₦airaland Forum

THE Nigerian National Petroleum Company Limited has again proven to be a monumental failure and a national embarrassment. After several denials and no more room to manoeuvre given the prolonged petrol scarcity, it has now admitted to owing international oil traders for petrol cargoes.

It is absurd that a company that declared a net profit of N3.29 trillion for the year ended in December 2023 – an increase of over N700 billion or 28 per cent over the 2022 profit of N2.54 trillion – is indebted by $6.8 billion to international oil traders.

This has resulted in crippling petrol shortages nationwide for over two months because fuel cargoes are stranded at the seaports. Petrol now sells mostly between N800/l and N1000/l and is unavailable at many petrol stations. This has instigated hardship and high transportation costs.

Financial experts have suggested that the NNPC, despite all its simulation, is illiquid to the extent that it has lost its going concern status. If it were a bank, it would have been liquidated.

This is a pointer to the ineptitude, and maladministration that has defined the NNPC’s operations through the years. The NNPC, as presently constituted, is a danger to Nigeria and its economic future. It should be sold lock, stock, and barrel immediately.

It is disgraceful that the NNPC cannot manage its four refineries. With a combined name-plate of 445,000 barrels per day, they have remained comatose for over 30 years. Different administrations have spent more than $20 billion to overhaul them.

This gross failure has left Nigeria with the dubious paradox of an oil producer that relies on fuel imports. Even the most recent efforts marked by promises to restart the refineries have seen several postponements. The Muhammadu Buhari administration borrowed $1.4 billion to fix the Port Harcourt plant before the end of 2023. The reopening date has been postponed for the sixth time.

In contrast, Dangote’s 650,000bpd refinery took eight years from groundbreaking to completion and first fuel delivery.

The NNPC is supposed to be Nigeria’s most valuable company as the custodian of the country’s vast oil and gas assets and proven reserves estimated at 37 billion barrels and 209 trillion cubic feet of gas. It is the key source of foreign exchange and funds for the national budget.

It is supposed to rival other national oil companies like Petronas of Malaysia, Equinor of Norway, and Petrobras of Brazil. These companies play pivotal roles in the management of energy assets and economic development of their countries; the NNPC remains a source of distress for Nigeria.

The NNPC has been a disaster. It has failed to guarantee energy security, stable fuel supplies, a steady revenue stream for the government, and facilitate the development of the oil and gas sector.

The behemoth’s operations are defined by a lack of accountability. It is a cesspool of opacity hijacked by politicians and non-state actors to serve dubious ends. Its management in recent times has exercised power over the state by withholding remittances due to the Federation Account on the grounds of having to defray petrol subsidy costs as well as routinely failing to pay taxes.

The Revenue Mobilisation Allocation and Fiscal Commission complained in June 2023 that the NNPC withheld about N8.48 trillion it claimed as subsidies for petrol since January 1, 2022.

NEITI, in its 2021 Oil and Gas Industry Report, said the NNPC did not remit $2 billion in taxes to the Federal Government in 2022. The NNPC denied this.

The failure of the NNPC as an entity has proven costly in terms of humongous subsidy payments estimated to top N5.4 trillion by the end of this year. The subsidy regime itself has been a metaphor for corruption.

A probe launched by the Goodluck Jonathan administration in 2012 uncovered a fraud of $6 billion (N9.6 trillion at the current exchange rate) in bogus subsidy payments as NNPC officials colluded with all comers to defraud the government. Even now there is no clarity on how petrol subsidy payments are determined.

In the upstream, the NNPC’s perennial failure to meet cash-call obligations to international oil companies has cemented its reputation as an unreliable partner, which is a major reason why no new major investments have materialised in the oil and gas sector in the past 15 years.

Most of the NNPC’s woes have been due to political interference and control. It has never been run as a business. Its funds have been used as a source of patronage with sweetheart deals and contracts given to enrich a privileged few. It is an open secret that the NNPC funds have been used to bankroll all sorts of expenses including elections by politicians. President Bola Tinubu, who removed petrol subsidy in May 2023, must muster the political will to end this charade.

The immediate action is to set machinery in motion for the full privatisation of the national oil company. Experience has shown that private sector management will help the NNPC run efficiently and profitably in the short term despite its current financial constraints. With a conservative valuation of N100 trillion, the company has enough leverage to unlock fresh capital to refloat its operations and salvage its reputation. This cannot happen with government appointees, beholden to political interests remaining in charge.

The Nigeria LNG in which NNPC owns 49 per cent has maintained profitable operations with revenues topping $150 million a year despite huge challenges because its management has been drawn from the ranks of Shell, a major partner with 25.6 per cent holdings.

The Eleme Petrochemicals company, which was sold to Indorama Group in 2006 for $226 million was able to pay its owners a dividend of N9.5 billion (approximately $74 million then) after only one year of operation. The new owners took only four months to complete turnaround maintenance that the NNPC failed to do since the plant was commissioned in 1996.

Privatising the NNPC is long overdue. Tinubu should make the move if he does not have a hidden agenda.

However, such privatisation must involve credible international institutions such as Standard & Poor’s, KPMG, and other reputable consulting firms. A listing on the stock exchange should involve majority shares, the government must let go of control. The Margaret Thatcher administration in the United Kingdom privatised British Petroleum and British Gas and the companies are running profitably after delivering immediate cash for the government.

Nigeria needs such a huge cash injection to refloat the economy and dig its way out of the current fiscal hole marked by a national debt of N121 trillion and rising, and over a third of the budget committed to debt servicing.

The new investors must exclude politically exposed persons, indeed anyone connected to past and present governments and they must bring in fresh capital.

The errors of the power sector privatisation must not be repeated where briefcase investors backed by past and present politicians hijacked the process while Nigeria is saddled with distribution companies that have no funds to invest and instead remain mired in debt.

