FRAUD IN NNPC: BETWEEN COVER-UP AND REORGANISATION?
There are striking similarities between Nigeria’s new president and the old. Apart from starting- off as servant leaders, both men have high dynamics in ‘shinning their eyes’ to grab things that concern the oil and gas industry especially in areas of control, revenue and lucrative assets.
The story: There are strong indications that the leadership shake-up in the Nigerian National Petroleum Corporation (NNPC) by the Federal Government was a step towards breaking up the agency. The NNPC is set for a major overhaul, whereby it will be replaced by a National Petroleum Company of Nigeria and a National Petroleum Management Agency; both to answer to a National Petroleum Council headed by the Presidency. Like father, like son.
If the executive rumour concerning the reorganization is true, then it means that President Umaru Yar’adua finally towed the footprints of his predecessor in retaining the administration of the nation’s oil and gas business in his office at the Presidency. The question is: Did he not learn lessons from the mistakes of his predecessor?
In a letter from the Secretary to the Government of the Federation, Babagana Kingibe, to the President requiring “approval for the implementation of the road map for the restructuring of Nigeria’s oil and gas Industry,” it was said that the road map, drawn in June 2007, was primarily based on the recommendations of the National Committee on Oil and Gas, drawn from the Oil and Gas Sector Reform Implementation Committee.
The letter: “The major addition in the Road Map is the creation of the National Petroleum Council, which would ensure that all strategic decisions regarding the oil and gas industry are coordinated at the highest level of government –the Presidency and are made from the perspective of macro-economic linkages.” So the proposed National Petroleum Council (NPC), a Ministerial advisory body, would function as the strategic decision-making organ of the oil and gas industry.
Taking a flash back, the NNPC came into existence on April 1 st 1977, by virtue of Decree 33, through a merger of the existing Ministry of Petroleum Resources and the NNOC. The objective of creating NNPC was in line with other OPEC Member Countries to transform Governments purely regulatory and tax collection role to direct participation in all phases of the petroleum industry through equity holdings in the IOC operations and technology acquisition by indigenes.
NNPC was therefore set up to explore, produce, transport, refine, process and market crude oil, petroleum products and natural gas as well as conduct research relevant to the petroleum industry. To that end, NNPC set up its subsidiary companies namely; the Pipelines and Products marketing Company (PPMC); Integrated Data Service Ltd; the Kaduna Refining and Petrochemical Company; Warri Refining and Petrochemical Company; Port Harcourt Refining Company; Nigeria Liquefied Natural Gas (NLNG); the Nigerian Petroleum Development Company (NPDC); Nigerian Engineering & Technical Company (NETCO); Hydrocarbon Services Company of Nigeria (HYSON); Nigerian Gas Company (NGC); Eleme Petrochemicals Company; and the National Petroleum Investments Management Services (NAPIMS). NAPIMS manages the Nigerian Governments equity in the operations of the IOC’s through a Memorandum of Understanding, Joint Venture and Joint Operating Agreements.
Regrettably, the agency since inception with all its subsidiaries failed woefully in achieving any of the goals that informed its establishment except in perfecting fraud and corruption with a sophistication that would make a mafia group ashamed of their tact.
However, under the proposed structure, it is conceived that major industry policy-making functions would go to the National Petroleum Council. This would be performed by a National Petroleum Directorate (NPD), with a Director General at the helm, while the Petroleum Minister will professionalize the operations of the Ministry of Petroleum Resources, whatever that means.
The regulatory function, formerly handled by the DPR, would go to the Petroleum Inspectorate Commission in charge of the upstream. The Petroleum Products Distribution Authority, currently overseen by the Petroleum Products Pricing and Regulatory, would take charge of the downstream inspection operations. Each of these two new creations would be headed by a Director General.
Overtly, the scheme proposes that all commercial operations now performed by the NNPC and its subsidiaries would fuse under a new body known as the National Petroleum Company of Nigeria (NAPCOM), headed by a Group Managing Director. A reason being advanced for the proposed creation of NAPCOM is the need to transfer the control of petroleum assets from the NNPC to a National Petroleum Assets Management Agency (NPAMA).
In other words, the NNPC, as currently constituted, will cease to exist giving way to a bloated organization that would likely be over three times the size of the NNPC in staff strength and cost in carrying out the same operations.
