NNPC: The plundering of Nigeria – Punch

THERE is a reason the Nigerian National Petroleum Corporation has a global notoriety as a tower of graft and ineptitude. This unedifying perception developed from its role in providing 'slush funds for the government' and as one of the 'major black holes in the country's public finances.'  Flush with oil revenues, the NNPC has been spending it wastefully, wallowing in a rotting culture of graft and corruption. This must end.

A report by the Human Rights Watch, a New York-based pressure group, says 'oil revenues have been misused, undermining democracy, facilitating corruption and depriving the public of important services.' The ongoing investigation of missing oil money only reinforces this terrible image. And the figures are eye-popping: they range between $10 billion and $20 billion within 19 months. It has never been this horrific.

Confronted once again with the financial atrocities at the NNPC and its subsidiaries, Nigerian officials have, regrettably, resorted to the usual nefarious and diversionary tactics of keeping the public in the dark about the depth of looting in our oil and gas industry. But the Financial Times recently said the 'conclusions drawn in independent research using official data are that, whichever way you look at them (the different figures), the numbers are indeed not adding up.'

But when the government is caught flat-footed in Nigeria, what does it do? Set up a probe to buy time. That is exactly what our Coordinating Minister for the Economy, Ngozi Okonjo-Iweala, has just recommended. 'Our judgement,' she said, 'is that a proper examination of these documents requires technical expertise beyond the capacity of the reconciliation team, etc, and therefore, we believe we should have an independent forensic audit, managed independently of these submissions.'

Not everyone welcomes that idea. This is a farcical way to deal with what everyone knows is an organised financial crime against the Nigerian State. Such insufferable hypocrisy should not wash. In that sense, Okonjo-Iweala's approach is worn out and is only fit for the dustbin.

Indeed, it is said that a good definition of insanity is doing the same thing over and over, expecting different results. Already, a thick stack of documents offers stout evidence of the plundering of Nigeria through the NNPC. The Comprehensive Oil and Gas Report 2009-2011 presented by the Nigeria Extractive Industries Transparency Initiative that offers troubling insights into the NNPC's dodgy operations is still on the shelf, its recommendations un-implemented. Like previous and later reports, it exposed the fraud, opaque accounting and disregard for law at the NNPC. Its findings on public funds never remitted to the treasury have not been acted upon. How many audits, panels and parliamentary hearings do we need before the NNPC is made accountable and the thieves brought to justice?

There is nothing new, therefore, in the alarm and findings of the impunity and revenue discrepancies by the now suspended Central Bank of Nigeria Governor, Lamido Sanusi, that have provoked the latest round of outrage and parliamentary acrobatics.

Indeed, after a forensic audit, KPMG, a global audit firm, in 2009, found how the NNPC surpassed OPEC oil production quotas without authorisation, falsified exchange rates with which it made payments to the Federation Account, illegally awarded or terminated oil lifting contracts, over-deducted oil subsidy claims and cheated the Federation Account of N25.7 billion in 2007; N33.8 billion in 2008 and N26.7 billion in 2009. Before then, the Hart Group, in another audit, had also reported how the NNPC cheated the taxpayer by under-stating crude oil sales.

Stakeholders are well aware of the monumental fraud at the NNPC arising from many diligently researched reports; what have been lacking are the political will to act and honesty on the part of legislators who are known to accept favours from the NNPC. The Magnus Abe-led Senate Joint Committee on Petroleum Resources (2005-2011) prepared one of such reports. In the wake of the fuel subsidy protests of 2012, four panels set up by the government itself detailed how the NNPC ran its affairs without effective oversight and how Nigeria could not even ascertain how much it truly earned from oil and gas. The Idika Kalu committee, Dotun Sulaiman committee, Aig Aig-Imoukhuede committee and the Nuhu Ribadu-led task force, among others, held the nation spellbound with reports of unheard-of corruption at the NNPC.

The House of Representatives Ad hoc Committee on fuel subsidy found that the NNPC paid itself N847.94 billion even after it had been paid N844.94 billion by the Petroleum Products Pricing and Regulatory Agency in 2011, suggesting that the company had been making double withdrawals for years from the treasury. The NNPC 'was found not to be accountable to anybody,' the committee said. Curiously, the government has not deemed it fit to make the NNPC halt its practice of selling 100 per cent of Nigeria's crude through middlemen. It was found that it sells to these third parties at $9-10 less per barrel than the prevailing price, representing millions of dollars in losses to Nigerians each year. How about the scandals surrounding its concessionary allocation of 445,000 barrels per day and the crude oil swaps?

And over and over again, revelations of unimaginable sleaze and impunity by the NNPC and its political masters rivet the whole world. Chatham House in 2013 said the 'lines between legal and illegal supplies of Nigerian oil can be blurry. The government's system for selling its own oil attracts many shadowy middlemen, creating a confusing, high-risk marketplace.' Nigeria's oil industry is also one of the world's least transparent in terms of hydrocarbon flows, sales and associated revenues.

In 2011, Revenue Watch and Transparency International reported that four African state-owned companies, including the NNPC, performed badly with regard to reporting on anti-corruption practices. Three African companies, especially the NNPC, registered the lowest score on institutional disclosure. In its Oct. 20, 2012 issue, The Economist stated, 'Information about Africa's biggest oil industry is an opaque myriad of numbers. No one knows which ones are accurate; no one knows how much oil Nigeria actually produces. If there were an authoritative figure, the truly horrifying scope of corruption would be exposed.' Anything to add?

Yes, there is. The effect is that about $400 billion of oil money, as the World Bank says, has been stolen since 1960. Elsewhere, national oil companies are spearheading development. Saudi ARAMCO, founded in 1933, is valued by the Financial Times of London at $10 trillion, making it the world's most valuable company. Petronas, the NOC of Malaysia, founded in 1974, is rated by Fortune magazine as the world 12th most profitable company, with investments in China, Vietnam, Cambodia, Niger Republic, Egypt, Mauritania and Indonesia, among others. The Abu Dhabi National Oil Company of the United Arab Emirates (founded in 1971) and Kuwaiti Petroleum Corporation (1980) have substantial investments in Western countries and Asia.

The issue at hand is straight-forward: the NNPC is out of control and must be reined in. Its executives, collaborators and political office holders - past and present - that have for years stolen the country blind, should be subjected to criminal investigations and prosecuted. All the fraudulently siphoned money from the firm should be recovered.

We must hold the state-owned firm to a higher standard. Pray, what is the Minister of Petroleum Resources, Diezani Alison-Madueke's special interest in subsidising the price of kerosene? Her argument that Nigerians will have to pay thrice the price is deceitful. At between N120 and N240 per litre, Nigerians have been paying well above the recommended price of N50 per litre, despite the trillions of naira of public funds the NNPC appropriates for subsidy. And it is especially irksome that our Finance Minister continues to dilly-dally on NNPC's lack of accountability. This disgusting situation is reinforced by a spineless, noise-making but over-paid parliament.

The grim reality is that years of easy money have made the NNPC irredeemably crooked and arrogant.  The NNPC is not a normal company. It reports to no one but itself. President Goodluck Jonathan cannot escape responsibility for this reckless pillaging. His only response so far to the atrocities of NNPC has been to suspend Sanusi! Will the National Assembly be sufficiently provoked to defend the interests of Nigerians this once? Maybe.

But there must be a clear separation of powers between the parliament, the Petroleum Ministry and the NNPC. Nothing will change unless the anti-graft agencies begin criminal investigations into the activities of the kleptocrats parading themselves as Nigerian leaders.