NNPCL: The elephant in the room Recently, Olufemi Soneye, the Chief Corporate Communications Officer of the NNPC Limited, utilised his “right-of-reply” privilege to debunk the assertions made by Dr. Muiz Banire, a Senior Advocate of Nigeria (SAN), when he described NNPCL as the “black hole of Nigeria” in his opinion piece.
To the best of my knowledge, Dr. Banire is not the only person who is concerned about the state of affairs in Nigeria’s oil industry. Several public affairs commentators and concerned Nigerians as well as stakeholders have used the radio, television, newspapers (print and online) and the social media to express their views, either for or against NNPCL – a fully-owned government oil company. When is NNPCL – the big elephant in the room – going public?
I understand Soneye’s difficult position as spokesperson of NNPCL, but I’m sure many Nigerians are not swayed or convinced by his explanation. He tried to paint a picture of what is going on at NNPCL, especially on issues relating to petrol scarcity – that has become a way of life for us – and failed attempts to remove subsidy payments in the past.
However, it is wrong and superfluous to even suggest that those who criticise NNPCL are “intentionally mischievous” or “standing facts on their heads” or “want to be in the good books of the public.” Maybe Soneye doesn’t even know that the public image of NNPCL is in tatters – that is if there’s still any semblance of any public image left, apart from the bright colours of its logo which was launched with so much fanfare with billions of naira in a major rebranding effort two years ago – and no matter how he tries to spin the NNPCL story, it will always be a hard sell.
I do not envy Soneye, but he has a job to do. A very difficult job indeed. This is the same oil company that initially denied that they were owing suppliers when the story first broke. There was really no point being economical with the truth in the first place. But as it turned out, NNPCL admitted in a statement that they were facing “financial constraints,” and indeed petroleum products suppliers were being owed about $6.8 billion because it pays to import these products rather than making our refineries work.
This debt burden – amongst others – is responsible for the long and winding queues at petrol stations, where productive man-hours are lost with the resulting negative effect on our economy. After lying shamelessly, NNPCL should apologise to Nigerians for their bad behaviour.
So who is responsible for the perennial fuel scarcity? Who was also responsible for importing bad petrol that damaged our vehicles and generators two years ago? Were there any sanctions or consequential management?
Soneye can commission a perception audit on NNPCL and tell the whole world the findings. I’m not too sure he would fancy the report. He reacted to the views of Dr. Banire and Pat Utomi, a professor political economy, because he could not ignore them, knowing fully well that they have “strong” voices in the court of public opinion, in addition to their stature in the society as public intellectuals and thought leaders.
Soneye cannot, in good conscience, say that these two gentlemen don’t know what they are saying. NNPCL cannot rule out more “vitriolic attacks” as the days go by; that would be mere wishful thinking when everyone is concerned about energy security. NNPCL is the one holding the keys and padlock to our oil quarters.
I don’t know whether Soneye was expecting The Punchto shower praises on NNPCL or garland the oil operator with medals of extraordinary achievements in the newspaper’s editorial. Wouldn’t that be rather farfetched? Does he truly understand the heritage and editorial policy of the newspaper that is over 50 years old?
The story of NNPCL will fill a book, and it could be a best-seller, depending on who the author is. Whether NNPCL is a “cesspool of corruption” or a “danger” to Nigeria, Soneye should understand that Nigerians are tired of the shenanigans, and lack of transparency and accountability of the fuel provider of last resort.
Shortly before former President Olusegun Obasanjo left office in 2007, he wanted a cure for a nagging migraine that had refused to go away. The migraine was diagnosed as Nigeria’s four moribund refineries. According to Obasanjo, he invited Shell Petroleum to run the refineries, even with the offer of an equity stake, but the oil giant refused, citing reasons that included massive corruption in the oil industry.
Obasanjo’s nagging migraine increased, but he could not believe his luck when Alhaji Aliko Dangote and Mr. Femi Otedola, two prominent billionaires, set up Blue Star Consortium to acquire stakes in the Port Harcourt and Kaduna Refineries – 51 percent for Dangote and 21 percent for Otedola. They were ready to “change the game and transform Nigeria’s energy landscape” for an investment of $750 million in both refineries.
The deal was made on Obasanjo’s watch only for it to be reversed by his successor, late Umaru Yar’Adua, in an “utterly obnoxious” manner as Otedola described it.
When Obasanjo learnt of the reversal, he went to ask Yar’Adua – who was now President at the time – why he took the decision, thereby frustrating the vision of Dangote and Otedola. Yar’Adua told Obasanjo that the henchmen at NNPC and other vested interests assured him that they would fix the refineries. We are now in 2024. Are the refineries working? That assurance given 17 years ago entered a mysterious voicemail.
In a viral video, the late Chief M.K.O Abiola who was the presumed winner of the annulled June 12, 1993 presidential election, said that he would demystify the “layers of mystery” around NNPC by making it more transparent and accountable after being sworn into office. Abiola promised to publish the price of daily sale of Nigeria’s crude oil, but he died under mysterious circumstances as he fought to reclaim his mandate. That was 31 years ago.
