NNPC’s Accountability Crisis: How GMD Kyari Flops

• As Stakeholders Demand The Passage Of PIB To End NNPC’S Monopoly

Even though the Niger Delta Development Commission (NDDC) probe saga has not yet ended and with the approval of another whooping sum of N2.5b to audit the books of the notorious commission, insinuations are already high over high level of corruption and mismanagement that might be going on in the Nigerian National Petroleum Corporation (NNPC).

 

With the recent probe of contracts in the NDDC, attention, and of course the focus of the Nigerian political commentators especially on social media, is now on other cash cow parastatals with NNPC in the eye of the public.

 

 

 

On his assumption of office as the Group Managing Director (GMD) of the NNPC, Mele Kyari Kolo has made two key and important promises which pundits and the Industry’s key stakeholders believe are all yet to be realized.

 

 

 

 

 

 

 

The Borno born GMD has promised to resuscitate all the four nation’s refineries and to bring them to full operations by 2023. NNPC has a total of four refineries, two in Port Harcourt, one each in Kaduna and Warri. Mr. Kyari had also assured a skeptic nation that under his leadership the NNPC will be fully accountable and transparent to Nigerians and promised to bring to an end the stories of corruption, mismanagement and abuses the NNPC is known for over the years.

 

 

 

While on paper and through reports emanating from the Corporation Mr. Kyari is said to have brought transparency and accountability in NNPC’s management of Nigeria’s oil and gas revenues and infrastructure, credible insiders in an interview with DESERT HERALD said the corruption in NNPC, particularly in crude oil exportation and importation of the refined product, has been unprecedented under the current leadership.

 

 

 

 

 

 

 

Stakeholders argue that releasing audited financial statements of the NNPC, its subsidies and business units alone, which they believe are being influenced and manipulated by the leadership at the NNPC Towers, should not be used as a yardstick to assume the Corporation under Mr. Kyari is now more accountable and transparent as the Senate Committee Chairman on Petroleum (Upstream), Sen. Bassey Akpan, will want Nigerians to believe.

 

 

 

They said NNPC is still not transparent, while the mismanagement and wastage are on the increase. They also insisted that Mr. Kyari should be judged by the transparency or otherwise in the management of Nigeria’s crude oil, its exportation for international markets and the product that are being exported for the purpose of refining back to Nigeria.

 

 

 

They lamented that under the current leadership and even during the subsequent administrations in the NNPC, nobody apart from those that are at the helm knows the exact amount of crude oil that is leaving Nigeria for all purposes.

 

 

 

 

 

 

 

They said the NNPC is judging itself, its conduct through aggressive media propaganda and misleading Nigerians about ‘achievements’ that are hugely being exaggerated and lamented how most media organisations have allowed themselves to be compromised while the nation’s resource is being diverted by very few opportune people.

 

 

 

Investigations by DESERT HERALD also revealed that some top executives of the Corporation are actually in oil businesses with interest in several local and international oil firms. Our investigation also confirmed that despite the promises and assurances given by Mr. Kyari to rehabilitate and return all the four ailing refineries to full production, he will certainly finish his mandate as the GMD without fulfilling even half of that promise because of high level sabotage by top officers within and outside the NNPC that are benefiting immensely from the fraudulent policy of crude oil exportation for the purpose of refining the product and bringing same back into the country. The contract, the arrangement and the process, insiders lament, are characterized by fraud.

 

 

 

 

 

 

 

And sadly, the deliberate failure to resuscitate the nation’s refineries despite wasting billions of naira in the past and even at present is damaging Mr. Kyari’s primary constituency, the North more. Thousands of people have lost means of livelihood for example as a result of the total shutdown of the Kaduna Refinery while the NNPC has continued to pay huge monthly salary bills and other allowances to its rather redundant staff at the four refineries.

 

 

 

The unfortunate situation will continue to linger at the expense of the nation and its poor citizens as long as there is no political will to permanently address the fraud, the mismanagement and the deliberate acts of sabotage at the NNPC.

 

 

 

 

 

Currently as investigated by DESERT HERALD, the NNPC as an agency of government has spent more than any agency in using chartered planes for both official and unofficial purposes with the GMD and the Minister of State for Petroleum, Timipre Marlin Sylva top in incurring such heavy and sometimes unnecessary bills. Even though big firms that are benefiting from the largesse of the NNPC do provide private jets to some top executives on request, findings reveal that the NNPC is spending so much in payment of such bills while in many instances families, cronies of such executives are the ones using the private jets.

 

 

 

Insiders are unanimous that the NNPC management or its publicity unit are only deceiving themselves to assume that Nigerians will believe the misleading rhetoric that there is no corruption in today’s NNPC or that transparency has been restored with the coming of Mr. Kyari on board. They raise several questions the NNPC is yet to address or rather avoiding it in their several claims of ‘successes’.

 

 

 

 

 

 

 

They also said the only way to judge the leadership of Mr. Kyari is to access the current state of the four refineries, what he has done since taking over and most importantly and beyond any rhetoric to ensure that the refineries are back into full production and to permanently stop the fraud of exporting Nigeria’s crude for refining. As long as the current GMD did not achieve that or could not achieve that, the stories of successes, entrenching transparency and accountability in whatever form will remain the usual old story.

 

 

 

With Mr. Kyari at the helm of the NNPC, pundits aver that the northern economy suffered more than ever before considering the failure of the Corporation to resuscitate the only refinery in the region which serves as not only a source of employment for hundreds but a source of income to thousands.

