The World Bank Group gave a damning verdict about the operations of the Nigerian National Petroleum Company (NNPCL) in its Accelerating Resource Mobilisation Reforms (ARMOR) Report released on May 17, 2024. The global lender’s summation was that the NNPCL’s financial reporting systems are fundamentally opaque, evasive, and deceptive resulting in the Federal Government and sub-nationals being routinely shortchanged in crude oil revenues for decades. The fuel subsidy regime worsened that situation with untold losses to the treasury.

Specifically, the World Bank noted that financial reports and remittances to the Federal Account Allocation Committee (FAAC), lacked essential information and were inconsistent with its activities. It bemoaned, among others, the “non-transparent reporting to the Federal Ministry of Finance (FMF) and the Federation Account Allocation Committee (FAAC), (that) make it difficult for the authorities to oversee NNPCL’s performance, calculate anticipated oil and gas revenues and determine the difference between revenues received by the Federation and NNPCL’s total revenue.”

The lender also pointed out that the reports submitted to FAAC by NNPCL are inconsistent and lack information such as details on pledged revenues, the tradeable value of crude oil, actual payments, and receipts from global trade, among others.

The Bretton Woods institution cited a case where the NNPCL pledged 35,000 barrels of crude oil per day to Dangote Refinery in exchange for a 20 percent stake. Aliko Dangote later revealed that the actual stake was 7.2 percent. The bank also noted that although the total value of the contractual investments for pledged oil revenues was estimated at $5.8 billion at end-2022, the amount declared by NNPCL was below expectation. These observations read like a criminal charge sheet. If the World Bank appears frustrated by the NNPCL’s woeful accounting, Nigerians should be more alarmed.

In June 2023, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) complained that the NNPC had withheld about N8.48 trillion as claimed subsidies for petrol since January 1, 2022.

The Nigerian Extractive Industries Transparency Initiative, in its 2021 Oil and Gas Industry Report, released in September 2023, had said NNPC did not remit $2 billion (N3.5 trillion) in taxes to the Federal Government in 2022, which it denied. NNPCL cannot explain how it racked up debts estimated at $7 billion in August days after declaring a net profit of N3.3 trillion at the end of 2023

These observations suggest that sound corporate governance is an anomaly at NNPCL Towers despite its incorporation as a limited liability company subject to regulations enshrined in the Companies and Allied Matter Act.

Oil and gas exports account for 92 percent of the Federal Government’s foreign exchange earnings. It is Nigeria’s lifeblood, especially crucial now the country’s illiquid forex market has resulted in the collapse of the naira. The entity collecting dollar revenues must be transparent, accountable, and responsible.

The incompetence, mismanagement, and wanton corruption that has defined NNPCL’s operations in the past 45 years continue to deny Nigerians any substantial benefits from the oil and gas industry operations. NNPCL’s conversion to a willing tool of political patronage has rendered supervision ineffective, compromised, and emasculated even at the highest level of government. The Bola Tinubu administration must end this nonsense and demand full accountability from the company’s board and management. A comprehensive forensic audit of NNPCL’s finances by reputable international and domestic firms must be commissioned immediately to unearth hidden revenues, losses, murky deals, and arrangements loaded in its books.

It is well known in the oil industry that Nigeria lost huge revenues due to the failure of certain NNPCL officials to demand Nigeria’s fair share of production-sharing contracts even as their private offshore accounts swelled.

NNPCL does not have the capacity or the will to verify actual oil volumes pumped from the various oil fields or exported. It is a disgrace that the NNPCL has reduced itself to a commission agent for Dangote Refinery since it cannot run its refineries. Despite over $20 billion spent on repairs and refurbishment over the past 18 years not a single one is functional yet it pays over N60 billion yearly to workers for doing nothing.

The board of the Federal Ministry of Finance Incorporated, NNPCL’s supervising entity, and ultimately President Bola Tinubu as Minister of Petroleum Resources, must take their remit more seriously to ensure its operational, investment, revenue, returns, and reporting profile rivals peer national oil companies such as Saudi Arabia’s Saudi Aramco, Norway’s Equinor, Malaysia’s Petronas and Brazil’s Petrobras.

The planned privatisation of NNPCL via a listing on the stock exchange will fail if its accounts are not cleaned up and reliable financial reporting systems are entrenched. The tail must stop wagging the dog. (The PUNCH Editorial)