NNPCL and the Nigerian black hole

BY MUIZ BANIRE

Since 1973, Nigeria as a country has been suffering from fuel scarcity and the challenge now seems intractable and perennial. Several reasons have been adduced for the problem, ranging from the cost of importation to the constant collapse of the country’s refineries. For equally a long time also, the petroleum corporation of the country has been accused of all manner of shady deals, culminating in the shortages witnessed in the country.

It will take a whole book to catalogue the accusations bothering on sleaze associated with the operation of the Nigerian National Petroleum Corporation as it was, but now a limited liability company. Is it subsidy racketeering? Is it prices manipulation? Is it storage maneuvering, diversion and smuggling? The list is endless.

The appreciation of the catastrophic performance of the corporation as it was, led to the unbundling into several entities with the ultimate privatisation of the corporation. Since the registration of the company, no significant difference has been witnessed. The situation in my view appears worse with the corporation becoming the sole importer of premium spirit into the country. It is still common knowledge that with the monopoly, imposition of manipulated prices continues.

With the astronomical figures routinely given, the NNPCL continued with alleged ‘subsidy’ in terms of price differentials. At a point, it claimed to be heavily indebted to some suppliers. The semantics involved in the continuous operation of subsidy is entirely an issue for another day. Notwithstanding the various interventions, particularly the never-ending turn-around of the Port Harcourt and Kaduna refineries, prices of petroleum products, coupled with the scarcity, continue to soar. The history of the Company, formerly known as Nigerian National Petroleum Corporation, has been one of woes and crises, corruption of an immeasurable depth.

No government in Nigeria has been able to tame this unruly monster that has consistently grounded the commanding height of the economy with the masses in a state of total confusion, hunger and deprivation. As remarked above, Fuel scarcity has been a major feature of our petroleum supplies to the people since 1973 and till today, whenever there seems to be any hope or end in sight, the company will come up with something eclipsing the whole country in total darkness of an impossible solution. The NNPC has consistently and historically been a black hole into which anything that goes has no hope of being recovered. It is a worse version of the gambling machine of our childhood known in Yoruba as kalokalo.

Whatever goes into a kalokalo is lost forever to the forlorn hope of little children being encouraged to stake their pocket money. Ajere, the Yoruba name for the storing receptacle of Ifa sacred palm nuts, believed to be incapable of storing water, is a lot better than kalokalo. While ajere is incapable of retaining water due to the holes perforating its wooden body but you can retrieve other items stored therein, at least water poured into ajere comes out through the holes and you can still see it.
On the other hand is the NNPCL with its incapacity to produce anything stored in it or put in its care. It was the systemic corruption that has grounded the company for decades that has made it impossible to make things work. The government of the day in 1979 following the Report that about N2.8 billion was missing from the crude oil sales for the period between 1976 to 1979, set up the Justice Ayo Irikefe Tribunal to probe the activities of the corporation. The Tribunal looked into the 20-year Production Sharing Agreement between Nigeria and Ashland Oil Company Limited, an American company, and described the whole sham contract as “an arrangement” by which Nigerians were fleeced to the enrichment of those who were involved in the arrangement.

It was under the same NNPC that the four refineries of the country were grounded and billions of dollars are being spent yearly on turn-around maintenance. The question is what are they turning around since for decades now, the refineries have failed to produce a single a single drop of refined oil? I have been aware since 1986 that Nigeria was exporting crude to Venezuela to be refined and importing the refined products in return. This was at the expense of the country and till today, Nigeria is still exporting crude to be refined abroad and importing fuel for its local consumption.

NNPC has been unable to determine the quantity of oil being produced in Nigeria and the whole nation has been a laughing stock in the comity of nations. Nigerians always look like fools who are bound to be thirsty in the abundance of water. Hardly has a year passed by without economic activities being paralysed by a scarcity of fuel and Nigerians have to spend hours in petrol stations. Despite the provisions of the law that forbid unauthorised sales of petroleum products, black markets where fuel is traded in jerry cans have become a permanent feature of our society where young men adulterate fuel and sell at exorbitant prices to the damage of consumers’ cars.

Yet, this same NNPC has been operating with all statutory amendments to its legal existence proving futile to rescue it from its systemic ailment. It has proven more determined and dangerous than Abiku of Wole Soyinka, incapable of being stemmed by propitiation. An analyst of the historical development of the Nigerian oil industry would agree that the much-expected positive change promised with the enactment of the Petroleum Industry Act, 2021 has failed. The NNPCL is incapable of being redeemed from its own self-consuming corruption. It has promised and failed so many times that the refineries would come to life and be operational with Nigerians expecting their days of woes to be over only, at every point of failure, NNPC would just shamelessly carry on proving that its word counts for nothing.

The serial promises on commencement of operations at Kaduna and Port Harcourt are yet to manifest. NNPCL has been the sole importer of petroleum products for some time now and it has been able to manipulate figures on prices as it feels like. With importation of petroleum products, it had been argued that the cost of landing was higher than the amount the products are being offered to Nigerians and hence the fact of subsidy being part of the market components. This has led to the creation of emergency billionaires who have perfected the means of fleecing the system by supplying less than the subsidy they claimed from the government.

