NNPC must die, says el-Rufai

JULY 14, 2015 : OKECHUKWU NNODIM 37 COMMENTS

Governor Nasir el-Rufai

The NNPC (Nigeria National Petroleum Corporation) must die!” These were the words of the Governor of Kaduna State, Mallam Nasir el-Rufai, in Abuja on Monday.

A visibly angry el-Rufai, while speaking at the 7th Wole Soyinka Centre Media Lecture Series, lambasted the national oil firm for being run like a parallel government, adding that he was hopeful that the current administration of President Muhammadu Buhari would “kill” the corporation.

The governor called for the setting up of another national oil firm as he argued that the present NNPC would kill Nigeria if it was allowed to continue running.

“If you don’t kill the NNPC, it will kill Nigeria,” el-Rufai said.

According to him, the oil firm is riddled with corruption and until it is destroyed completely and rebuilt from the scratch, there will be no headway for Nigeria.

El-Rufai argued that with his experience as a former Director-General of the Bureau of Public Enterprise, it was possible to destroy a bad organisation and turn it into a good firm.

He maintained that Nigeria’s collective wealth was being feasted upon by the less than 1,000 employees of the corporation, alleging that the NNPC only remitted 42 per cent of what it ought to remit to the Federal Government for about three years.

The governor used statistics to defend his recommendation on why the current NNPC must be destroyed

He said in 2014, the country produced on the average about 2.2 million barrels of crude oil per day, while importing most of its daily consumption of 43.5 million litres of refined petroleum products.

He stated that the reliance on imports of refined products led to unsustainable expenses on questionable subsidy payments, exemplified by the $8.99bn spent in the 18 months between January 2012 and June 2013.

El-Rufai said, “About N971bn was budgeted for subsidy payments in 2014 alone (more than twice that was eventually paid). You all recall how trillions of naira were paid out as oil subsidy in 2011, when only N254bn was appropriated. No one has been successfully prosecuted for this scam. Huge deficits in gas supply have ensured that the country’s thermal plants cannot produce power at optimal levels.

“In the eight years leading up to 2014, joint venture production declined by 50.4 per cent. Some 100,000 barrels per day, about five per cent of total production, is estimated to be lost to organised theft. And we all dread the ease and rapidity with which supply shortages lead to endless queues, widespread panic and mortal consequences for the many victims of tanker accidents.

“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 N2.77tn of ‘domestic’ crude oil but paid only N1.66tn to the Federation Account. In 2013, it earned N2.66tn but paid N1.56tn to FAAC; in 2014, (it earned) N2.64tn, but remitted N1.44tn; while between January and May 2015, it earned N733.36bn and remitted only N473.2bn.

“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!”

The governor noted that the NNPC felt entitled to consume more resources than the 36 states and the Federal Capital Territory, and the Federal Government combined.

“The example just given is only with respect to domestic crude oil sale. Similar leakages exist in the NPDC, NAPIMS procurement and subsidiary budgets,” he added.

On the way out for Nigeria, the governor said the country could demonstrate a new purpose by slaying three huge dragons, which he outlined as “a fixation with public ownership and control of every major oil asset, the corruption and distortion that oil subsidy is inflicting on our economy, and the NNPC in its current form is not in our collective national interest.”

El-Rufai went on to state that the corruption and distortion in the subsidy regime must be tackled.

He argued that the oil subsidy regime had neither grown the Nigerian people nor guaranteed stability of refined products’ supplies.

Rather, he said, what the subsidy had achieved was to create a huge hole in the budget and a new array of overnight billionaires.

The governor said, “An efficient and productive oil sector, able to create jobs, spur industrialisation and earn more revenues, requires that we tackle the monster that the NNPC has become. This country can no longer afford to maintain an NNPC that arrogantly, unlawfully and unconstitutionally spends an unhealthy proportion of national oil earnings on itself.

“We should replace the NNPC with brand new organisations that are fit for purpose, among others, a commercialised and corporatised national oil company, and new industry regulators. This new national oil company should be capitalised once and for all, and then freed to fend for itself like other national oil companies do, seeking its financing independently from the financial markets and paying due taxes and royalties.

He noted that no one was better qualified to do this than the person that birthed the NNPC through the merger of the NNOC and the Ministry of Petroleum in 1977, President Buhari himself.

“No one can appreciate the gap between the vision of the NNPC’s founding fathers, the beautiful baby of 1977 and the 38 year-old monster it has become better than President Buhari. The NNPC of today must make Chief Sunday Awoniyi of blessed memory squirm in his grave. Something fundamentally decisive must be done to tame this monster,” el-Rufai added.

The governor noted that Nigeria had an oil fortune, adding that the decline in the nation’s revenue or the negligence in using it to build human capital or enduring physical infrastructure was another matter.

El-Rufai stated that despite a 60 per cent fall in oil prices between June 2014 and the end of last year, Nigeria still earned $77bn from oil exports in 2014.

“The PUNCH Newspaper of April 2, 2015, quoting figures from the United States Department of Energy, placed oil export earnings for the year 2011 at $99bn. Indeed, in the five Jonathanian years, Nigeria earned nearly $500bn from crude oil and gas sales,” he said.

According to him, about 40 per cent of Nigerians are estimated to be very poor, adding that this means about 70 million citizens are living below the poverty line in a country that has earned at least $1tn from oil in 50 years.

“Our rich enjoy the lifestyles of the richest in the world, while our poor are truly the wretched of the earth. This inequality is most unfortunate. That wide gulf in living standards is clearly problematic.”

When contacted to speak on the points raised by el-Rufai, the spokesperson of the NNPC, Mr. Ohi Alegbe, told our correspondent that he was in a meeting.

A text message was sent to his mobile telephone line demanding a response. However, as of the time of filing this report, no response had come from the corporation.

One of the guests at the lecture series, who is the Chairman, Editorial Board of The Nation newspaper, Sam Omatseye, argued that caution must be applied when dismantling the current NNPC.

He stated that the government must be careful not to create another national oil firm that would be worse than the current NNPC.