Partial audit report out as Jonathan reconstitutes NNPC board

As Nigerians await full balance sheet of the Nigerian National Petroleum Corporation, NNPC, a partial audit report has indicated that the Federal Government owes the Corporation in excess of $246million for improper, informal loans used to cover a range of expenses, from a presidential helicopter to maritime security.

Reuters reported that the sum also includes outstanding debts owed by the Power Holding Company of Nigeria, PHCN, for the supply of gas to its power plants across the country.

The disclosure is coming on the heels of the constitution of a new Board for the NNPC by President Goodluck Jonathan, yesterday.

The new Board is made up of the following members: Minister of Petroleum Resources, Mrs Diezani Alison Madueke as Chairman; while other members are the Permanent Secretary, Federal Ministry of Finance, and the Group Managing Director, NNPC.

Others are Alhaji Abdullahi Bukar, Mr. Steven Oronsaye, Prof Olusegun Okunnu, Arc. Daniel Wadzani, Mr. Bernard O.N. Otti (Group Executive Director, Finance & Accounts); Dr. Peter S. Nmadu (Group Executive Director, Corporate Services).

Although no reason was given for the sudden dissolution and reconstitution of the NNPC Board, but in a statement issued by the President’s spokesman Dr Reuben Abati, Jonathan charged members of the new Board to “discharge their duties efficiently and with integrity in order to enhance positive transformation of the petroleum sector.”

NNPC audit report

Meanwhile, the audit, prepared by an outside organisation given access to accounts of the NNPC as part of a government’s efforts to improve transparency at the firm, raises doubts over its independence.

According to sources involved in the external audit, it will show outstanding debts owed to the oil company by a number of ministries and state agencies. The company paid for a $14 million presidential helicopter, and is owed $106 million by the state power firm and $124 million by a maritime security agency.

State governors are threatening to take the federal government to court over illegal tapping of oil revenues that should be shared with local government.

Africa’s biggest oil producer and key supplier to the United States is pinning its future oil industry hopes on turning the debt-ridden NNPC into an independent profitable company emulating Brazil’s Petrobras or Malaysia’s Petronas.

NNPC has a budget agreed by parliament. Other revenue it collects from oil production is meant to be passed to the government accounts.

The finance ministry and NNPC declined to comment on the debts and the presidency and oil ministry did not respond to requests for reaction.

“We are aware of many of these debts, obviously it isn’t an ideal situation,” an NNPC source told Reuters on condition of anonymity.

State agencies in debt to NNPC should be funded through the budget, so such loans add to transparency concerns.

The NNPC needs its own funds to pay for joint ventures with foreign oil companies, some of which have lain dormant due to a lack of state investment.

“It does highlight the extent to which NNPC has been drawn into the more opaque areas of government – and will give ammunition to those critics who say it has operated at least partly as a slush fund for government,” Antony Goldman, Nigeria oil expert at PM Consulting said.

“It points to the huge difficulties in making independent a corporation with such a complex web of assets and liabilities, at least some of which appear not to have been contracted solely on a commercial basis.”

A National Assembly report in May uncovered a $6.8 billion fraud involving a government gasoline import subsidy, which is partly run by NNPC.

That report said NNPC was accountable to no one. It said the company owed oil traders, including privately-held Trafigura , $3.5 billion in unpaid bills.

Nigeria risks its two million barrel per day oil production declining in the next few years if it fails to reduce political uncertainty, corruption and criminality.

A long-awaited Petroleum Industry Bill (PIB), due to go to the National Assembly for debate within days, is supposed to spin off some assets and replace the NNPC with a new, independent and partially listed National Oil Company (NOC).

The draft PIB also states that the oil minister will oversee all institutions within the industry, raising question marks over how independent the NOC would be.

President Goodluck Jonathan replaced the managing director of the NNPC and three other senior directors last month in efforts to improve transparency and accountability.

Agabi's absence stalls trial of el-Rufai, 2 others

The trial of former Minister of the Federal Capital Territory (FCT), Malam Nasir el-Rufai, and two others at an Abuja High Court could not hold on Wednesday.

This was due to the absence of Chief Kanu Agabi (SAN), a defence counsel.

Also standing trial with el-Rufai are Altine Jibrin, a former Director-General, Abuja Geographic Information System (AGIS), and Ismail Iro, a former General Manager, AGIS.

They are facing an eight-count charge of abuse of office and illegal possession of government lands by the EFCC.

The land allegedly acquired by the trio was meant for the construction of transmitting/Injection sub-stations of the Power holding of Nigeria at Plot 1201, Asokoro, Abuja.

el-Rufai was also charged with allocating 10 plots of land with the help of Jibrin and Iro in Asokoro district to his family members, including his two wives, Hadiza and Hasiya.

The action was allegedly committed ``in sheer disregard of the law guiding land allocation’’.

At the resumed trial before Justice Abubakar Umar, EFCC counsel, Mr Adebayo Adelodun (SAN),  informed the court that Mr Sunday Idowu, an investigation officer of anti-graft agency was in court.

Adelodun said that the witness was ready for cross examination by Agabi (counsel to Iro).

But Mr Haruna Alome, who was holding brief for Agabi, informed the court that the principal counsel was not in court due to ill health.

Alome informed the court that he could not go on with the cross examination because Agabi only sent him to apply for an adjournment.

Reacting to the application for adjournment at the instance of the defence counsel, the EFCC counsel informed the court that the timing for the absence of Agabi was ``ill-timed’’.

``My Lord I know what I went through to be able to produce my witness, Idowu in court today.

``I have no objections to the application. But I want the court to take judicial notice of the fact that we are ready to go on with the matter and the adjournment is at the instance of the defence team,’’ he said.