 

 

 

While Mr. Kyari and seven other Chief Operating Officers were appointed on June, 20th, 2019 and assumed office on 7th July, 2019 with a clear mandate, NNPC under them and after over one year did not show any sign of departure from the failed promises of the past. Despite commitment to that effect all the nation’s refineries did not refine a single barrel of crude oil in the last 13 months of the current leadership but yet they have incurred a combined operating expense of N142.07bn.

 

 

 

The reason given by NNPC which is not justifiable and shouldn’t have been accepted by any serious government is because of the declining operational performance of the refineries to ongoing revamp aimed at further enhancing their capacity utilisation once completed.

 

 

 

The refineries, which are located in Port Harcourt, Kaduna and Warri, have a combined installed capacity of 445,000 barrels per day but have continued to operate far below the installed capacity.

 

 

 

 

 

 

 

“No white product (Premium Motor Spirit and Dual Purpose Kerosene) was produced in June 2020 and apparently for the past 12 consecutive months. The lack of production is due to ongoing rehabilitation works at the refineries,” the NNPC said in its monthly report for June.

 

 

 

The corporation said the combined value of output by the refineries (at import parity price) for the month of June amounted to about N40m.

 

 

 

“No associated crude plus freight cost for the three refineries since there was no production but operational expenses amounted to N10.27bn. This resulted in an operating deficit of N10.23bn by the refineries,” it added.

 

 

 

The Kaduna refinery incurred an operating expense of N60.20bn from July 2019 to June 2020, according to the NNPC data.

 

 

 

Port Harcourt refinery’s operating expense in the period under review was N43.37bn while that of Port Harcourt refinery was N38.49bn.

 

 

 

The Group Managing Director, NNPC, Mallam Mele Kyari, said on July 30 that the refineries were all idle, adding that the country was importing practically every petroleum product being consumed in the country.

 

 

 

In June, 767.42 million litres of PMS were supplied into the country through the Direct Sale Direct Purchase arrangement as against the 495.10 million litres of PMS supplied in May.

 

 

 

Under the DSDP scheme, selected overseas refiners, trading companies and indigenous companies are allocated crude supplies in exchange for the delivery of an equal value of petrol and other refined products to the NNPC.

 

 

 

The reason for these assertions against the NNPC might not be far-fetched because there have surely been many allegations of gross mismanagement of public funds in NNPC. In 2011, an audit report by KPMG revealed the agency couldn’t account for about $28.5 billion dollars over deducted funds in subsidy claims.

 

 

 

In 2013, a controversial letter by the then Central Bank Governor, Sanusi Lamido, to Goodluck Jonathan, claimed that NNPC had not remitted $49billion from crude oil sales.

 

 

 

 

 

 

 

Similarly, international companies like Willbros and ABB Vetco Gray have repeatedly admitted to paying bribes in millions of dollars to NNPC officials in the past.

 

 

 

Nigeria is currently using the 1969 Petroleum Act, which vested the entire ownership and control of all petroleum in, under, or upon all land or Nigeria’s territorial waters in the Nigerian government.

 

 

 

Under the current law, NNPC controls a majority in the Nigerian oil sector. The body, which manages the oil assets owned by the government, negotiates terms with operators, controls the importation of petrol into the country, handles the nationwide distribution of these products, issues licenses, and permits, and also set policies and regulations.

 

 

 

Sadly, NNPC’s responsibilities are not only massive for an agency; there is a conflict of interest because NNPC, serving as a referee who is also a player on the pitch, has an unfair advantage over other operators, and it also contributes to systemic corruption, to wastefulness and even allegations of theft.

 

 

 

The Nigeria Natural Resource Charter (NNRC) in 2019 carried out another Benchmarking exercise report assessing NNPC, using these criteria; Role and Funding, Corporate governance, Transparency, and accountability, the result for NNPC was poor, and that was a repeat of what happened in 2017 with a slight difference.

 

 

 

This has shown that NNPC’s lapses have been consistent; hence, there has to be a reform that will transform NNPC and shape Nigeria’s petroleum industry as the industry’s success relies heavily upon NNPC.

 

 

 

Another interesting finding by the NNRC was that Petrobras with lower reserves generate more revenues and 26 times more profits than NNPC while subject to the biggest corruption investigation in its history and paying fines or making provisions above US$10 billion on its balance sheet and still make a profit.

 

 

 

Last month, the Nigerian National Petroleum Corporation (NNPC) released its audited financial statements for its subsidiaries for 2018, noting that its refineries recorded losses of a whooping N154 billion. Yet, no concrete steps have been taken to offload the refineries from NNPC’s books.

 

 

 

 

 

 

 

NNRC noted that Petrobras still makes profit despite the high level of corruption because it’s commercially driven even though the failure of governance and failure of accountability and transparency impacted its management and operational efficiency.

 

 

 

NNRC concluded that commercial efficiency is key to the health and sustainability of a National Oil Company.

 

 

 

This means that corruption is not the only problem today’s NNPC is facing. A good Petroleum Industry Bill (PIB) should be able to tackle this problem with the creation of commercial institutions that will be tasked with holding and managing the assets and interests of the government.

 

 

 

The need to enact a decent Petroleum Industry Bill can never be overemphasized according to stakeholders, and increasing the performance of NNPC should be a leading objective. A good PIB should restructure the Nigerian National Petroleum Corporation (NNPC) and provide a clear path to the more effective management of Nigeria’s state-owned oil enterprises.

 

 

 

For now, it remains to be seen whether Kyari’s promise to revamp the refineries and end fuel importation by 2023 will be fulfilled.

Source: Desert Herald