Formerly Nigerian National Petroleum Corporation (NNPC), the state’s oil firm legally transformed into a limited liability company on July 1, 2022, whose operations and activities are regulated under the Companies and Allied Matters Act. One year down the line the organisation’s transparency is still being contested, Abdulwahab Isa reports.
Excessive opaqueness in its finance operations, trust deficit were two major reasons Nigeria’s Governors’ Forum (NGF) battled the management of the Nigerian National Petroleum Corporation Limited (NNPCL) to no end in 2022. The federation purse was at its lowest ever on account of the Corporation’s zero revenue remittance. It triggered a media war between the sub-national government and NNPCL. Precisely last year, the Forum of state governors was embittered that the national oil firm declared mega profit for the year, when it failed in remitting a dime into the federation account for sharing to the three tiers of governments.
The Forum Chairman at the time, and a former Governor of Ekiti State, Dr. Kayode Fayemi, took NNPCL to the cleaners, lambasting it for not remitting any funds to the monthly Federation Accounts Allocation Committee (FAAC) while it declared N287 billion profit after tax for its 2020 financial year, which, incidentally, was its first profit in a long time. In 2022 and 2023, NNPCL cut off oil revenue remittance into FAAC on the account of fuel subsidy burden shouldered by the firm. However, the governors laboured in vain to compel NNPacL to submit its books for scrutiny. Details of the financial operations are non-disclosure subject matter by every successive administration.
Subsidy removal
Despite a sustained rise in the crude oil price at the international oil market last year, the Corporation failed to remit revenue into the federation account. The oil firm’s excuse was provisioning for fuel subsidy burden. Faced with dwindling revenue for states, governors met in Abuja under the Nigerian Governors’ Forum (NGF) and insisted for the removal of subsidy on premium motor spirit (PMS), otherwise called petrol. Fayemi disclosed that the Nigerian National Petroleum Company (NNPC) Limited contributed nothing to the Federation Accounts Allocation Committee (FAAC) for months when price of crude attained record high, trading above $110 per barrel. He said payment of subsidy had eroded almost 90 per cent of the fund expected in the FAAC. Governors’ push for fuel subsidy sailed through under the current administration.
President Bola Ahmed Tinubu announced removal of fuel subsidy as one of the key policy announcements of the administration on May 29, 2023. Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) backed President Bola Tinubu’s decision to stop the subsidy on petrol products. The agency doubted the humongous amount NNPCL claimed it spent on fuel subsidy removal or under recovery.
Post-subsidy removal issues
Almost seven months of fuel subsidy discontinuance, issues bordering on NNPCL’s transparency, accountability and management of forex revenue flow dominates public discourse. A former Governor of Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, last week carpeted the management of NNPCL for opaqueness in forex revenue disclosure of the state’s oil firm. Speaking as a guest of honour at Bank Directors Summit organised by the Bank Directors Association of Nigeria in Abuja, the former CBN governor advised President Bola Tinubu against occupying the office of the Minister for Petroleum Resources as done by immediate past President Muhammadu Buhari. He said doing so comprised NNPCL transparency, thus shouldering further its accountability. The fiery former Emir of Kano carpeted NNPCL for allegedly failing to remit enough foreign exchange into the government coffers despite the removal of fuel subsidy by the current administration.
His address touched on spikes in forex exchange inflow and what could be done to achieve a stable foreign exchange and the expected role NNPL could play. “The exchange rate needs to be stabilised and we have to address the fundamental question, why is there no money coming in? Why is the NNPCL not able to bring in dollars? Am sorry this is the question that cost me my job and I will continue asking this ques- tion until NNPCL fixes it up or until I die. “Where are the dollars? We need to shine a light on the NNPCL. The finance minister cannot tell you because he doesn’t have a monitoring system that reports to him. The finance minister can’t tell you how many barrels of petrol we produce and export. It is only the NNPCL that can give those figures. The finance ministry needs to know how much oil we produce daily, how much we sell, and where the money is going.
“We are no longer paying subsidies so where are the dollars? It was under recovery during the subsidy era and that has been stopped, so where is the money? This was the issue I raised for which I was suspended, well you can suspend me again. The NNPCL is the opaquest oil company in the world. When I was in the central bank for 15 years, they had not been audited. We have to follow the money from production to export to return, where is the money going? We paid N11tn in subsidy and there is no accountability up till now. The National Assembly called the NNPCL to bring the documents, but they refused.” He added: “By the way, let me advise that the idea of the President becoming a petroleum minister is not a good idea.
The last president was the minister of petroleum for eight years. When I was governor of the central bank we had a minister of petroleum so when I talk about the NNPCL, I could attack Diezani Madueke. Now, nobody can talk about petroleum because for eight years if you talk, you are attacking the president. We need that buffer, somebody has to be there, so a minister has to be there who is held accountable by Nigerians.” Lamido’s observation about NNPCL isn’t new. Stakeholders in Nigeria’s real sector recently called for urgent reorganisation in the Central Bank of Nigeria (CBN) and NNPC Limited for improved transparency and accountability.
They (stakeholders) made the call in a communiqué issued at the end of the 2023 Mid- Year Economic Review and Outlook jointly organised by Lagos Chamber of Commerce and Industry, LCCI and Cordros Capital to highlight opportunities for business growth and sustainability in Nigeria and the global market. “The operating environment of NNPCL is somewhat opaque, which is anti-competition. The oil sector will attract the desired investment if the government liberalises fuel import licences and other vital activities in the midstream and downstream. Government should unlock revenue from assets by complementing tax with rent, fees, dividends, and capital gains. Economies that optimise revenue through equities have recently offset the loss from declining commodity prices”.
NNPC counters
The state oil firm as usual debunked claims of secrecy, opaqueness foisted on its af- fairs by some individuals, bod- ies. The firm was quoted by a media outlet in response to views expressed by the former CBN governor, stressing that everyone was free to air their opinion. NNPC’s Chief Corporate Communications Officer, Olufemi Soneye, was quoted as say- ing, everyone was entitled to his opinion. “Constant responses to every individual can hinder our work. Our focus remains on delivering energy security, managing on- going projects, and implementing reforms,” Soneye stated
Last line
As a public entity, an important one whose revenue remittance is paramount to the size of revenue available to the federation, openness and transparency of NNPCL is key to its finance operations as the public has the right to shine light on its activities.
