Nigerians Reject Calls for Scrapping NNPC

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Nasir el-Rufai

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Some Nigerians from all walks of life including members of the Petroleum and Natural Gas Senior Staff Association of Nigeria kick against the idea of scrapping the Nigerian National Petroleum Corporation

By Anayo Ezugwu  |  Jul 27, 2015 @ 01:00 GMT  |

CONTROVERSY is still trailing the call by Nasir el-Rufai, Kaduna State governor, for the scrapping of the Nigerian National Petroleum Corporation, NNPC. Some Nigerians from all walks of life including journalists and oil workers have kicked against the idea, arguing that instead of scrapping the corporation the federal government should rid the system of corruption and government interference which is weakening the nation’s cash cow.

Governor el-Rufai had in a paper he delivered during the 7th Wole Soyinka Centre Media Lecture Series in Abuja on Monday, July 13, called for the disbandment of the NNPC and the setting up of a new company in its place. He alleged that the national oil company was being run like a parallel government, expressing hope that the current administration of President Muhammadu Buhari would “kill” the corporation. He argued that the present NNPC would kill Nigeria if it was allowed to continue running. “If you don’t kill the NNPC, it will kill Nigeria,” el-Rufai said.

According to him, the oil firm is riddled with corruption and until it is destroyed completely and rebuilt from the scratch, there will be no headway for Nigeria. El-Rufai argued that with his experience as a former director-general of the Bureau of Public Enterprise, it was possible to destroy a bad organisation and turn it into a good firm. He maintained that Nigeria’s collective wealth was being feasted upon by less than 1,000 employees of the corporation, alleging that the NNPC only remitted 42 percent of what it ought to remit to the federal government for about three years.

The governor used statistics to defend his recommendation on why the current NNPC must be destroyed. He said in 2014, the country produced on the average about 2.2 million barrels of crude oil per day, while importing most of its daily consumption of 43.5 million litres of refined petroleum products. He stated that the reliance on imports of refined products led to unsustainable expenses on questionable subsidy payments, exemplified by the $8.99 billion spent in the 18 months between January 2012 and June 2013.

El-Rufai said: “About N971billion was budgeted for subsidy payments in 2014 alone (more than twice that was eventually paid). You all recall how trillions of naira were paid out as oil subsidy in 2011, when only N254billon was appropriated. No one has been successfully prosecuted for this scam. Huge deficits in gas supply have ensured that the country’s thermal plants cannot produce power at optimal levels.

“In the eight years leading up to 2014, joint venture production declined by 50.4 per cent. Some 100,000 barrels per day, about five per cent of total production, is estimated to be lost to organised theft. And we all dread the ease and rapidity with which supply shortages lead to endless queues, widespread panic and mortal consequences for the many victims of tanker accidents.

“The long and short of the situation of our oil industry is best exemplified by the parallel government called the NNPC. In 2012, it sold N2.77trillion of ‘domestic’ crude oil but paid only N1.66trillion to the Federation Account. In 2013, it earned N2.66tn but paid N1.56tn to FAAC; in 2014, (it earned) N2.64tn, but remitted N1.44tn; while between January and May 2015, it earned N733.36bn and remitted only N473.2bn. That means that the NNPC only remitted about 58 per cent of the monies earned between 2012 and the first half of 2015. A company with the audacity to retain 42 per cent of a country’s money has become a veritable parallel republic.”

The governor noted that the NNPC felt entitled to consume more resources than the 36 states and the Federal Capital Territory, and the federal government combined. “The example just given is only with respect to domestic crude oil sale. Similar leakages exist in the NPDC, NAPIMS procurement and subsidiary budgets,” he noted.

On the way forward for Nigeria, the governor said the country could demonstrate a new purpose by slaying three huge dragons, which he outlined as “a fixation with public ownership and control of every major oil asset, the corruption and distortion that oil subsidy is inflicting on our economy, and the NNPC in its current form is not in our collective national interest.”

El-Rufai went on to state that the corruption and distortion in the subsidy regime must be tackled. He argued that the oil subsidy regime had neither grown the Nigerian people nor guaranteed stability of refined products’ supplies. Rather, he said, what the subsidy had achieved was to create a huge hole in the budget and a new array of overnight billionaires.

“An efficient and productive oil sector, able to create jobs, spurs industrialisation and earns more revenues, requires that we tackle the monster that the NNPC has become. This country can no longer afford to maintain an NNPC that arrogantly, unlawfully and unconstitutionally spends an unhealthy proportion of national oil earnings on itself. We should replace the NNPC with brand new organisations that are fit for purpose, among others, a commercialised and corporatised national oil company, and new industry regulators. This new national oil company should be capitalised once and for all, and then freed to fend for itself like other national oil companies do, seeking its financing independently from the financial markets and paying due taxes and royalties.”

Governor el-Rufai noted that no one was better qualified to do this than the person that birthed the NNPC through the merger of the NNOC and the ministry of petroleum in 1977, President Buhari himself. “No one can appreciate the gap between the vision of the NNPC’s founding fathers, the beautiful baby of 1977 and the 38 year-old monster it has become better than President Buhari. The NNPC of today must make Chief Sunday Awoniyi of blessed memory squirm in his grave. Something fundamentally decisive must be done to tame this monster.”

The governor noted that Nigeria had an oil fortune, adding that the decline in the nation’s revenue or the negligence in using it to build human capital or enduring physical infrastructure was another matter. El-Rufai stated that despite 60 percent fall in oil prices between June 2014 and the end of last year, Nigeria still earned $77 billion from oil exports in 2014. “The PUNCH Newspaper of April 2, 2015, quoting figures from the United States Department of Energy, placed oil export earnings for the year 2011 at $99 billion. Indeed, in the five Jonathanian years, Nigeria earned nearly $500 billion from crude oil and gas sales,” he said.

According to him, about 40 percent of Nigerians are estimated to be very poor, adding that this means about 70 million citizens are living below the poverty line in a country that has earned at least $1 trillion from oil in 50 years. “Our rich enjoy the lifestyles of the richest in the world, while our poor are truly the wretched of the earth. This inequality is most unfortunate. That wide gulf in living standards is clearly problematic.”

However, the leadership of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has faulted the call, saying instead of “killing the NNPC,” the governor should have called for the insulation of the corporation from undue political interferences that were distracting the organisation.

Lumumba Okugbawa, acting general secretary, PENGASSAN, said corruption issue in the NNPC mentioned by the el-Rufai was a problem hindering growth and development in the oil and gas sector as a whole. He said government should deal with the corruption in the system rather than throwing away the baby with the bath water. The NNPC, created by an Act of Parliament in 1977, is made up of the holding office, subsidiaries and service units, all of which had been subjected to undue political interference, which hindered its autonomy and competitiveness for the past six years, he said, adding, that should not be a justification for scrapping the corporation as demanded by the governor.

“If you look at the NNPC as it is today, it has been politicised with most of its decisions and operations being influenced by political motives, and at times, executive fiat. The corporation is so much tied to the apron of the political officeholders but not the technocrats that are at the helm of corporation’s affairs,” Okugbawa said.

Some of the areas of interference listed by him were the appointment and removal of the group managing director, group executive directors and managing directors of the NNPC subsidiaries by the President, and limited financial autonomy for its operations.

Sam Omatseye of the Nation Newspaper hit the bull’s eye when he argued that NNPC is not the problem but the corruption in the system. Calling for caution in handling the affairs of the NNPC, he said it would not augur well for the country if NNPC is scrapped and another Octopus is created, adding that fidelity to the conscience of the law is what is important in fishing out  those who have abused the system and punishing them accordingly.

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