There have been general outcry that The Nigerian National Petroleum Company Limited (NNPC) should be scrapped, this agitation became more pronounced a few days back when the price of PMS was increased all over the country......Read The Full Article>>.....Read The Full Article>>
Meaningful Nigerians have called on President Booa Ahmed Tinubu to scrap NNPC and empower the oil marketers to lift the Dangote Refinery with a special arrangement.
The following are questions meaningful Nigerians have been asking: why do Nigerians don’t know the price of petroleum from Dangote Refinery? Why has NNPC monipolised the sale of petrol from Dangote refinery? These and many other are some of the questions fill the mouth of the majority of Nigerians in the last few days.
A few months back, the former Governor of the Central Bank of Nigeria and Emir of Kano, Lamido Sanusi, called for the unbundling of the Nigerian National Petroleum Company Limited, declaring the national oil company as a money pit and not a “cash cow”.
Sanusi, who spoke at the 7th edition of the Kaduna Investment Summit (KADinvest 7.0) organised by the Kaduna Investment Promotion Agency, noted that he had no political party.
The former CBN Governor was the keynote speaker at the event and spoke on the topic; “Improving subnational resilience against global economic shocks.”
“He said that the national oil ought to be better but unfortunately, it has become a money pit rather than a cash cow, emphasising that the four refineries that were more or less comatose and not satisfying the yearnings of the Nigerians, should be henceforth unbundled and disbanded.
“NNPC is a money pit instead of a cash cow; it should be unbundled and disbanded. More can be had from simply levying royalties and CIT on private players following models like Petronas and Petrobras.
“Beyond the challenging global context, Nigeria has problems entirely of its own making where oil revenues which were once the lifeblood of the Federal Government, have been in secular decline for over a decade. This has been happening regardless of the oil price environment.
In some ways, Nigeria’s problems are not a failure of the system because it is working as one would expect, but a loss of design and a failure of implementation.
“In the current environment, the first and most obvious problem is the existence of the fuel subsidy and opportunities this creates for fraud, the average daily fuel consumption in Nigeria (by the NNPC’s admission) is 66 million litres per day, and on some days as high as 100 million litres per day.
Sanusi noted that the relentless rise in the US dollar as being the bigger problem in most of Africa causing widespread and painful currency adjustment, which is a more important driver of inflation than the underlying moves in commodity prices.
“Since the start of the Ukraine war, crude oil prices are 5 per cent lower, rice prices are 12 per cent higher, and wheat prices are flat, the trade-weighted US dollar however is 17 per cent stronger in this period, the sharpest upward move since the early 1980s, this is what is causing the pain in emerging markets.”
He stated that only 50 per cent of states generated enough recurrent revenue to cover wages, overheads and debt service and recommended that states advocate for changes that do not rely on fixing failures of system design and policy implementation at the Federal level.
Also spoke on this is former Kaduna Governor, El-Rufai
Mr. El-Rufai said the NNPC has become so entrenched in corruption that the only way out for Nigeria is not to attempt to salvage the corporation, but to destroy it and create a new oil company.
He said as a former director general of the Bureau of Public Enterprises, he was confident a messy organisation could be disbanded and turned into a useful one.
He said NNPC has become so corrupt and arrogant that it runs a parallel government and unilaterally decides what it remits to a nation of 170 million people, while its hundreds of employees feed fat on Nigeria’s resources.
In the last three years, Mr. el-Rufai said the NNPC retained 42 per cent of Nigeria’s money, and remitted only 58 per cent.
“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,” 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 N2.77tn 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!”
He said the examples he gave were only with respect to domestic crude oil sale. “Similar leakages exist in the NPDC, NAPIMS procurement and subsidiary budgets,” he said.
“The NNPC feels entitled to consume more resources than the 36 states, the FCT and the Federal Government combined. How could a country so dependent on oil revenues have been so lax about the proper governance, efficiency and security of its oil industry?” he lamented.
He identified the need to remove the undue premium on public ownership and control of every major oil asset, while checking the impact of corruption and distortion of oil subsidy on the country’s economy, and restructuring of the NNPC in the national interest.
To realise the potentials of the oil industry, he said the government must not only define exactly what the country wants the oil industry to be and to achieve, but also the structure that would best deliver it.
“An efficient and productive oil sector, able to create jobs, spur industrialization and earn more revenues requires that we tackle the monster that the NNPC has become,” he said. “We should replace the NNPC with brand new organizations that are fit for purpose – a commercialized and corporatized national oil company and new industry regulators.
He said the new national oil company should be capitalized once and for all, and then freed to fend for itself like other national oil companies, by seeking its financing independently from the financial markets and paying due taxes and royalties.
“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,” he said.
Also spoke is top Political Economist, Pat Utomi. He criticized the Nigerian National Petroleum Corporation Limited (NNPC) as one of the most opaque and unreliable institutions, urging for a significant overhaul to address its issues.
Utomi discussed the recent increase in fuel prices and attributed the country’s current predicament to the misuse of subsidies.
He highlighted that while nations like the United States and European countries use subsidies to support production, Nigeria has focused on “subsidized consumption for pleasure,” leading poor resource management.
Utomi stated that a thorough clean-up of the NNPC could reduce corruption in the subsidy system by 60 percent. He stated that, if given the opportunity, he would prioritize this clean-up effort.
“I think that the typecasting of what a subsidy is has put us in a bind. I probably would have begun by trying to clear up the mess in the industry, the NNPC. Believe me, the NNPC is one of the most opaque and unreliable organisations in the world. Quote me any day. The first thing is that you clean up the NNPC, and you will reduce the so-called subsidy by more than 60 per cent by just cleaning up the corruption in the NNPC. If I’m given the job, I can do it,” he said.
