(BACKPAGE) Doubts around NNPC Limited

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BY LEKAN SOTE

Uba Group

It serves President Muhammadu Buhari, Minister of State for Petroleum Resources Timipre Sylva, NNPC Group Managing Director, Mele Kyari, and everyone else involved in the launch of Nigeria National Petroleum Company Limited, right.

The choice of song, “Fire on the Mountain,” the black –no, dark– mournful Darth Vader cloak she wore, and her businesslike, even unapologetic appropriation of the stage, during the unfolding of NNPC Limited, was a classic act of defiance, even if songstress Asa didn’t intend it that way.

If she had raised a middle finger or cussed, using the inelegant language of former American President Donald Trump, it couldn’t have been more apt. She made her point about probable displeasure with Nigeria with her choice of song.

Minister of Petroleum Resources Muhammadu Buhari, who, as President, authorised the transfer of bureaucratic NNPC assets to “commercialised” NNPC Limited on 1st July 2022, was also Minister of Petroleum Resources when NNPC was formed on 1st July 1977 under the military government of General Olusegun Obasanjo.

Though NNPC Limited is incorporated under the Company And Allied Matters Act, it is still owned 100 per cent by the government: MOFI, or Ministry of Finance Incorporated, the holding company for Federal Government assets, owns 50 per cent.

The balance 50 per cent stake is held by the Ministry of Petroleum Incorporated, or MOPI. What this suggests is that the Board and Management of the company will still be appointed by the Federal Government.

The enabler is Section 53(3) of the Petroleum Industry Act which provides that “Ownership of all shares in NNPC Limited shall be vested in the Government at Incorporation, and held by the Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated in equal portions on behalf of the Federation…”

What casts further doubt is Section 53(5) which says, “Shares held by the Government in NNPC Limited are not transferable by way of sale, assignment, mortgage, or pledge unless approved by the National Economic Council on behalf of the Federation.”

Section 1(1) of the Act, titled “Vesting of petroleum in the State,” emphatically provides that “The entire ownership and control of all petroleum in, under or upon, any lands… shall be vested in the State,” an opaque terminology for Big Government.

Section 2 explains that the lands spoken about are “All the land (including land covered by water) which is under the territorial waters of Nigeria; or forms part of the continental shelf; or forms part of the Exclusive Zone of Nigeria.”

That portion of Section 2, which refers to “all the land (including land covered by water),” sensitises you to why Buhari’s government is fixated on vesting all bodies of water in Nigeria in the Federal Government.

Section 1 of the Petroleum Industry Act says, “The property and ownership of petroleum within Nigeria and its territorial waters, continental shelf and exclusive economic zones is vested in the Government of the Federation of Nigeria.”

Do you wonder why those who cannot run four money-guzzling refineries to produce petroleum products continue to hang on, inflicting poverty and scarcity on the poor, toiling masses of Nigeria?

The answer is in Section 59(2), which empowers the President to appoint NNPC Limited’s non-executive Chairman, Chief Executive, Chief Financial Officer, and representatives of Ministries of Petroleum and Finance not below the rank of director, and six non-executive directors spread across Nigeria’s six geopolitical zones.

“The 500 or so middle or lower cadre staff, most of whom are reported to be old and feeble that have been retired, are not the critical mass who should go. At the risk of repeating the obvious, it is Kyari, the Board, the Executive Directors and General Managers –the topmost echelon who hold strategic positions in the ancient regime, who should go”

Though PIA’s Section 62(1) requires NNPC Limited to “ensure that annual audit of NNPC Limited is conducted by an independent, competent, experienced and qualified auditor,” there is a lingering sense of doubt.

This is because NNPC Limited, still owned 100 per cent by the Government, as a private limited liability company, that is not listed on the stock exchange, is not obligated to publish its annual financial returns.

There is fear that so-called temporary government ownership of NNPC Limited is a way to retain Big Government by presenting commercialisation in the garb of privatisation.

“CBN"

To convince Nigerians that NNPC has been privatised –partially or fully– NNPC Limited must speedily issue an Initial Private Offer, the proper way that Nigerians can take ownership of the oil industry.

By the way, what happened to the hoopla about telecommunications companies selling their shares to ordinary Nigerians through the stock exchange? Private placements –to financial institutions, like banks and insurance companies– don’t quite cut the ice.

Another tragic aspect of the NNPC Limited lie is that bureaucrat Kyari, with his Board of Directors and Management whose membership are substantially lopsided to favour one region of Nigeria, remains the helmsman of NNPC Limited.

The 500 or so middle or lower cadre staff, most of whom are reported to be old and feeble that have been retired, are not the critical mass who should go. At the risk of repeating the obvious, it is Kyari, the Board, the Executive Directors and General Managers –the topmost echelon who hold strategic positions in the ancient regime, who should go.

How could you expect a team of dyed-in-the-wool bureaucrats, whose entire careers have been within government or quasi-government organisations, to suddenly transform into sharp commercial types? Think of a musicologist acting like a musician. Someone says you can’t use the same old method and expect a different result.

President Buhari says the Petroleum Industry Act exempts NNPC Limited from Treasury Single Account, Public Procurement Act and Fiscal Responsibility Act that requires government-owned enterprises to remit their “retained earnings” to the Federation Account, and obtain permission before they can spend their proceeds.

Yet NNPC Limited GMD Kyari is saying something contrary, suggesting that NNPC Limited is not going to be completely independent of a meddlesome Federal Government.

Kyari told a press conference the following: “We now have a smarter, more responsive and accountable company that must act within the premises of all the regulations that are applicable for private companies.”

Despite this posturing, Kyari then gave the following waffle of a dodgy answer on the matter of petrol subsidy: “Whatever is the decision and policy of the state, the NNPC is there to deliver commercial value to the customer at the price the state wants.”

Section 6(1) of the Petroleum Act, which authorises the government to fix prices, by subsidy or taxation, says, “The Minister (of Petroleum Resources) may by order published in the Federal Gazette fix the prices at which petroleum products or any particular or classes thereof may be sold in Nigeria or in any part or parts thereof.”

If Kyari’s opaque answers, in the face of government’s clearly stated intention to interfere with the price of petroleum products, which the future NNPC Limited will produce, do not tell you that NNPC Limited is destined to run as a Not-For-Profit “commercial” company, nothing else will.

If the Federal Government really means business, it should not stop at ensuring that “(NNPC Limited) would be having systems, processes, lines of profitably and Accountability to stakeholders” by mid-2023. That won’t be enough.

NNPC Limited should be transformed into a public liability company by going into the stock exchange with an Initial Public Offer immediately. Why wait for 2023 before the Nigerian public can directly own the promise to deliver energy for today and tomorrow profitably?

The idle who hide in public corporations and government-owned enterprises should have no sinecure in a privatised, and commercially driven, NNPC Limited.