It was based on this that it became imperative for the government to implement the Bretton Woods policy of removing oil subsidy so that the products could be sold at international market prices. Way back in 1987, we heard of the removal of subsidy which Babangida used as an excuse in the implementation of the Structural Adjustment Programme (SAP) in 1989 together with the twin policy of devaluation of the currency. From then, we have been treated to festivals of subsidy removal every year.

A lot of agitations, protests and brouhaha dominated the polity for more than four decades of repeated removal of subsidy which means that subsidy would never be finally removed. The present government had no pretence about its agenda to remove oil subsidy when the President announced at his inauguration that oil subsidy was gone. Yes, many of us felt uneasy as it would compound the problems with the average Nigerian.

However, we were excited to learn that with the final removal of subsidy, we were making a lot of money in multiples of what Nigeria was making before. We felt that the President saw what we did not see then and were prepared to thank him. It did not take time, in a sudden somersault, before NNPC came with figures about subsidy being paid for the same petroleum products. Like the proverbial Phoenix or Abiku, fuel subsidy has returned again. We have NNPC to thank for all these economic gymnastics.

The recent fuel scarcity has grounded the economy again and Nigerians breathed a sigh of relief with Dangote Refinery Limited announcing its readiness to start supplying refined fuel to the market. With this development, Nigerians believed that prices of petroleum products would crash and would be more affordable. The first shock was the announcement by NNPCL that it was not ready to supply crude to Dangote Refinery Limited and hence the multi-billion dollar project was to be grounded.

This is a terrible situation. NNPC did not care that the refinery would have to be importing crude from abroad thereby making fuel more difficult for Nigerians to purchase at cheaper prices. It means that NNPC did not care if Dangote Refinery Limited goes out of production and business with thousands of jobs and opportunities that the company would provide to Nigerians being lost. All the cabals in NNPCL and their co-conspirators in the regulatory sector were concerned with is the filthy lucre that would line their massive pockets from this gargantuan project running insolvent. NNPCL, through the regulatory authority, claimed that Dangote Refinery had no capacity to refine quality fuel and that its product samples were adulterated.

The cabals in government and NNPCL do not care if the owner is bankrupt and banks have to pull him to shreds towards recovering their loans. The taciturn billionaire, Aliko Dangote, was forced to come out and challenge the hawks and jackals in government and regulators thereby staking it all and not minding if heavens would fall. It was upon this fight of the titans that the president had to intervene and thereby save the day. The president directed that NNPCL, through the offshoot regulatory body, should make crude available to Dangote Refinery Limited. We thought the fight was over and were happy. Not long thereafter, Aliko Dangote announced that his Refinery would start refining crude and in 48 hours therefrom, there would be fuel in all retail stations.

The promise made Nigerians to be excited as queues would automatically disappear. It took only a few minutes from this announcement for NNPC to announce an increase in fuel price from 658 Naira to 865 Naira. Dangote told us that the NNPCL would be the off-taker of all fuels refined by Dangote Refinery. The hike has led to prices oscillating between N850/litre to N1,400 per litre. Shockingly, NNPCL responded by declining to offtake, thereby advising the company to sell directly to independent marketers.

As if this was insufficient, when asked what the likely price of the Dangote product would be, Dangote responded that the Federal Government, through the relevant authority, would determine. I started thinking what exactly NNPCL wanted to achieve by being the sole purchaser of fuel produced by Dangote. Is it not the same Dangote they accused of producing adulterated fuel a few weeks back? It means that the allegation then was to call Dangote’s dog a bad name so as to hang it. With hues and cries in the polity, again, in response, NNPCL distanced itself from the pricing regime, stating that the owner of the product would determine the price.

In the midst of all these, Nigerians are getting confused, and the situation becomes the more you look, the less you see. The way things are emerging, it seems that Dangote Refinery is floating, not sure of what the future holds for it. My suspicion is that Dangote Refinery will most likely ultimately be unable to sell at the current prices without threat to its viability, particularly to the independent marketers. This will endanger the entire investment. It is obvious that the current operational regime of the NNPCL is not free from several compromises which the Dangote Refinery cannot afford.

This is coupled with the conspiracy of the various suppliers/contractors of the NNPCL. It is clear that NNPC has no welfare of Nigerians at heart. All it is concerned with is the interests of the cabals who have made the industry a black hole and a personal fiefdom where humongous wealth is made for them on a daily basis. It will be noticed that I kept referring to NNPCL instead of the regulatory authorities. This is deliberate to underscore the fact that nothing other than names and structures have changed. NNPCL remains what is notoriously referred to as the ‘government baby’, still with the same set of faces hitherto in the organisation before privatisation. In fact, any discerning mind knows that NNPCL still exercises an overbearing influence on the regulatory authorities.

To this extent, therefore, it is pointless to bifurcate the entities. It is in the light of the above that I conclude that in so far as there is no real change of batons in the NNPCL, nothing good can come out of it. The suffering and struggle therefore continue. It is situations like this that lead to revolutions in many countries and it is time the President looked deeper into the operations of this company. If for decades, the national refineries are incapable of being revamped so that we do not have to depend on imported fuel products, then, government capacity and will are being questioned.