Tinubu must sell the NNPC now!

efighter:
Please post the curriculum vitae of your biological father here, let’s see if he is qualified for the job

Gerrard59:
Nigeria is too populated to run a subsidy, not necessarily because it is an oil-producing nation. Petrol prices are not subsidised in the US - a top three oil producer ditto Canada. Before you mention Saudi Arabia, please note that it is racially and religiously homogenous and a thriving monarchy.

LadyExcellency:
All eyes are on Dr. Olasupo Olusi — Managing Director/Chief Executive Officer. Can he do the job? SMEs and Startups are packing up while politicians are beneficiaries of the largesse.

DeLaRue:
'...broad political education work that I do'.

Political education is a code for anti government activities.

Political education of who?

I finally believe there is some truth in the claims made by the Police.

Can a Russian be in the USA and claim to be doing 'political education' awhile coordinating/ influencing anti US government protests? That Russian will end up with a long prison sentence.

Burob:
Frustrated Wailer, who force them to born you for The Federal Republic of Nigeria?

Burob:
Frustrated Wailer, who fault say them born you for The Federal Republic of Nigeria?

Them for cross border just a few kms to The Republic du Cameroon so that your loyalty for dey to Paul Biya?

tduorhen:
Nnpc should sell in naira and leave all these fraud!. Grow the naira you people won't hear, is it that roadside shoe maker that will grow the naira?

Burob:

The Coalition of United Political Parties, CUPP, has said that President Bola Ahmed Tinubu’s incompetence has been exposed, following the surge in fuel scarcity in the country.

CUPP in a statement by its Spokesperson, Comrade Mark Adebayo, stated that while the country is on fire, Tinubu and his cabinets ‘snore away’.

His words: “The Coalition of United Political Parties, CUPP, views the current artificially induced fuel scarcity nationwide as a satanic ploy by the failed APC government to further increase the pump prices of fuel which will further exacerbate the mass suffering of Nigerians.

“The government has not been able to advance any reasonable argument for the persistent fuel scarcity in the country that has further worsened the already desperate economic situation of the country. This government has no solutions for the problems it has created for Nigerians.

“We make bold to say that this is a government run by a cabal of incompetent, unpatriotic and rapacious power cultists who can’t care less about the people’s suffering, but focusing solely on feathering their own nests and feeding their insatiable greed and avarice at the expense of Nigerians.

“The NNPCL owes Nigerians explanations as to the cause of its huge debt of over Nine Trillion Naira it’s owing fuel suppliers who have now threatened to stop fuel supply to the country. Should the fuel scarcity get worse than this, the security situation of the country which is already very bad will even get worse, not to talk of the resultant economic meltdown and allied social crises.

“President Tinubu and those in power with him snore away as the country is on fire. They are so clueless now that their incompetence has been exposed by the staccato of policy somersaults they apply to the crises that their mishandling of the country has caused.

“The current administration behaves like a political undertaker to bury Nigeria as the primary purpose of seeking the highest office in the land. In all ramifications, the Tinubu administration has failed woefully and there is no magic they can perform to reverse their parlous records in the last fifteen months.

“It is now crystal clear that President Tinubu never prepared for the serious business of governance. He just wanted to be president”

Burob:
Very funny, he will be contesting for president till he is 80 years of age.

Just like em Oga Abubakar Malu Atiku,Aso Rock The Agulu Fraudster no go enter.

Lizzysamuel:
My goodness..

God knows Nigeria was never as bad as this under Buhari. Tinubu makes Abacha look like a saint

yarimo:
Well said Chief Emeh, Alex otti is a disgrace to good governernce in Abia state

EcoNews:
Bro Tinubu or no Tinubu wretched soul like you destined to perish in wretchedness will ultimately perish in it sooner or later while Nigerians like Davido Yemolee are having lavish wedding and living their lives to the fullest.

EcoNews:
Shut it, this thread is about the Pandora Criminal bastard Peter Obi n his co lunatic Okonkwo not Tinubu.

yarimo:
comrade Kenneth okonkwo 🤣🤣

jmoore:
Even Buhari saw the future when he said he will go to Niger Republic. He knows that Tinubu is a disaster.


Btw, are they still teaching Peter Obi a lesson? Abi, the syllabus don dey choke Dem?

Amalekki:
Totally different issue.

I'm talking about the "heaven about to fall" shout. The people in those countries are not dead, they are doing fine. It is not death sentence.

Amalekki:
It is well. The people of Benin Republic, Cameroon, Togo, Ghana, Niger Republic, Burkina Faso and several others have been buying fuel at the rate that Nigerians are just getting used to. They are not dead, they are not in hell. We are going to be fine. We should be tired of 64 years with no clear direction, we had several decades of subsidized fuel with nothing to show. Something has to give.

Amalekki:
It is well. The people of Benin Republic, Cameroon, Togo, Ghana, Niger Republic, Burkina Faso and several others have been buying fuel at the rate that Nigerians are just getting used to. They are not dead, they are not in hell. We are going to be fine. We should be tired of 64 years with no clear direction, we had several decades of subsidized fuel with nothing to show. Something has to give.

loveth360:
Losers Crying

trutharena:
Kenneth Okonkwo has been doing a good job exposing the nonsense that Peter Obi and his supporters are peddling

Loverofpeace:
Baba cannot even finish 4 years

yarimo:
PDP must summon WABARA the bot chairman, SUSWAN, BODE GORGE, MAKINDE, FAYOSE, ORTOM, IPKEAZU, IFEANYI, UCHE SECOUDUS, OKPARA, SENATOR LEE , OMEHA, SEKIBO, ODILI, E.K CLARK and others too. PDP should also remember to summon people that contributed in killing PDP in 2015