NNPC AND THE SUBSIDY CLAIMS

The operations of the state-run corporation must be made transparent

A REGIME OF UNBRIDLED SUBSIDY IN WHICH A SUBSTANTIAL SLICE OF THE NATIONAL BUDGET GOES TO SERVICE THE CONSUMPTION OF ONE SINGLE ITEM IS DETRIMENTAL TO THE DEVELOPMENT OF ANY NATION

For the fifth time in seven months, the Federation Accounts Allocation Committee (FAAC) meeting was deadlocked last week due to claims by the Nigeria Governors’ Forum that the Nigeria National Petroleum Corporation (NNPC) was short-changing the federation over volumes of petrol it imports into the country. At the centre of this recurrent controversy is the absence of due process, transparency and accountability in the management of the NNPC, an agency of government notorious for corruption and opacity.

The NNPC reportedly collected subsidy to the tune of N89 billion in the month of May, part carry-over from last year, yet the Department of Petroleum Resources (DPR) doubts the genuineness of those figures. The Petroleum Products Pricing Regulatory Agency (PPPRA) that is statutorily responsible for documenting how much petroleum products Nigeria consumes daily also has reservations about the NNPC figures. Between the NNPC, DPR and PPPRA – the three main sources that should know and provide reliable statistics about how much petrol Nigeria consumes at every point - none has agreed with the figures being churned out by others.

What has come out clearly from the unfortunate development is the lack of transparency and accountability in the management of our oil assets. Meanwhile, the NNPC from a recent letter to the Finance Minister, Mrs Kemi Adeosun, in a bid to exonerate itself from any wrongdoing in the FAAC imbroglio, inadvertently let out very damning information about its own operations.

In the letter, NNPC disclosed it imports and claims subsidy for 60 or 70 million litres of petrol daily, a figure the DPR and other stakeholders in the sector dispute on grounds Nigeria could not be consuming more than 30 million litres every day. Even the PPPRA from its records indicated an average of 45 million litres has been the volume of petrol Nigeria consumes daily, and upon which it has based its advice on imports.

What the differing figures have done is to highlight the level of corruption in the business of petrol importation and distribution in Nigeria by the NNPC and perhaps explains why most private oil marketers have been pushed out of the busines.

Based on the NNPC letter to Adeosun, in which it made frantic efforts to absolve itself and even accused the DPR of intentionally divulging information on the situation to the governors, as well as undisputable operational records from the PPPRA, we are constrained to believe that the downstream sector of the petroleum industry will never be free of unwholesome practices until it is weaned of the subsidy regime. Yet, neither the NNPC nor the officials of the current administration seem keen on restoring sanity in that direction.

As we have consistently argued on this page, a regime of unbridled subsidy in which a substantial slice of the national budget goes to service the consumption of one single item is detrimental to the development of any nation. But the issue at hand is how to make the NNPC more accountable and transparent in its dealings. The solution lies in the reform of the sector. The National Assembly has done considerable work in that regard with the passage of the Petroleum Industry Governance Bill (PGIB) which is yet to be signed into law by President Muhammadu Buhari.

While we welcome recent disclosure that the World Bank, National Bureau of Statistics and other key stakeholder would embark on a project to gather data, verify them and eventually come up with a figure of how much petrol the country consumes daily, we urge that this does not become another empty pledge. Beyond this, we also maintain that reforms of NNPC should be expedited so that it can be operated as a transparent body like what obtains in other jurisdictions.