NNPC must go

Let’s face it, Nigeria has a problem called Nigeria National Petroleum Company Limited, NNPCL. That problem begins with the organization’s rather ambiguous identity. ‘NNPC’ is one of the foremost household names in Nigeria, well known to nearly every Nigerian adult. Yet, it is still often difficult where or how exactly to place it among various […]

Let’s face it, Nigeria has a problem called Nigeria National Petroleum Company Limited, NNPCL. That problem begins with the organization’s rather ambiguous identity. ‘NNPC’ is one of the foremost household names in Nigeria, well known to nearly every Nigerian adult. Yet, it is still often difficult where or how exactly to place it among various categorizations of organisations in this country. Is the NNPC a state-owned enterprise, a public service provider like a university or yet, a private company like Innoson Motors? Or is the NNPC all three at once?

If the first, then we should ask: what enterprise? How enterprising has been the NNPC over the past 30 years, or indeed, since its inception in 1977? If the second, then we must ask: what service or utility does the NNPC provide to the Nigerian public? And by what degree of efficiency and effectiveness? If it is a private company, as the NNPC now claims in its latest incarnation, then we must ask: how much value does it deliver to its customers by way of service or product? Just as important, how much value or dividend does it deliver to its shareholders, which are, however we look at it, the federal government of Nigeria and the Nigerian people?

It is difficult to say with any level of seriousness that the NNPC is any of those things. Yet, the ambiguity over the NNPC’s identity extends to its function. What precisely does the NNPC do? If it is an oil company, as it claims, how much crude or refined oil does the NNPC actually produce? How much oil has it produced by itself in barrels or litres over the past 30 years, last year or last month? How many functional oil rigs or refineries does the NNPC command or its staff work on at present? If it is an oil marketing and distribution company, how much oil did it market and distribute in the past year? If it is a regulatory agency in the oil sector, what are the positive impacts of its regulations and their enforcement in any sense of the term? The sad reality is that the NNPC is truly not what it claims to be, but cannot claim to be what it truly is.

First, all Nigerians should wonder whether the NNPC is not essentially something else than it is the national treasury’s cash cow. By law, the NNPC is required to remit oil revenues to the federation account on a monthly basis. Yet, the most frequent allegations levelled against the NNPC by many different parties at various times over many years is that of non-remittance of those same revenues. The House of Representatives, the Nigerian Senate, the Auditor-General’s Annual Report, the Central Bank of Nigeria (CBN), the industry watchdog NIETI, newspapers, civil society organisations, and among others, have all at one time or another accused, probed or reported cases of the NNPC’s non-remittance of revenues to the federation account.

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The most celebrated of these cases in 2014, involving unremitted funds of $49 billion, according then CBN Governor (now Emir of Kano), Sanusi Lamido Sanusi, later adjusted to $20 billion or ‘just’ $10 billion. But even recently as last year, NIETI accused the NNPC of not remitting $2 billion n in taxes to the federal government in 2022, continuing a trend of similar accusations that stretch decades against the same organisation. Accusations and allegations are not facts, of course, but the consistency of such accusations, their stretching over many, many years, and their coming from many different organisations leave a sour taste in the mouth of the NNPC, and a feeling in the minds of millions of Nigerians that a fruit does not fall too far from the tree that bears it.

Second, the NNPC is also essentially a specialist in excuses for failure, to paraphrase a well-known Portuguese football coach. Every year, the NNPC issues out tons of sugar-coated excuses, ‘explanations’, and ‘clarifications’ for evident failures to deliver on its mandate. The NNPC has ready-made excuses for periodic fuel scarcity, excuses for adulterated fuel, excuses for the non-functioning of its refineries, excuses for non-remitted revenues, excuses for every failure. Were a researchers set down to list the number of excuses and “clarifications” the NNPC has offered to Nigerians for the pain and anguish it has periodically caused over the past four decades, not to talk of the ludicrousness of some of these excuses, they would produce a compendium running into thousands of pages. What kind of a public service, public enterprise, or private company does its job primarily by excuses and clarifications for evident failures?

Third, the NNPC is not just a specialist in providing excuses for evident failures, it is in fact a specialist in failure. The NNPC has not added any real value to its own remit, its own area of business and its own operations since the completion of the Kaduna Refinery nearly 40 years ago in 1988. Nigeria’s population has since doubled since that time, but the NNPC’s total refining capacity has stayed the same. In fact, none of its four refineries has produced much refined products consistently in the last 30 years, and thus subjecting a country of 230 million people to the apparent national security threat of having to import refined petroleum products year in, year out. Worse still, after nearly 50 years in existence, the NNPC still lacks internal self-capacity for oil prospection and exploration, exploitation, marketing and, even distribution. Nearly every single one of these major functions of a serious oil company is done on the NNPC’s behalf by other companies, making the NNPC itself essentially a middleman. What is that if not failure?

What kind of organisation is that? What is the point of the billions of naira the NNPC pays its refineries and other staff annually or the billions of dollars it claims for maintaining moribund refineries over the past 30 years? The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), receives four per cent of royalties, signature bonus, fines and other oil and gas revenues. In January this year, the NUPRC alone pocketed some N18.68 billion as the “cost of revenue collection” higher than what 31 states in Nigeria each got from the federal allocation account that same month, according to Agora Policy, a think tank. What is the point of all these billions if the NNPC does no more than specialise in failure and excuses for failure?

At inception in 1977, the NNPC had just the task of turning Nigeria’s natural advantage of being the largest oil producer in Africa into a real economic advantage by, among other things, exploiting to the fullest the gas, refining, petrochemicals, agro-chemicals, and pharmaceuticals value chain of oil production that will turn Nigeria into the continent’s hub in the industry across all subsectors. In that, it has failed woefully. But where the NNPC failed, its peers like Petronas, Malaysia’s national oil company established in 1974, and Petrobras, Brazil’s national oil company, established in 1953, have both succeeded, despite similar problems of context, corruption and all. Both companies now operate in dozens of countries around the world. Both are listed regularly in the Fortune Global 500 of the world’s top companies. Both are among the “new seven sisters” of national oil companies that give the older ones in the industry like Shell and BP a run for their money across all subsectors. And both generate value for their countries in ways that certainly avoid the kinds of currency exchange headaches the NNPC has made sure will remain Nigeria’s forever. These are the peers NNPC should be emulating or beating. But the NNPC still does not produce any oil, crude or refined, and is content with excuses for failure.  It is worse than tragic.