Also reacting, ccounsel to el-Rufai (first) and Jibrin (second accused), Chief Akin Olujimi (SAN), did not object to the application for adjournment.

Olujimi said that since it was on account of ill health, the court should grant the application.

``I know Agabi. He has been coming to court since this matter started on Oct. 22, 2010. He has never failed to appear,'' he said.

Justice Umar granted the application for adjournment on account of ill health.

He adjourned the case to Sept. 25 for continuation of hearing and cross examination of the prosecution witness, Idowu.

It would be recalled that on April 25 when the matter came up, trial was stalled sue to the absence of the EFCC witness, Idowu.

Idowu was said to be indisposed as a result of ill health. 

Scratching the surface at NNPC

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.

Lawan bribery video to be shown on national TV

THERE are indications that the video tapes on Farouk Lawan's bribery saga might be released anytime from now to a national television station.

Informed sources hinted that six video tapes and 16 audio tapes were likely to be made available to major television networks in the coming days.

It could not be confirm as at the time of filling this report whether the the tapes were to be released by the State Security Service or one of the parties to the dispute.

Falana, 70 others for SAN interview

LEGAL Practitioners Privileges Committee has selected 71 lawyers to attend interviews in order to qualify for the award of the rank of Senior Advocate of Nigeria.

The list, which was obtained by our correspondent, included human rights lawyer, Mr. Femi Falana, as well as social critic, Mr. Fred Agbaje.

Economic and Financial Crimes Commission lawyer, Mr. Rotimi Jacobs, was also on the list.

A statement by the Secretary/Chief Registrar of the committee, Mr. Sunday Olorundahunsi, said comments on the competence and integrity of the lawyers must reach the committee on or before July 11, 2012.

The statement read, “The Committee invited the general public to comment on the competence and integrity of the shortlisted lawyers.

“The General Public is hereby notified that the under listed applicants have been found worthy to attend the interview preparatory to the award of the rank of Senior Advocate of Nigeria.

“The general Public is at libertyto comment on the integrity and competence of any of the candidates.”

The statement did not state the date of the interview.

However, it explained that the interview date would be communicated to applicants.

Other lawyers for the interview include Adele Eberechi, Blessing Emonema Ukiri, Chief Henry Oghogho Ogbodu, Mba Ekpezu Ukweni, Gerald Godwin E. Ezeuko, Anthony Chukwuemeka Anaenugwu, Nwufo Kevin Chukwudi, Nwankwo Benson Sopulu, Oluwakemi Mufutau Balogun, Adeyinka Patrick Olumide – Fusika, Afolabi Hakeem Olatunde, Adeshina Joy Okungbowa, Etiaba Emeka Benson, Paul C. Ahanaba, Adejuyigbe Oluranti Olatunde.

Others are Akinlolu O. Osinbajo, Chiesonu Igbojamike Okpoko, Francis Chuka Agbu, Olumide Olusoga Sofowora, Sylvanus Aghumele Ogwemoh, Ahmed Raji, Omokayode Adebayo Dada, and Ogwu James Onoja.

The long list include Mahmud Abubakw Magaji, Adewunmi Adedeji Ogunsanya, Ayoola Olufemi Ajayi, Selekeowei Larry, Aliyu Umar, Joe Ad’ojo Abrahams, Folarin Rotimi Abiola Williams, Illo Katunde Sanusi, Rotimi Oluseyi Oguneso, Akinlaja Dayo Moses, Lana Micheal Folorunsho, Oluseye Samuel Opasanya, Oke Olusola Alex, among others.

21 Nigerian firms to get oil lifting licences

NO fewer than 21 Nigerian firms have been short listed to lift Nigeria’s crude. According to reports 21 firms are among 50 oil companies which scaled the screening by the Nigerian National Petroleum Corporation.

The firms are to be allocated about three-quarters of Nigeria’s daily production or around 1.6 million barrels per day via term contracts to 50 companies including 21 Nigerian firms, a document sent to winning firms showed.

The oil  which amounts to around 580 million barrels sold over the next 12 months – is worth nearly $60 billion based on current premiums of the country’s light, sweet crude to Brent futures.

The tender result, awaited since April, showed that around 45 per cent of the allocated oil was earmarked for companies either based in Nigeria or owned by Nigerian companies, including NNPC subsidiary Duke Oil, which doubled the size of its contract from last year to 60,000 bpd.

Industry sources expressed surprise at the number of small Nigerian firms on the list after government pledges to cut back on cronyism in the sector and the introduction of tough new entry requirements for this year’s tender.
“The first thing you notice is that this isn’t a significantly shorter list, so the promise to simplify and streamline hasn’t been met,” said an Abuja-based oil industry source who confirmed the contents of the document.
“On the surface, many of the public’s concerns haven’t been dealt with.”

Global oil traders Glencore, Vitol and Trafigura, firms that have traditionally had a strong presence in the west African country and last year won the biggest contracts, had their supplies halved to 30,000 bpd.

Trafigura and Glencore spokesmen declined to comment and a Vitol spokesman was not available for comment.
The volumes for Swiss-based traders Gunvor and Mercuria stayed unchanged from 2011 at 30,000 bpd.

NNPC hardened the qualification terms for the supply contracts when it first released the tender document in March as part of a drive to reform the sector.

These included at least 10 years’ experience in the industry, a minimum annual turnover of $600 million and a $5 million deposit, and were expected to help large international traders at the expense of local firms.

But the number of companies on the list grew from last year’s 45 and included many small African firms such as Tempo and Benny Peters, the document showed.

“They (Nigeria) faced pressure and had to increase the list by around 20 companies. It was likely a struggle of back and forth and that also delayed the process,” said a trader with a company that won a contract.
The deadline for submissions was extended in April

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