The testimonies of Obasanjo and Abiola are just two examples that underscore the urgent need to lift the veil of opaqueness surrounding NNPCL. At a time Nigerians are struggling to survive, another layer of hardship was added – Nigerians in search of petrol sleep at filling stations because NNPCL cannot guarantee energy security.
The Guardian Weekend of September 7 – 8, 2024 did an excellent reporting on NNPCL. According to the newspaper, after spending about $3 billion on Turn Around Maintenance (TAM) on Nigeria’s four refineries in the last three years, NNPCL has not been able to give Nigerians one drop of petrol, yet there are huge salary bills and employee benefits paid every year running into billions of naira. The failure of NNPC and now NNPCL, it must be stated for the umpteenth time, is rooted in allegations of mind-boggling corruption, poor corporate governance and political interferences.
There are two refineries in Port Harcourt, one in Warri, and one in Kaduna. It was the 61-year-old Port Harcourt refinery that received approval of $1.5 billion in 2021 for total rehabilitation. The Warri refinery is 46 years old while the Kaduna refinery is 44 years old. The Kaduna and Warri refineries also received about $1.5 billion in 2021 after the Federal Executive Council (FEC) approved the contract awards in August 2021. The four refineries have an installed capacity of 445,000 bpd distributed as follows: Port Harcourt refineries (210,000 bpd); Warri (125,000 bpd), and Kaduna (110,000 bpd).
These refineries are just waste pipes. If you check their record of debts in the 2022 audited statement of the company, the Port Harcourt refineries are owing N806 billon; Warri refinery is indebted to the tune of N597 billion while the Kaduna refinery is owing N487 billion. Even when the refineries were shut down, the losses continued to mount. I’m sure Soneye will agree with me that this is a poor score card by any standard. If NNPCL were a private sector company, the entire management would have been fired a long time ago.
“What’s the future of NNPC refineries?” The Guardian Weekend asked. Is there indeed a future after what we have witnessed in the last 40 years? The newspaper quoted Dr. Muda Yusuf, the chief executive of the Centre for the Promotion of Private Enterprise (CPPE), as follows: “NNPC lacks the capacity to effectively manage critical oil sector assets, including the refineries. The high standards seen in other national oil companies such as Saudi Aramco and Petrobas are missing in NNPC’s operations. Merely injecting more money into the sector will not solve its problems.”
Dr. Yusuf went on to recommend that the Nigeria Liquefied Natural Gas (NLNG) model be adopted to manage the four refineries. Indeed, talking about solutions, NNPCL shares should be listed on the stock exchange where government control should be diluted to not more than 25 percent.
As of 2021, NNPCL had 7,338 staff. The four moribund refineries spend N68 billion yearly on salaries and over N500 billion on employee benefits in a single year. In 2022, the employee benefits stood at N266.923 billion, but it rose dramatically to N583.797 billion in 2023 – that’s more than double, an increase of about 118 percent, according to the audited statements released last month.
The statement also revealed that the company’s general and administrative expenses increased from N1.704 trillion in 2022 to N2.991 trillion in 2023 – an increase of 70 percent. Is this how they spend our money at NNPCL?
Nigeria is a major oil producer with four refineries, but in nearly 30 years, we have been importing petroleum products that are heavily subsidised. If Nigeria is flat broke today, it is mainly due to the huge subsidy scam and oil theft that are perpetrated by the enemies of Nigeria. Personally, I feel ashamed that we have been unable to manage our oil assets. While monumental oil thefts, subsidy scams and smuggling have posed significant challenges, NNPCL continues to multiply its own problems.
The bulk of our crude committed to forward sales by NNPCL is creating supply challenges to local refineries with our daily oil production at only 1.3 million bpd. Last year alone, over N7 trillion was spent on subsidy payments, and this figure is likely to go higher this year. In six months from January to June, 2024, our petrol import bill is already at N5.8 trillion.
NNPCL is now searching for private firms (Operations and Maintenance (O&M) companies) to operate the Kaduna and Warri refineries. This is like history repeating itself if we recall the Blue Star Consortium story when the sale of both refineries to Dangote and Otedola 17 years ago was reversed. I would be glad if the national oil company is able to sign an O&M deal for the two refineries. By the way, we must thank Dangote Refinery for coming to the rescue of NNPCL after a series of oily twists and turns.
Going forward, NNPCL should turn a new page, and intentionally seek to have a clean break from the past. For example, instead of making unrealistic projections, it is better for the refineries being rehabilitated and revamped to begin operations before any public announcements are made. That approach would be a better public relations strategy.
Soneye, join me and my colleagues as we advocate for a better Nigeria. That is what we are doing under the auspices of Naija Times Journalism Foundation (NTJF), the nonprofit arm of Naija Times, our online newspaper. We are guided by three ideals: building strong institutions, upholding the rule of law and defending the public interest.
We do not have any other country to call our own, except Nigeria. We must therefore join hands in the task of nation-building and make Nigeria, the greenest nation in Africa, realise its full potential.
Braimah is a communications strategist and publisher/editor-in-chief of Naija Times (https://ntm.ng)and Lagos Post (https://lagospost.ng). He can be reached at [email protected].
Category: World-News
Tag: NNPCL The elephant in the room
Written by Author
Published 9/14/2024