NNPC Ltd and the challenges in the oil sector: Banire misunderstands facts, promotes distorted views, by Olufemi Soneye

 

 

In the face of challenges in the oil sector, especially the ongoing petrol shortage, it has become fashionable to blame everything on the national oil company, the Nigerian National Petroleum Company Ltd (NNPC Ltd). Last week, it was Prof. Pat Utomi who railed and raged against NNPC Ltd, calling it one of the most opaque and unreliable companies in the world. Before that, The Punch had published an editorial describing NNPC Ltd as a danger to Nigeria. The latest of these vitriolic attacks is from Dr. Muiz Banire, a Senior Advocate of Nigeria (SAN) and former Lagos State Commissioner for Transport and Environment, who argued in his column in The Sun that NNPC Ltd is Nigeria’s black hole.

Considering all that is happening in the oil sector, it would seem justifiable to single out NNPC Ltd as some have done recently. But most of the diatribes are based on sentiments that are not rooted in facts. To rail against NNPC Ltd without a thorough understanding of the issues that have given rise to the current challenges in the oil sector, as most commentators have done, will not do the country any good. At this critical junction, the task of all well-meaning Nigerians should be how to find lasting solutions to the harms in the oil sector and not look for scapegoats, as Dr. Banire has done.

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According to Banire, Nigeria has been experiencing fuel shortages since 1973 due to fuel subsidy and NNPC Ltd is responsible for this. The claim that NNPC is responsible for this state of affairs is questionable. The fuel subsidy policy is not the prerogative of NNPC. Over the years, various administrations have seen fit to subsidize the cost of petroleum products for citizens. They have devised different methods to do so. The role of NNPC Ltd has been to implement the policy as decided by the government. When various administrations felt that the fuel subsidy policy had become a burden that needed to be gotten rid of, they made it known. NNPC Ltd, as the national oil company, implemented it. This was the case in 2012 when the nation rose up in protest against the government’s decision to remove fuel subsidy. The same scenario was repeated in 2019 when the then administration came up with the policy to remove fuel subsidy. NNPC Ltd is not responsible for the fuel subsidy policy or its abolition.

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It is indeed unfortunate that Dr. Banire has gone to the extent of criticizing NNPC Ltd for the fuel subsidy disaster that has beset Nigeria and on that basis label the company that has patriotically borne the brunt of the fuel subsidy policy over the years as a black hole. His analysis fails to take into consideration the enormous challenges of product smuggling, pipeline vandalism and crude oil theft that the company faces on a daily basis and yet manages to keep the nation going with crude oil production and fuel supply.

Barely three months after the Federal Government announced the removal of fuel subsidy, it became difficult for major and independent petroleum traders to import petrol due to foreign exchange policy. They could not raise foreign exchange to continue importing petrol. Since then, NNPC Ltd has been importing the product and selling it at almost half the price in compliance with the provisions of the Petroleum Industry Act (PIA), which designates it as a fuel supplier of last resort. Yes, there have been supply issues here and there due to the financial constraints imposed by the transaction. Imagine the hardship the nation would have suffered if NNPC Ltd had not been there to play the role of supplier of last resort! NNPC Ltd is the reason why Nigerians continue to enjoy lower pump prices for petrol than what they would normally pay for the product. How then does such a company become a black hole?

For Banire, NNPC Ltd is responsible for everything that is wrong with the petroleum sector. He even accuses NNPC Ltd of smuggling and unauthorized sale of petroleum products to street urchins who in turn sell them in jerry cans on the black market. But does he have evidence that the unpatriotic sellers who divert petroleum products for local consumption in neighbouring countries are staff or representatives of NNPC Ltd? Does he have any shred of evidence that the boys who sell fuel in jerry cans on the black market are getting their supplies from NNPC Retail Ltd. distributors? The least one would expect from a lawyer of Banire’s stature is a factual and non-speculative comment.

NNPC Ltd has changed course since 2018 when it began preparing for the enactment of the Petroleum Industry Act, which was finally signed into law in 2021. In addition to strengthening its commitment to accountability and transparency by regularly publishing its audited annual financial statements, it has become a profitable company with an unquestionable growth trajectory. It recorded an unprecedented profit of N3.29 trillion in its recently released 2023 audited financial report. But this fact has conveniently escaped Dr Banire, who insists that he saw no difference between NNPC as a company and the trading-focused NNPC Ltd that was incorporated in 2021. Fortunately, it does not take Banire to see or believe that NNPC Ltd, as currently incorporated, has broken away from its debilitating past for this to be true. He is comfortable with the legal maxim: “Res Ipsa Loquitur”, meaning the facts speak for themselves.

While people like Dr. Banire cannot be dissuaded from criticizing NNPC Ltd, they must refrain from twisting the facts just because they want to be populist or to be in the good graces of the public. Also, the Banires of this world should not be intentionally malicious in their assertion that NNPC Limited is exerting an overbearing influence on the regulators. It is expected that, given the level of their educational achievements, they should have the ability to research their editorial submissions very well so as not to argue, assert and progress in error(s). In corollary, either Banire is malicious or ignorant about the assertion he made in his article that NNPC influences NUPRC and NMDPRA which are the two independent regulators. If he does not have a clear understanding of the workings of the industry, he should be humble enough to seek clarification so as to be well informed. NNPC Limited is an operator with several refineries under its jurisdiction. The Port Harcourt refinery will be taking off soon. In fact, the refineries under NNPC are operators and are therefore subject to the regulatory framework and regulations set by the NMDPRA. The operator/operators cannot, therefore, exert a domineering influence over the regulators. This is impossible according to common sense. Plain and simple.

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

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