Who Should Be Blamed for NNPC

Who Should Be Blamed for NNPC's Inefficieny?

Ifeanyi Izeze

President Umaru Musa Yar’Adua was very correct when he said at the opening of the eighth edition of the Nigerian Oil and Gas Conference in Abuja, that the Nigerian National Petroleum Corporation (NNPC) had derailed from the objectives for which it was established and had been unable to play its statutory roles in the nation’s oil sector.

He was also very correct when he attributed the loss of focus by the NNPC to what he described as “the paucity of the policy, regulatory, operational, fiscal and managerial frameworks that govern the country’s oil and gas industry.

However, for obvious reasons, he cleverly dodged to say that the woes of the NNPC became worse in the last nine years especially under the reign of Gen Olusegun Obasanjo who ran the corporation as a sole administrator. The Obasanjo government short-circuited all existing platforms for decent business transactions in the corporation and technically ran the nation’s apex oil concern aground. Truth be told, the pathetic state of the NNPC today is a showcase of the Obasanjo’s legacy in the oil industry.

Any performance rating or assessment of the NNPC would be out rightly bias and grossly incomplete if it does not take due consideration of the negative effects of undue Presidency’s interference on the activities of the corporation.

The Obasanjo Presidency took this unholy meddling in the affairs and especially the accounts of the NNPC to a criminal height throughout the eight-year stay in office. The actual and objectively ascertainable consequences of the interferences greatly hindered the effective, smooth and transparent functioning of the corporation as commercial and profit-oriented business conscription. This is the truth.

No doubt that since the NNPC was established to oversee the management and operation of the nation’s oil industry, the Corporation had not only failed to establish itself as an active oil company in business to make profit, it also failed in establishing administrative structures that is free from government manipulations. And this led to the 100 percent hijack of the day-today decision making muscle of the corporation by Gen Obasanjo under the pretence of correcting the fraud and corruption culture often associated with the organisation.

Recent public pronouncements by President Yar’Adua and the Oil and Gas Reform Committee, could best be taken as an indictment on the Obasanjo Presidency. The last administration left the NNPC far worse than it met it in terms of the level and sophistication of opaque financial transactions backed with executive recklessness.

President Yar’Adua rightly remarked at the Abuja conference that “It is imperative that we tell each other a few home truths. An industry that had operated for about five decades, like the Nigerian oil and gas sector, still suffered from funding problems, perennial shortfalls, especially in funding of upstream operations that have constituted great obstacles to the timely growth and development of the industry.

“The situation is not any better when we look at the other aspects (downstream) of the energy industry. The provision of petroleum products, including PMS, AGO and LPG are dependent almost 100 percent on importation.

“It stands to reason that such situation cannot and should not be allowed to continue any longer.”

If Yar’Adua expected applause for the vote of no confidence on the NNPC, obviously he is not going to get it because he failed to properly situate the NNPC handicap or rather inertness which was to a great extent not the fault of the crop of the high quality technical staff of the corporation. NNPC had some of the best brains in the Nigerian oil and gas industry. At some point, the foreign multinationals were even pouching the highly trained NNPC exploration and production personnel. So it would very unfair for anybody to run down the technical capacity of the corporation to do oil business- upstream and downstream.

To a great extent, the NNPC was the architect of its misfortunes. The administrators of the Corporation especially within the last eight and half years allowed the Presidency to use them to ridicule the corporation’s efforts in the nation’s crucial oil sector. This is the truth.

The top level administrators of the corporation and their collaborators in government especially at the Presidency under Obasanjo milked the organization through fraudulent diversion of funds from sales of crude oil, unclear -accounted importations of petroleum products, oil block awards and other business transactions of the NNPC’s strategic business units.

Blanket condemnation of the NNPC as inefficient and fraud infested may not be enough in our genuine quest to unravel the demon that has continued to hold the corporation moribund. Every concerned Nigerian should bother to ask where and how the NNPC gets the funds to run its operations including the joint venture obligations. Does the Corporation really have anything like budget in the strict sense of the term?

Government’s interference in the operations of the firm, especially in money matters has done more harm, and made the corporation to lose its credibility both at home and abroad.

Ask me, and I would say that Government should completely hands- off the NNPC so that the corporation can function like a commercial profit-driven business outfit. And the parasitic marriage of convenience between the Presidency and the corporation should be dissolved immediately rather than being re-packaged under the guise of reform and restructuring. There is no amount of restructuring that would make NNPC profit-driven if the corporation continues to take direct instructions from the Presidency or even any other government agency that are not schooled in the highly technical oil and gas exploration and production business even the marketing of the crude and products.

It was an outright mischief for the Presidency to publicly express misgivings over the level of compliance of the Nigerian National Petroleum Corporation (NNPC), the Department of Petroleum Resources (DPR), the Nigerian Customs Service (NCS) and the Federal Inland Revenue Services (FIRS) with the rules on revenue remittance to the Federation Account. President Yar’Adua is fully aware of what the problems of the NNPC were and should confront such issues frontally if he is serious at sanitizing the NNPC. There is a great need to probe the last sole administrator of the NNPC (Obasanjo’s Presidency with all the gangs that liaised between the Presidency and the Funso Kupolokun-headed NNPC). This would help place the new NNPC in proper footing for the proposed re-branding.

The Auditor-General (AG) should not only carry out a comprehensive audit of the Federation Account to ascertain completeness and ensure the integrity of balances in the national account as directed by the president, the AG should support a comprehensive probe of the entire business of the NNPC within the last nine years to ascertain the extent of damage done to the NNPC accounts and the national economy by the Obasanjo Presidency.

The probe should seek to review the Petroleum Subsidy Account- the Equalisation Fund, signature bonuses account (s) for all the quarterly awards of oil blocks to funny investors, crude oil earnings especially the component of the over 350 million barrels per day crude feedstock which was supposed to be set aside for domestic refineries but which were never refined locally but sold abroad under opaque transactions.

For the first time, I challenge the current NNPC administrators to institute an independent audit of its finances and come up with a strong case to prove that the problems of the corporation were extraneous. Needless to say that whether the Group Managing Director likes it or not, if he does not pioneer this self audit, any probe instituted by the Presidency, would obviously indict the NNPC management for fraud and inefficiency. It is time we place the NNPC problem in proper perspective. This will help re-position a re-banded NNPC as a commercial profit-oriented business organization.