Going by the initiative, President Umaru Yar’Adua would be the Chairman of the NPC, with membership drawn from the key economic and petroleum - related ministries, which would, together, implement a new institutional framework to regulate the industry.
One curious question is: Why has the re-organisation of the NNPC and the oil industry suddenly become a front burner issue when all the current apostles of the re-packaging have been in charge of the system for over eight years.
The allegation that the double-speak of the anti-graft agencies - the EFCC and ICPC in dealing with the NNPC rot may have been due to the merger of the Petroleum Ministry with the Presidency may be very correct. However, Nigeria can no longer afford to continue business or rather corruption as usual. The way we do things must change if we are serious with achieving the Millennial Development Goals (MDG)
They should first tell us how they fared in earlier responsibilities particularly management of oil and gas earnings and selling of the nation’s entire lucrative deep and ultra-deep offshore acreages. Also, Nigerians need to know how they sold crucial NNPC assets.
For some time now, disgusting corruption allegations have been trailing the operations of the NNPC. The accounts of the corporation have not been audited since 1999, under which the former president, Chief Olusegun Obasanjo, doubled as the petroleum minister until 2006 when he reluctantly relinquished the portfolio.
An incriminating allegation was made that some top NNPC officials were involved in the N502 billion shady practice of producing crude oil in excess of the Organisation of Petroleum Exporting Countries’ quota for the country. Again, some organisation’s officials were linked with an illegal diversion of the Nigerian oil money totaling about $2 billion. Many damning reports have been published about the effects of corruption in the nation’s oil industry and we cannot just ignore those allegations and pretend to be reforming the industry.
The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), recently accused the corporation of unclear accounting of about N555 billion between December 2004 and April 2007. The RMAFC Chairman, Mr. Hamman Tukur, hinted that the nation may have lost the huge amounts due to the Federation Account as a result of lack of transparency and accountability in the NNPC’s computation and payment procedures.
Rather than give cogent explanations on the allegation by RMAFC, the Acting Group Managing Director of NNPC, Abubakar Yar’Adua simply said “What the Chairman of RMAFC is raising as missing revenue arose from lack of understanding of the workings of the corporation.” Interestingly, he called the allegation of massive fraud as a misunderstanding between his corporation and the RMAFC and blamed the misunderstanding on a disagreement on the issue of subsidies. This is unacceptable from a public officer who should give account to the Nigerian people whose corporation he was assigned to manage.
Lending credence to the corruption allegations in the NNPC, NEITI had earlier lamented that Nigerians will weep if they know the details of the Memorandum of Understandings (MoUs) between the oil companies and NNPC. While it accused the organisation and other FG agencies in the oil and gas sector of “institutionalised opacity”, NEITI admitted that Nigeria produces much more than 2.4 million barrels per day as being alleged.
As both EFCC and NEITI acknowledged that the oil and gas sector managed by the NNPC has been a haven of corruption, the question is: why is the Federal Government pretending to be unaware of the rot? From all indications, the powerful thieves benefiting from the NNPC mess may be directly in government at the highest level and seemed untouchable before now.
Between 1999 and 2007 about $250 billion revenue windfall accrued to the country from excess crude oil prices at the international spot markets, and this money was allegedly mismanaged and unaccounted for. The EFCC if it is serious with the anti-graft campaign should embark on thorough investigation and prosecution of the perpetrators of this executive stealing of money that belongs to all of us.
The entire accounts of the NNPC from 1999 to date should be closely scrutinized by external auditors rather than the current piecemeal audit being carried out locally because the allegations of fraud in the corporation are so strong and cannot be ignored just like that. The complicity of officials of the NNPC and those of foreign oil companies must be established, if any, and those found guilty made to refund such monies before facing the full wrought of the law to deter those who may want to toe their path in the future. Such probe is very necessary because it would also exonerate the clean ones within the system and would help the nation separate the wolves from the sheep.
The National Assembly should use its powers to halt the so-called “far reaching re-organisation of the oil and gas sector. There is a great need for us to look into the books of the NNPC and other oil and gas parastatals at least from 1999-2007 before we reorganize the entire system as the proposed reorganization would hide most of the cases of massive fraud and corruption under new structures as proposed for the sector.
BY: IFEANYI IZEZE
IFEANYI IZEZE IS A PORT HARCOURT-BASED ENABLING ENVIRONMENT CONSULTANT (iizeze@yahoo.com)
