President Buhari recently announced that his government would break the NNPC into two separate entities – one a regulator and the other an investment vehicle.
His words: “I am reforming the oil and gas sector, breaking up the NNPC into two parts – the first will become an independent regulator for the sector, while the second will act as an investment vehicle for the country.”
That plan is very much in order, and the Department of Petroleum Resources which inadequately performs some regulatory roles in the oil sector should also be folded into the planned regulatory successor of NNPC.
This spinoff should happen without delay. But apart from that, the Government should not fail to probe officials who have presided over the NNPC in such a way that the company cannot account for billions of dollars that should have been remitted to the Federal Government.
According to former Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, NNPC failed to pay $20 billion in revenues to government accounts between January 2012 and July 2013.
The National Economic Council has disclosed that the NNPC earned N8.1 trillion ($41 billion) between 2012 and the end of May 2015, but paid only N4.3 trillion ($21.6 billion) to the Federal Government.
The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Hajiya Zainab Shamsuna Ahmed, also said last week that about $25.3billion of the nation’s oil monies was missing. Speaking on subsidy payments, she said that while subsidy payments from 2005 – 2012 captured that 11.631 billion dollars have been paid to the NNPC, there was no evidence of the money being remitted to the Federation Account.
By law NNPC is supposed to hand over its oil revenue to the Federal Government, which then pays back what the oil entity needs based on a budget approved by National Assembly. But the Act establishing the oil entity allows it to cover costs before remitting funds to the government, and indeed the report of the forensic audit of the accounts of the Nigerian National Petroleum Corporation (NNPC) released by Pricewaterhousecoopers recently showed that the Corporation spent no less than N$18.53billion (or N3.65 trillion) as operational costs without a duly approved budgetary allocation.
With such a massive amount expended on operational costs, how does the NNPC explain the fact that it has failed woefully in most of its operations?
How does NNPC explain the fact for instance that it is still owing its Joint Venture (JV) partners billions of dollars in arrears in, leading to a lull in oil exploration in the country at a time the country needs all the money it can get?
As a result of this financial neglect in the midst of plenty, not only has exploration activity been greatly reduced, oil companies who are owed billions of dollars in cash call arrears are putting the jobs of Nigerian oil workers on the line; and citing non-payment of cash calls by the NNPC as a convenient excuse to lay off Nigerians when they feel like.
So, NNPC has by not paying the billions it owes for counterpart funding of exploration and production operations, reduced the potentials of the oil sector; while at the same time, it cannot account for billions of dollars that were supposedly used for ‘operations’. Not only should the NNPC be disbanded, but its officials should be probed and severely sanctioned if found guilty. Also, the Federal Government should make arrangements to pay off the cash call arrears that the NNPC owes, as a way of rejuvenating oil exploration operations.
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