The hammer finally came down on the former Group Managing Director (GMD) of the Nigeria National Petroleum Corporation (NNPC), Dr. Joseph Thlama Dawha early in the week. In his place, President Muhammadu Buhari announced the appointment of the former Executive Vice Chairman/General Counsel of ExxonMobil (Africa), Dr. Emmanuel Ibe Kachikwu as the new boss of the corporation.
The termination of Dawha’s appointment no doubt marked the end of an era in the all important organisation in whose hands the financial fate of the nation literally lies, but which, unfortunately, has been bedeviled by mega corruption. Only on Tuesday, an international governance watchdog, the Natural Resource Governance Institute (NRGI) released a report in which it accused the NNPC of failing to remit $12.3 billion (about N2.46 trillion) into the Federation Account, being proceeds of sales of one of Nigeria’s crude oil grade over the last 10 years.
In the report titled ‘Inside NNPC Oil Sales: A Case for Reform in Nigeria,’ the NRGI said its research found no evidence that NNPC forwarded to the treasury any revenues from sales of Okono crude between 2005 and 2014, totaling more than 100 million barrels with an estimated value of $12.3 billion.
“In other words, the corporation has provided no public accounting of how it used a decade’s worth of revenues from an entire stream of the country’s oil production,” the report stated.
The report further disclosed that the NNPC’s approach to oil sales suffered from high corruption risks, adding that the company had failed to maximize returns for the nation. According to the report, over the last 38 years, the NNPC has neither developed its own commercial or operational capacities nor facilitated the growth of the sector through external investment. Instead, NRGI noted, it has spun a legacy of inefficiency and mismanagement.
The governance watchdog lamented that in spite of the failings of the NNPC, especially in its debilitating consumption of public revenues, successive governments have made no effort to undertake a reform of the corporation.
NRGI said: “We find that management of NNPC’s oil sales has worsened in recent yearsand particularly since 2010. The largest problems stem from the rising number of ad hoc, makeshift practices the corporation has introduced to work around its deeper structural problems.
“For instance, the NNPC entered into poorly designed oil-for-product swap deals when it could no longer meet the country’s fuel needs. Similarly, it began unilaterally spending billions of dollars in crude oil revenues each year, rather than transferring them to the treasury, because NNPC’s actual budget process fails to cover operating expenses.
“Some of these makeshift practices began with credible goals. But over time, their operation became overly discretionary and complex, as political and patronage agendas surpassed the importance of maximising returns. “These poor practices come with high costs.
“Average prices for the country’s light sweet crude topped $110 per barrel during the boom of 2011 to 2014. Yet during that same period, treasury receipts from oil sales fell significantly. While volumes lost to oil theft explain some of the decline, NNPC’s massive revenue withholdings and an increase in suboptimal sales arrangements are also to blame. “Mismanagement of NNPC oil sales also raises commercial, reputational and legal risk for actors worldwide. The sales involve some of the world’s largest commodity trading houses, are financed by top banks, and result in the delivery of crude to countries across the globe.”
The alarm raised by NRGI was a corroboration of earlier ones by concerned Nigerians, including Governor Nasir el-Rufai of Kaduna State who, advocating a radical solution to the menace the NNPC had constituted to the nation’s progress, said the corporation should be abolished and replaced with a new one.
“NNPC must die! If you don’t kill NNPC, it will kill Nigeria,” he said at the 7th Wole Soyinka Centre Media Series in Abuja on July 13.
According to the governor, in three years between 2012 and 2015, the corporation failed to remit the sum of N3.670 trillion, which he said amounted to 42 per cent of the moneys it earned during the period. He explained that NNPC made about N10.463 trillion in the period but remitted only about N6.793 trillion and could not showcase proper record for the rest.
He said: “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 N1.66 trillion to the Federation Account. In 2013, it earned N2.66 trillion but paid N1.56 trillion to FAAC, in 2014 N2.64 trillion but remitted N1.44 trillion, while between January and May 2015, it earned N733.36 billion and remitted only N473.2 billion!”
“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.”
But the party appears to be over with the appointment of Kachikwo as the new GMD. His pedigree as a First Class Graduate of Law from the University of Nigeria, Nsukka and the Nigerian Law School, with master’s and doctoral degrees in Law from the Harvard Law School to boot, seems to testify to the quality that is being brought to the management of an establishment that is clearly the nation’s economic nerve centre. So also is his record of service with the Nigerian/American Merchant Bank from where he moved to Texaco Nigeria Limited before he joined ExxonMobil where he functioned as the Executive Vice Chairman/General Counsel before his appointment as NNPC’s GMD.
He has already wielded his winnowing fork, sacking the eight group executive directors of the company and merging the eight directorates into four, less than 72 hours after his appointment. Nigerians definitely expect more.
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