.”

    In the view of Chief Amakiri Mike, a public affairs commentator, although the Buhari-led government had not publicly announced the decision to scrap the NNPC, the possibilities exists.

    According to him: “Given the fact that NNPC became the poster boy of anything goes, it is just as well that a structural change is effected on that agency.”

    “I heard a statement by El-Rufai that it is only in Nigeria that one company can bankrupt a whole nation. That’s NNPC. And if that’s the truth, then it means Nigeria has a big problem. So there must be a major overhaul of that body. We cannot continue to condone a situation where a few individuals will continue to hold the rest of over 170 million Nigerians to ransom,” Amakiri said.

    NNPC, he observed, “should be in the level of companies like Petrobras or Petrolas. That was the concept of NNPC. How can a corporation alone spend more than the national budget? Something is definitely wrong somewhere. But we thank God that we have a president who has come on board who is so diligent and incorruptible and his intention is to clean up the mess created by the culture of corruption and we as Nigerians need to give him our total support to help him achieve that goal.”

    As the argument for the scrapping of the good old NNPC goes back and forth, the public waits in bathed breathe what the final decision of the Buhari-led administration would be. NNPC to be or not to be, that is the question.

  • The NNPC, missing funds and subsidy debacle

    These are certainly not the best of times for the Nigerian National Petroleum Corporation (NNPC). From allegations of non-remittance of oil revenue to those of operating above the laws of the land and constituting itself as a parallel government to the Federal Government, the anti-NNPC sentiments have come full-cycle and assumed the dimension of a mob action with the recent call by Governor Nasir El-Rufai of Kaduna State to “kill NNPC”.

    As is usually the case in every mob situation, objectivity and truth have been sacrificed even by those who have been given the assignment to investigate allegations of financial malfeasance against the Corporation by the National Economic Council. But try as we may to deny the reality of the financial situation that is upon our country by engaging in a mob action against NNPC or any other institutions or personalities, the truth is that the days of oil boom are over (at least for now) and the earlier Nigerians wake up to that reality with a view to taking responsibility to diversify the economy and develop alternative revenue sources for the country, the better for us all.

    It is a known fact that since the last quarter of 2014 the price of crude oil, the major export and revenue earner for the country, has been falling. From about $95 per barrel in September 2014, it dropped to about $85 (a difference of $10) in October that same year. This trend has been sustained over this period with the unfortunate consequence of dwindling oil revenue flow into the nation’s coffers for onward distribution to the Federal, states and local governments as has been the culture. But rather than look for creative ways of shoring up national revenues in the face of dwindling oil prices, all that we have seen so far is the demonization of the revenue generating agency for the oil sector, the NNPC.

    This is not a defense for the national oil corporation that has been hobbled by years of government interference and scandals. It is rather a call for a barefaced and critical look at the situation on ground with a view to averting the calamity the nation is certain to fall into if we choose to continue on the path of trading blames instead of rolling up our sleeves to work to build a prosperous nation. This work should include, of course, recovering every penny misappropriated by NNPC or any other institution or personality and meting out appropriate sanction on them to serve as deterrent. It should not be restricted to the NNPC.

    This is because, at the end of the day, it would be discovered that much of the so-called unremitted or missing oil revenue for which the Corporation is being pilloried emanated from the federal government policy of fuel subsidy which it has to implement. This much has been stated by NNPC in the past when it contended that it was erroneous for Nigerians to talk about missing oil money when it (NNPC) is saddled with the uneconomic task of bringing in kerosene and petrol at the cost of N100 and above per litre and selling at N50 and N87 per litre. The huge loss resulting from this is what is referred to as fuel subsidy. Ironically, while Nigerians, including the government, insist on having fuel subsidy, they turn around to label the cost of the subsidy as unremitted oil revenue or missing oil money and castigate NNPC for it. This was why a former Group Managing Director of the Corporation, Engr. Andrew Yakubu, once declared that if oil money was missing, then it got missing in the pockets of Nigerians who bought kerosene and petrol at less than the cost price.

    Other components of the unremitted or missing oil revenue, according to the explanations offered by NNPC, are the losses arising from crude oil and products theft and losses during the frequent cases of pipeline breaks. But to the Nigerian public, including those in government, it is convenient to charge these losses to NNPC insisting that they are unremitted revenue or missing funds.

    When the price of oil was high enough to guarantee a sizeable allocation to the various tiers of government, the huge losses were not noticeable or were rather overlooked. But with dwindling oil revenues on the back of falling oil prices, the losses have suddenly become very noticeable like a sore thumb. But rather than look at them dispassionately and think up ways of cutting the losses while at the same time creatively diversifying the economy to break away from dependence on oil revenue, all we have been treated to is the anger and fury of a mob.

    But mob action is not known to solve any problem, much less the gargantuan type that is starring us in the face. Now is the time for us to think and come up with solutions to the dwindling oil revenues and the mono-economy anchored on oil before our march on the road to Greece gets to an irreversible point.

     

    • By Usman Sanni, Abuja.
  • Oil sector probe: El-Rufai gets dossier on NNPC

    Oil sector probe: El-Rufai gets dossier on NNPC

    KADUNA State Governor Malam Nasir El-Rufai yesterday got a dossier of corruption in the Nigerian National Petroleum Corporation (NNPC).

    The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Hajiya Zainab Shamsuna Ahmed, handed over the dossier on the sharp practices in the Corporation to him at the Government House in Kaduna.

    El-Rufai is one of the four governors appointed by National Economic Council (NEC) to investigate the management of the accounts of the NNPC and the Excess Crude Account (ECA) by the administration of former President Goodluck Jonathan.

    The committee of four has a mandate to unravel the whereabouts of the N3.8 trillion not remitted to the Federation Account by the NNPC between 2012 and May  as well as the $2.1bn said to have been deducted from the ECA without proper authorisation by the Federal Accounts Allocation Committee (FAAC).

    In her presentation yesterday on how billions of dollars of oil revenue not remitted to the Federation Account by the NNPC, the NEITI chief said about 160 million barrels of oil, valued at $13.7 billion, were stolen between 2009 and 2012.

    Calling on the Federal Government to privatise the nation’s refineries, Hajiya Ahmed said there was no proof that the $11.631 billion subsidy payment captured from 2005 – 2012, was remitted into the Federation Account by the Corporation.

    Hajiya Ahmed said: “Crude product swap of $866m was lost from 2009 to 2011 and $82.43m in 2012. Total amount expended on subsidy payment from 2005 to 2012 as captured, $11.631m have been paid to the NNPC. However, there is no evidence this amount was remitted to the Federation Account.”

    El-Rufai alleged that the NNPC had been sponsoring media publications against him for recommending the scrapping of the corporation.

    El-Rufai had urged the Federal Government to ‘kill NNPC before it kills Nigeria’ at the Seventh Wole Soyinka Centre Media Lecture Series in Abuja, as part of celebration marking the 91st birthday anniversary of Nobel laureate Prof Wole Soyinka.

    The governor said yesterday: “NNPC has become a monster and too powerful. I will continue to fight NNPC till it dies for Nigeria to survive. It is either Nigerians kill NNPC or NNPC will kill Nigeria. Since I called for the death of NNPC, the corporation sponsored articles to attack me.

    “But, I am telling the NNPC that my skin is thicker than an elephant. The NNPC can’t bribe us (the four governors),” El-Rufai assured his guests.