PRESIDENT Goodluck Jonathan must be disappointed at the rather tepid applause that greeted his abrupt replacement last week of the top four officials of the Nigerian National Petroleum Corporation. True, the eviction of Austen Oniwon as the Group Managing Director of the state-owned oil firm was long overdue but, unlike their President, Nigerians are painfully aware that cleaning up the suffocating stench in the oil industry requires much more far-reaching reforms than a few headline-grabbing changes.
By replacing Oniwon, the latest in a long line of uninspiring GMDs, and three executive directors with four other NNPC apparatchiks, Nigerians expect only more of the same wretched service delivery and opaqueness for which the oil and gas firm is notorious. There is a significant, indeed the majority, segment of the population that sees the changes as, at best, cosmetic and ineffectual. Some insist that the removal was diversionary and another simulation of motion without movement.
The President’s spokesman, Dr. Reuben Abati, did claim that Oniwon and Co were removed to “further strengthen the ongoing reforms and transformation” of the petroleum sector and achieve “greater transparency and accountability in government”. While all stakeholders – the business community and global investors, not least ordinary Nigerians – align with this objective, the government has not demonstrated either an appreciation of the dire rot in the industry or the willingness and capacity to deal with it.
The mess is mind-boggling. The theft in only one year of about N2 trillion for a dubious petroleum products subsidy is only the culmination of corruption that has run riot. Shell, the Anglo-Dutch oil major, has said that 150,000 barrels of its oil are stolen in Nigeria each day, translating into $5 billion losses each year. The Influential Financial Times of London once estimated daily crude oil theft at over 250,000 bpd through activities of the NNPC officials in collusion with oil theft syndicates, security personnel and bankers who launder the loot. Of all oil exporting countries, Nigeria is the only one that cannot successfully run a refinery; instead, she is a net importer of refined petroleum products despite being the world’s sixth largest crude producer. The four refineries owned by an NNPC subsidiary are in various stages of disrepair and are veritable conduits through which NNPC officials, politicians and contractors regularly steal millions of dollars of public funds in the name of Turnaround Maintenance.
While state-owned oil firms elsewhere have become some of the biggest operators worldwide, NNPC continues to wallow in corruption and inefficiency. It cannot emulate Saudi Arabia’s ARAMCO that operates the world’s largest hydrocarbon network; Kuwait Petroleum Corporation that is the world’s fourth largest oil exporter or Brazil’s Petrobas, the Southern Hemisphere’s largest company by market capitalisation.
The rot, corruption and total breakdown of internal controls at the NNPC that were revealed from the fuel subsidy hearings at the National Assembly should have prompted the resignation of the Petroleum Minister, Diezani Alison-Madueke, under whose watch officials brazenly dipped hands in the national till to spend N1.7 trillion above approved budget for subsidy. Her exit, by resignation or dismissal, would make more meaning than moving around NNPC executives, all of who answer to her as minister and chairperson of the board. The ministry, the industry regulator, Department of Petroleum Resources, the Petroleum Products Pricing and Regulatory Agency, and Petroleum Equalisation Fund all failed to protect national interest and often colluded with marketers to fleece the treasury.
In the course of performing its oversight functions, the National Assembly has often had cause to query the accounting processes of the NNPC, which has been implicated in the operation of hidden accounts, contrary to the provisions of the Constitution. The corporation, citing a spurious law, dips hands into oil sales money and only remits what it deems fit to the treasury while the law requires every government agency to remit money and only spend what is appropriated by the National Assembly.
Jonathan will need to move in tandem with the aspirations of Nigerians to inspire confidence in his administration. His government has delayed the passage of the Petroleum Industry Bill and opted for a pared version that falls way short of the original radical version that would have maximised resources and instilled greater transparency in this opaque industry that nevertheless generates over 90 per cent of external earnings and 42 per cent of Gross Domestic Product.
The NNPC needs complete overhauling. The President should remove Alison-Madueke, at least until all the ongoing inquiries into the NNPC are concluded. No longer should the NNPC be allowed to run accounts that neither the Finance Minster, the Accountant-General of the Federation nor the Auditor-General knows about. Nor should this agency be allowed to continue to spend revenues without sanction by the President and the parliament.
To have the desired impact, the government should immediately implement the long-standing privatisation plan to unload all NNPC’s downstream assets and limit the corporation only to the role of a holding company to manage national interests in the joint ventures. The government must drop its contradictory policies of mouthing reforms while awarding multi-billion dollar contracts in the downstream to deepen the NNPC’s stranglehold on the economy.
Replacing Oniwon and others alone will not transform the oil industry. Rather, the passage of the PIB, immediate privatisation and implementation of the KPMG report and the House of Representatives ad hoc panel report on petroleum subsidy will signal the beginning of a new and transparent era.
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