The recent scandal in the Nigerian National Petroleum Corporation involving the disappearance of N11bn worth of petrol is another disturbing occurrence in a company to which scandal, fraud and inefficiency have become second nature. It is even more worrisome that the trend is persisting at a time the country is going through a serious financial crunch due to economic recession and, more importantly, under a government that is pursuing an anti-corruption agenda.
Given its history of desultory management, there can be no better time than now to start subjecting the activities of the national oil firm to stricter and closer scrutiny. Besides, it is time to carry out a long-overdue restructuring of the NNPC so that all avenues through which leakages and fraud occur can be firmly blocked. A complete overhaul of this corrupt oil behemoth, notorious for making losses, has become imperative if the government is desirous of bringing sanity to the place and achieving a turnaround in its fortunes.
According to reports, the NNPC had stored over 130 million litres of petrol in the facilities of two indigenous oil firms, MRS Limited and Capital Oil, ostensibly as part of its strategic reserves. But, for a company that boasts numerous depots across the country, contracting the storage of its products out to other firms was unnecessary; it was a move that smelt trouble because of the propensity for abuse.
Not surprisingly, this was exactly what happened when the NNPC wanted to access the product at the two depots. It could no longer be found, having been appropriated and sold off by the concerned firms. As if the illegal appropriation of the product was not bad enough, it was revealed that while MRS offered to pay back, Capital Oil allegedly refused to do the same, citing claims that it was actually the one being owed by the corporation.
The purpose here is not to determine the veracity of the claims, as they could be sorted out through litigation. But for an agency that has been serially mentioned in fraudulent activities and is constantly involved in non-remittances of revenues to the federal purse, as constitutionally required, not many will be shocked by this latest scandal. This is a company that played a role in the fleecing of the country of about N2.53tn – about 50 per cent of national budget then – for subsidy payment in 2011 for which N246bn was actually provided in the budget. People were reportedly paid subsidy for products not imported, and the country is yet to recover from that monumental fraud.
The periodic reports of the Nigerian Extractive Industries Transparency Initiative have never failed to indict the corporation, as was the case in the one released last month, which claimed that it withheld a whopping sum of $21.77bn that should have gone to the national treasury. Part of the money was from oil swap deals and dividends that accrued to the country from her investments in the Nigeria Liquefied Natural Gas, which the NNPC withheld. NEITI’s audit report for 2014, released in December last year, indicted the NNPC for not releasing $4.7bn and N318bn to the Federation Account.
Incompetence and lack of transparency have also underlined other activities of the NNPC, especially in the management of the country’s four refineries in Warri, Port Harcourt and Kaduna. While the refineries, combined, have a capacity for refining 445,000 barrels of crude oil daily, their capacity utilisation has remained anything between zero per cent and a peak of 42.6 per cent between January 2016 and January 2017. In fact, the refineries have become better known for the money they guzzle in the name of carrying out turnaround maintenance than for the crude oil that they refine.
Not surprisingly, the NNPC’s books for the year ended 2016 showed another mind-boggling loss of N197.47bn. This was after it seemed to have turned the corner by recording its first profit in 15 years of N273.74m in May, under the Minister of State for Petroleum Resources, Ibe Kachikwu, who was also then the NNPC Group Managing Director.
The N11bn involved in this scam seems relatively small, compared to the gargantuan fraud that usually takes place in the NNPC; but the authorities should carry out a thorough investigation and ensure that those involved in it are brought to book. Although a few senior management staff were said to have lost their jobs on account of the fraud, that should not be enough. To serve as a real deterrent, anybody found to have been closely or remotely connected, no matter how highly-placed, should be prosecuted and if found to be culpable, jailed.
Nigeria has to follow global best practices in her dealings with the oil industry. When scandals, the type recorded in the NNPC, occurred in Brazil’s national oil company, Petrobras, nobody was spared; not even the then President Dilma Rousseff, could wash herself clean from what became known as the ‘Car Wash’ scandal, as she was impeached 15 months into her second term. The NNPC has to be repositioned to become profit-oriented and efficient in its day-to-day running.