Senate probe of NNPC and matters arising
In the 1970s and early 1980s NNPC was the foremost hope for creating and sustaining the wealth of the nation. These periods witnessed massive investments in oil infrastructure ranging from refineries, petrochemicals, petroleum products depots and extensive network of oil pipelines across the country. These investments were overwhelming and these periods were regarded as the “Golden Era” of the Nigeria oil industry. It was also during this era that a formal planning for realizing the NLNG dream was put in place. A working committee was inaugurated in March 1985. Also to demonstrate evidence of commitment to the NLNG Project, the Finima (NLNG Project site) relocation committee was reconstituted in 1984. To demonstrate commitment also, a specific allocation of crude oil was dedicated to finance the NNPC equity contribution.
Not surprising, the golden era is associated with President Buhari’s performance during his tenure as the Federal Commissioner for Petroleum and Natural Resources in the late 1970s and the Head of State between 1983 and 1985. My advice therefore is that we should rally around this president and encourage him to deliver as he did in the past. Every distraction should be avoided. Time is a luxury that we do not have.
I was concerned at the level of attention given to the Minister of State’s letter without hearing from the NNPC. I would be very surprised if Dr. Baru at the level of his experience, education and all the qualities that he has consistently demonstrated, would be involved in massive violation of contract procedures and rules. In the past on several occasions, I have written and emphasized that the NNPC has some of the finest brains in the oil industry and frankly he is one of them. Generally it would have been more appropriate to wait for the response from the NNPC before rushing to make far reaching comments on the issue.
We should not forget that Dr. Kachikwu and Dr. Baru are both President’s men. Dr. Baru currently is gradually turning the NNPC around in terms of positive performance and results. We have witnessed substantial reduction in crude oil exploration and production cost per barrel. The Ibadan Petroleum Products Storage depot has been rehabilitated and commissioned. NPDC is said to have been positioned to grow equity production to 500,000 bpd by 2020. This subsidiary is presently the biggest and largest gas producer in the country and highest supplier of gas in domestic market. The Nigerian Gas and Transport Company, a subsidiary company of NNPC has just declared profit after tax running into billions of Naira. These are green shoots and the credit goes to the President, the Board, the Minister of State, the GMD and the entire staff of the NNPC. Dr. Baru has also inaugurated an anti-corruption committee recently in NNPC.
I am not against the pending Senate probe of NNPC as a result of the Minister of State’s letter, but I am worried about the cost/benefit implications. The disruptions and man hours that would be involved on both sides in the probe project may have serious cost/benefit implications. The overheads involved can also be substantial. In the past, NNPC has never been short of probes without any benefits to justify them. A rethink by the Senate may be necessary. NNPC is in the league of NOCs which trade at substantial government discount. NNPC is also overwhelmed by “stakeholders overload”. Government in the past has been known to be the problem of NNPC as the following examples will show:
The allegation that the sum of N2.8 billion was missing from the accounts of the NNPC has been proved to be without any foundation. The Crude Oil Sales Tribunal of inquiry headed by Justice Ayo Irikefe appointed by Alhaji Shehu Shagari to investigate issues surrounding the alleged missing money made that known in a White Paper submitted to the Federal Government on 30th June, 1980. As far as I am concerned the issues bordered on crude sales carried in the balance sheet as unreconciled items which were later on reconciled and cleared. Unfortunately, this issue generated undeserved publicity without any single benefit to Nigerians.
Also in the early 1990s a panel headed by the late General Abisoye of blessed memory was set up to investigate NNPC. Part of his report stated as follows: “NNPC is plagued with massive and continuous interference within and without. Anyone, be he an idiot, a liar, a thief, etc. with the right connections outside the corporation can always bring a project to derail NNPC’s carefully worked out budgeted plans with or without funds. In its 17 years of existence, the corporation had eight Chief Executives. Each and every one of the previous seven had been disgraced out of office”. General Abisoye also blamed the problems of the corporation on an allegation that NNPC has been turned into the “Father Christmas” of the Federal Government particularly within the last four years, stating that any sectors in financial distress irrespective of reasons were always bailed out by the NNPC on the directive of the government”.
Yes, government owns 100% of the NNPC equity, and has the legitimate right to intervene or monitor its operations to ensure accountability. It is generally I am not against the pending Senate probe of NNPC as a result of the Minister of State’s letter, but I am worried about the cost/benefit implications. The disruptions and man hours that would be involved on both sides in the probe project may have serious cost/benefit implications accepted worldwide that this can be done effectively through the enforcement of high quality financial reporting, independent and credible auditing and sound corporate governance. There are daunting challenges in the industry and my advice is that the Board should concentrate on policy issues and leave the day to day running of the NNPC and its subsidiaries to the GMD as is also provided for in the 1977 Act. Some of the policy issues should include: • Raising Reserves • Harnessing Growth in the oil and gas industry Achieving zero gas flare Managing OPEC quota restrictions Niger Delta Challenges Balancing Commercial interests with environmental and socio-economic responsibilities, Fast tracking Brass LNG FID Revival of OK LNG Modular Refineries Ogoniland and Niger Delta clean-Up Raising oil production capacity Rehabilitation of the four refineries, and many more The PIGB New NLNG Refineries These are policy issues which if properly articulated could take NNPC to the promised land.
As regards issues relating to promotions and internal movement of staff within the corporation and its subsidiaries, these are day to day issues within the responsibility of the GMD. It should not be influenced from outside the corporation. The GMD is always responsible for the promotion and movement of his staff but in doing so he needs to adopt internal policy that places premium on talent, experience and expertise.
My advise is that the Board, the Minister of State and the GMD who is also a member of the Board should have a shared vision to move the corporation forward. The President needs solid support to help him repeat the miracle of the “golden era”. • • • • • • • • • • • • Projects and New