NNPC Ltd: A Well-Rounded Resource for Nigeria, by Olufemi Soneye

 

 

In its editorial on August 2, 2024, BusinessDay newspaper, as usual, launched another scurrilous and baseless attack on the Nigerian National Petroleum Company Limited (NNPC Ltd). In the editorial titled: “NNPCL: Liability or Asset to Nigerians?”, the newspaper set out to paint the picture of NNPC Ltd as a liability to Nigeria rather than an asset as it should be. It outlined a series of issues that it said had caused the company to lose its place as an asset to the nation. As expected, all the issues raised were either outright lies or unfair misrepresentations of facts. Let’s look at them one by one.

According to the paper, the asset status of NNPC Ltd. is being undermined by the opaqueness of its operations and corruption. The truth, however, is that this is a regurgitation of age-old allegations that have since been overtaken by the emergence of Mr. Mele Kyari as the company’s Group Chief Executive Officer and the transition of the old NNPC from a corporation to a limited liability company under the Petroleum Industry Act.

One of the key thrusts of the Kyari-led management team since 2019 has been its focus on transparency and accountability. This is what gave rise to the Transparency, Accountability and Performance Excellence (TAPE) management philosophy, under which the company’s audited financial statements started being published annually from 2019. In fact, the same BusinessDay newspaper that is so intent on pinning the opaque label on the company actually honoured Kyari with its “Energy Executive of the Year” award in 2021 for turning around the company’s fortunes and ingraining a culture of transparency in the company. But out of sheer malice, the newspaper forgot so soon and chose to borrow some dastardly tricks from Josef Goebbels’ playbook, that of frequently repeating the lies of opaqueness and corruption against NNPC Ltd with the hope of sustaining the propaganda so well that the public would believe the lies to be the truth.

The next point raised in the editorial is that of mismanagement of resources and inefficiency. In an attempt to present a semblance of balance, the paper acknowledged the role of government interference in society. Much of the legacy problems, such as the age-old lack of maintenance of refineries, can be traced back to government interference. Any old refinery staff member of NNPC Ltd will tell you that NNPC engineers used to do turn-around maintenance of refineries until past governments started dabbling in influencing contracts for their cronies.

However, with the PIA, all that is behind us as NNPC Ltd now operates as a private limited company under the Company and Allied Matters Act (CAMA). As currently incorporated, the company is owned by the government through the Ministry of Finance Incorporated and the Ministry of Petroleum. But the PIA envisages that in the not too distant future, the company will be publicly listed with shares owned by Nigerians in their individual capacities. But before that time, the management of the company under Kyari has instituted a management system encapsulated in the Performance Excellence element of the TAPE philosophy. Based on this, the company has made great strides in moving from a loss-making position in 2019 to consistently profitable. This is despite the fact that the company is facing monstrous odds in the form of crude oil theft and pipeline vandalism.

The fact is that companies like Saudi Aramco, which the paper tried to benchmark NNPC Ltd against, do not have to deal with such probabilities that have very practical implications for crude oil production. The paper is just being dishonest in attributing the nation’s suboptimal crude oil production to the inefficiency of NNPC Ltd when it is well known that the security challenges are not the company’s doing. But then again, NNPC Ltd has not done badly in managing the bad situation to achieve the results it has posted in the past few years. The truth is that the current reality of NNPC Ltd, in terms of management and performance, does not reflect the picture of mismanagement and inefficiency that BusinessDay tried to paint in its editorial. The question that arises from all this, and which BusinessDay must answer, is: do companies that have problems with resource mismanagement and inefficiency make profits as NNPC Ltd has consistently done in the past three years?

The other issue that has prevented NNPC Ltd from being an asset to the nation, according to BusinessDay, is its monopolistic control of the oil sector. In support of its position, the papers state, “The company’s dominant position as the sole importer of petrol and the main issuer of import licences for diesel creates market distortions.” This statement, coming from a business paper like BusinessDay, is very curious. The fact that the paper claims that NNPC Ltd is the “main issuer of import licences for diesel” shows how little it knows about the oil and gas industry. It just means that BusinessDay either does not know the difference between an industry regulator and an operator or simply wants to take its malice to a ridiculous level, hoping that the public will swallow its lies verbatim.

For the avoidance of doubt, NNPC Ltd does not issue import licenses for diesel or any petroleum product. This is because, NNPC Ltd, as per Section 64 of the PIA, is an operator like any other company operating in the oil and gas sector, and not a regulator. The PIA provides for the establishment of two regulatory agencies in the sector. They are the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The newspaper has indeed acknowledged these two regulatory agencies in the editorial. But how it came up with the idea that NNPC Ltd issues import licenses to traders, a clear regulatory function, is really hard to fathom. This, however, shows that the newspaper and its editors know very little about the subject of their editorial.

On the allegation that NNPC Ltd has a monopoly in petrol import, here are the facts that BusinessDay failed to acknowledge in its editorial. When the downstream sector was deregulated on May 29, 2023, with President Bola Ahmed Tinubu declaring that the fuel subsidy was gone, every petroleum trader was automatically allowed to import the product and sell it at whatever price he wanted. NNPC Ltd only stepped in to fill the gap as a supplier of last resort, a role assigned to it by the founding fathers of the PIA to ensure the nation’s energy security. NNPC Ltd has not forced any trader out of petrol import to become a monopoly. It also does not appear that the company is making any profit from being the sole importer of petrol, which is usually the main target of monopolists.

Indeed, by playing this role as the sole importer of petrol at a time when others are unable to import the product, NNPC Ltd has proven to be a huge asset to the nation, much more than BusinessDay would have Nigerians and the world believe!

● Soneye is the Chief Corporate Communications Officer of NNPC Ltd.

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