Time to Strip NNPC of Toga of ‘Missing Money’
The report of the recent audit of the Nigerian National Petroleum Corporation by PricewaterhouseCoopers is an opportunity for the key actors in government and NNPC to stop using the corporation as an ATM and allow oil industry professionals to run the org
In terms of control and management of hydrocarbon resources, the Nigerian National Petroleum Corporation (NNPC) cannot be counted among the top 10 national oil companies in the world, neither is it anywhere near the class of global oil giants such as Shell, ExxonMobil, Total, Chevron, and BP.
But despite its very small size, constant allegations of ‘missing money’ have made the NNPC to rank Number One in popularity among the national oil companies and other top players in the global oil and gas industry.
In fact, allegations of missing oil money date back to the military administration of General Olusegun Obasanjo (retired), between 1976 and 1979.
It was after Obasanjo had handed over to the civilian administration of former President Shehu Shagari in 1979 that the first alarm was raised that N2.8 billion got missing in NNPC during Obasanjo’s regime, when the President-elect, General Muhammadu Buhari was the Minister of Petroleum Resources (Federal Commissioner for Petroleum, as it was then called).
Shagari’s government was said to have set up a Judicial Commission of Inquiry headed by Hon. Justice Ayo Irekefe of the Supreme Court, to probe the alleged missing oil money.
Up till date, controversy has continued to trail the findings of the commission. One account claimed that the commission reported in its findings that no money was actually missing.
But the political opponents of the Presidentelect resuscitated the issue recently, claiming that the money actually developed wings from the Midland Bank, London account of the NNPC, during General Obasanjo’s era as military head of state.
The then Turaki of Ilorin, the late Dr. Olusola Saraki, who was the majority party leader of the Senate at the time, headed the Senate Committee set up to trace the alleged missing money.
The setting of the Senate Committee was said to have followed over three years of clamour for a probe by the labour and other civil society coalitions. One account alleged that the money was traced to the Midland Bank London branch fixed account of an unnamed official but another account said that the White Paper from the Irikefe Commission showed that no money was missing. Sanusi’s recent allegation Though allegations of missing money continued to feature at the NNPC after the N2.8 billion incident under the Obasanjo’s administration, but the allegation that ridiculed Nigeria beyond imaginable proportion in the eyes of the international community was the one made by a former Governor of the Central Bank of Nigeria (CBN), Mr. Sanusi Lamido Sanusi that the NNPC failed to remit the sum of $49.8billion for the period January 2012 to July 2013.
Sanusi, now Emir of Kano had written a letter, which later leaked to the media, to President Goodluck Jonathan, complaining about the alleged missing funds.
Although the highly-respected former apex bank governor, who was in a privileged position to get the right data from the relevant agencies of government, apparently got his facts wrong as inter-agency reconciliation brought down this figure to about $10.87 billion.
Although $10.87billion is a huge amount of money that must be accounted for, the false information given by the apex bank governor, who was supposed to have the correct financial data as the chief financial officer of the country, questioned the credibility of his claims.
Sanusi however reviewed the disputed figure upwards to $20billion.
As the controversy over the $10.87 raged, the NNPC made spirited attempts to provide credible clarifications on how the purportedly missing fund was spent.
In a submission before the Senate Committee on Finance, the then Group Managing Director of NNPC, Mr. Andrew Yakubu said before the allegation of $49.8 billion was made, NNPC, Federation Account Allocation Committee (FAAC), CBN and the Federal Ministry of Finance were clearly aware of the outstanding $10.87 billion and the issues relating to its non-realisation. Kerosene subsidy scam The issue of kerosene has been one of the most contentious issues as the CBN in its presentation before the Senate Committee on Feb 4, 2014 had submitted that the implementation of kerosene subsidy regime is a violation of the DPK deregulation order by the late President Yar’adua and that the directive was communicated to and received by NNPC.
The apex bank alleged that the NNPC rendered no returns on kerosene subsidy from April 2012 to December 2013 and that the NNPC delayed in filing subsidy claims to PPPRA.
In his submissions, Yakubu said the CBN misrepresented facts in alleging that NNPC violated a presidential directive on kerosene subsidy.
“The factual position is that late President Yar’Adua issued a directive on the deregulation of the price of kerosene but the legal and administrative procedures for its implementation were never concluded. As a matter of fact, the presidential directive contained conflicting provisions that required further clarification to support the implementation,” he said.
He restated that the directive on kerosene subsidy was never formally communicated to NNPC for implementation as posited by the CBN.
According to him, the directive was communicated to the former Minister of Petroleum Resources – the late Dr Rilwan Lukman, who did not direct NNPC to implement.
He also argued that the House of Representatives on July 5, 2011 passed a resolution in plenary, supporting the retention of the subsidy, ensuring the availability of DPK across the country and the sale of DPK at N50 per litre.
Yakubu also cited a subsisting court judgement by the Federal High Court Abuja Division delivered on the March 19, 2013 by Justice Bello in BamideleAturu vs. Minister of Petroleum Resources and Ors (FHC/ABJ/CS/591/09), where the court granted “an order restraining the defendants, their agents, privies and collaborators and whosoever and howsoever from deregulating the downstream sector of the petroleum industry or from failing to fix the prices of petroleum products as mandatorily required by the Petroleum Act and the Price Control Act”.
He said the implication of the court judgment was that the Minister of Petroleum Resources was restrained from deregulating the prices of regulated petroleum products including DPK. Offshore processing/swap arrangement The issue of Offshore Processing Arrangement (OPA) or swap arrangement is another contentious issue raised by the CBN, against the NNPC, with even the Nigeria Extractive Industry Transparency Initiative (NEITI), saying in one of its report that the country was losing $8 billion in the crude oil swap deal with oil traders.
However, the NNPC acknowledged that over the years, the operations of the refineries have been very epileptic due to equipment failures and incessant acts of vandalism on the crude oil supply pipelines.
Yakubu said even when the refineries were fully operational, they could not satisfy the petroleum products requirements of the domestic market, especially PMS, with domestic daily requirement currently estimated at 40 million litres.
He said the open account import system exposed NNPC to certain variable market conditions, especially the demand for high premium by the suppliers.
This demand in most cases, he said was predicated on NNPC’s inability to fulfill its payment obligations as and when due.
Yakubu told the committee that the delay in making payments for the cargoes delivered deteriorated to over 1,000 days in default and as a result the debt owed by NNPC at some point in time accumulated to about $3.2billion.
The consequence of the NNPC’s long delay in making payments, and the huge outstanding debt, was that most International financial institutions became reluctant to cover NNPC imports, he said.
In order to mitigate the challenges of price vulnerability and supply disruptions associated with the open account import system and also guarantee steady supply of petroleum products to the market, Yakubu said the NNPC explored the option of offshore processing of some portion