[dropcap]A[/dropcap] news story in The Guardian of March 24, 2019 had the following headline: “Losses at NNPC hit N551.46 billion in four years.”
Some early paragraphs of the story went thus:
“The Nigerian National Petroleum Corporation, NNPC, recorded losses (sic) in the region of N551.46 billion between January 2015 and December 2018.
“Details of financial records published on the company’s website revealed that the national oil company repeatedly failed to meet projected profits as its subsidiaries, particularly refineries, running cost at the headquarters and other arms left whopping deficits.
“The corporation recorded N267.14 billion loss in 2015. The figure stood at N197 billion in 2016. In 2017, data from its financial statements showed N82 billion in operational losses, while a deficit of N5.46 billion was posted for January and August in 2018.
“While the company has excluded key details such as taxes and figures from the Nigeria Liquefied Natural Gas Ltd, it has continually failed to perform when compared to other national oil companies in Africa and other parts of the world.”
On March 5, 2019, The Punch ran a news story with the following headline: “NNPC loses N228.1 billion revenue as refineries remain dormant.”
To help the reader appreciate the depth of the issues involved, it is important to quote the story copiously:
“The Nigerian National Petroleum Corporation lost revenue of N228.1 billion between April and November 2018, a period of about seven months, as its refineries continued to perform poorly, the latest industry data revealed.
“Figures obtained from the national oil firm in Abuja on Monday showed that the corporation’s revenue nosedived from the N520.4 billion recorded in April 2018 to N292.3 billion in November last year. Our correspondent observed that the NNPC’s revenue grew from the N323.19 billion recorded in January 2018 to the highest level of N520.4 billion in April, but commenced a descent until it crashed to N292.3 billion in November, which was the month with the most recent financial updates from the oil firm.
“An analysis of the data from the sector showed that in the months of May, June, July, August, September and October last year, the NNPC’s revenues were N482.55 billion, N401.53 billion, N468.51 billion, N309.37 billion, N304.44 billion and N373.08 billion respectively.
“It was further gathered that while the corporation’s revenue plummeted, its refineries did not help matters as they maintained a poor performance for the most part of last year.
“From February to November last year, the Kaduna Refining and Petrochemical Company did not refine a drop of crude oil.
“The Warri Refining and Petrochemical Company and the Port Harcourt Refining Company were never stable in their capacity utilisation during the period.
“For instance, in February, WRPC and PHRC posted capacity utilisation of 8.3 per cent and 24.6 per cent respectively. This fluctuated in the succeeding months and in June both refineries recorded 27 per cent and 27.7 per cent capacity utilisation respectively.
“But their capacities crashed to zero per cent in September and October 2018, while in November, WRPC could only post a marginal capacity utilisation of 2.4 per cent, as PHRC remained dormant at zero per cent….
“The refineries under the management of the NNPC have been performing below standard over time, a development that made the Federal Government to search for international financiers to revamp the facilities, but this move has yet to succeed.”
The NNPC, which was established on April 1, 1977 to regulate the oil industry and participate in the industry on behalf of Nigeria, has been inefficient and ineffective. It has been like a bone in Nigeria’s throat.
For example, the Nigeria Natural Resource Charter Benchmarking Exercise Report 2017, which assessed the operational activities in Nigeria’s oil and gas sector between 2015 and 2017 against the Natural Resource Charter, came up with the following verdict:
“Focusing on transparency and accountability, the 2017 BER found that the NNPC performs low in the areas of timely financial audits, accurate financial records, and public disclosure of audited accounts. The corporation’s audited accounts are only carried out when the need arises and at the behest of political office holders especially the executive arm of government. This is in contravention of section (7) subsection (2-3) of the NNPC Act (1977) which directs regular auditing of the corporation’s account in a financial year. Also, the series of previous independent audits indicted the corporation of sharp practices in accounting information, the effect of which strongly undermine sound financial judgement of audited reports. Furthermore, the NNPC has not shown willingness in making its audited financial information publicly available – despite the existence of the Freedom of Information bill and Fiscal Responsibility Act, which promote public knowledge of the activities of the Ministries, Departments and Agencies.”
The NNPC recently advertised job vacancies. The reactions of some Nigerians in the social media captured the perception many have about it. There were comments like: “If you don’t know a minister or senator or governor or a top official in the NNPC or an influential VIP, please don’t bother to apply for NNPC jobs.”
The impression many Nigerians have is that NOBODY gets employed by the NNPC based on merit. So when someone is employed at the NNPC, the person is usually asked: “Who helped you?” It is believed that no matter how intelligent and skilled you are, you need to know a powerful person to help you get a job in the NNPC. If a critical institution that handles the wealth of the nation has an image of recruiting its employees based on croynism, how can it free itself of mediocrity and corruption and be profitable?
In July 2015, shortly after assuming office, Governor Nasir el-Rufai of Kaduna State, warned that Nigeria must kill NNPC or NNPC would kill Nigeria. Describing the NNPC as a “monster”, el-Rufai –who was the guest speaker at the 7th Wole Soyinka Centre Media Lecture Series in Abuja – regretted that the corporation had become so corrupt and arrogant that it ran a parallel government and unilaterally decided what to remit to Nigeria, while its hundreds of employees fed fat on Nigeria’s resources. He added that in the three years preceding 2015, the NNPC retained 42 per cent of Nigeria’s money, and remitted only 58 per cent.
Stating that he was confident that President Muhammadu Buhari would implement the proposal to kill the NNPC, el-Rufai lamented, “The NNPC feels entitled to consume more resources than the 36 states, the FCT and the Federal Government combined. How could a country so dependent on oil revenues have been so lax about the proper governance, efficiency and security of its oil industry?” Sadly, four years after, Buhari has done little about tackling the challenge posed by the NNPC.
Most importantly, the Petroleum Industry Bill that should solve the problem of the petroleum industry has been going back and forth from the National Assembly to the Presidency close to two decades now. For some strange reasons, no Nigerian president has been courageous enough to sign it. To remove all the stumbling blocks against the bill, the National Assembly decided to disaggregate the bill into four parts: The Petroleum Industry Governance Bill, PIGB, the Petroleum Industry Fiscal Bill, the Petroleum Industry Administrative Bill, and the Petroleum Industry Host and Impacted Community Development Bill.
Last year, Buhari refused to assent to the Petroleum Industry Governance Bill, citing sundry reasons. In the letter submitted to the National Assembly, the reasons given for withholding assent to the bill included the 10 per cent the Petroleum Regulatory Commission would retain, which he considered too high, the belief that having a single regulator like the Petroleum Regulatory Commission for the upstream, midstream and downstream would give it enormous powers that may be open to abuse, and the need to edit some drafting issues that could affect the interpretation and application of the bill if passed into law in this current form.
With virtually two months to the end of this legislative year, it is hoped that the National Assembly can effect the changes and return the bill to the President and that he will not give further excuses for not signing the bill into law. Buhari should sign the bill and take the glory of saving this nation the age-long directionlessness, opacity, corruption and distrust in its oil and gas industry, which is the mainstay of its economy.
Azuka Onwuka is a veteran journalist and writer. He is also a social commentator and public affairs analyst. Connect with him on Facebook.
The opinions expressed in this article are solely those of the author.
