The Nigerian National Petroleum Company Limited (NNPC) recently shocked the nation by admitting to a massive $6.8 billion debt to petrol suppliers, a claim it had vehemently denied multiple times.
“This stunning reversal raises questions about transparency, accountability, and the true state of the nation’s oil finances,” said DARE OLAWIN.
The company had consistently denied owing international oil traders $6.8 billion. Olufemi Soneye, NNPC’s spokesman, issued a statement in August emphatically denying the claims:
“NNPC Ltd does not owe the sum of $6.8 billion to any international trader(s). In the oil trading business, transactions are carried out on credit, so it is normal to have outstanding amounts at certain times. However, NNPC Ltd, through its subsidiary NNPC Trading, maintains many open trade credit lines with several traders. The company is fulfilling its obligations on a first-in-first-out (FIFO) basis.”
However, in a surprising turn of events, Soneye later admitted:
“NNPC Ltd has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers. This financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply.”
Nigerians continue to suffer from a lingering fuel crisis that began in July. The NNPC’s debt has hindered access to sufficient fuel supply, with reports indicating that Nigeria’s debt to petrol suppliers surpassed $6 billion in July.
Reuters reported that the national oil company began struggling early this year when late PMS payments surpassed $3 billion, and it still hasn’t paid for some January imports. As of now, five traders have stopped supplying PMS to the NNPC due to unpaid debts.
The NNPC also admitted to selling petrol to marketers at half the cost, after denying subsidy payments on PMS for nine years. Chief Financial Officer Alhaji Umar Ajiya explained:
“In the last eight to nine years, NNPC has not paid anybody a dime as a subsidy; no one has been paid kobo by NNPC in the name of subsidy. No marketer has received any money from us by way of subsidy.
“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price. So the difference between the landing price and that half price is a shortfall.”
Critics argue that the NNPC’s opacity and lack of accountability have been persistent issues. Former Minister of Education Oby Ezekwesili recalled telling the NNPC leadership:
“When we were in government, I often told the NNPC leadership that they cannot carry on as though there is a ‘Federal Republic of the NNPC’ just because they think of themselves as ‘the goose that lays the golden egg’.”
Ezekwesili also mentioned the Multi-Stakeholders Nigeria Extractive Industries Transparency International (NEITI), established during her tenure:
“We went above global minimum voluntary standards of transparency requirements by entrenching ours in an Act that established NEITI as the transparency regulator of the oil and minerals sector.”
Recent disclosures by Alhaji Aliko Dangote, President of the Dangote Group, revealed that the NNPC holds only a 7.2% stake in his refinery, contrary to the believed 20%. Ezekwesili reacted:
“The opacity of the NNPC was the reason we took great delight in designing… NEITI.”
Many Nigerians are questioning the NNPC’s integrity and trustworthiness. A netizen asked:
“Why should we believe you now when you lied to us in the past? Where is the trust? Where is the integrity?”
Senior Advocate of Nigeria Olisa Agbakoba and Professor Emeritus Wumi Iledare are advocating for reforms. Agbakoba suggests repealing the Petroleum Industry Act, while Iledare recommends restructuring the Ministry of Petroleum.
The NNPC’s admission has raised more questions than answers, leaving Nigerians wondering if the company’s revelations are genuine or just a ploy to justify hiking petrol prices.
Since 2007, the Nigerian National Petroleum Company (NNPC) has undergone various transformations and leadership changes. However, critics argue that the company’s transparency and accountability have not improved significantly.
Senior Advocate of Nigeria, Olisa Agbakoba, recently expressed concerns about the NNPC’s opaqueness:
“The GCEO of NNPC today under the PIA wears two caps; it is so confusing when you read the act and cannot tell exactly the job the office does. He is the state regulator of oil, he is also an oil operator; so, he does two things, and he cannot do them well.”
Agbakoba suggested repealing the Petroleum Industry Act (PIA), stating:
“It is either you are regulating like the Minister of Energy in Saudi Arabia, or you are a player like Chevron. The NNPC should be efficient like Saudi Aramco. It doesn’t matter whether it is public or private. It has to refine the interest of Nigeria.”
Dangote Group Yet to Finalise Petrol Pricing with NNPC
Professor Emeritus, Wumi Iledare, attributed the NNPC’s issues to manpower deployment rather than organizational structure:
“It’s not the NNPC organizational structure that is at fault, but manpower deployment.”
Iledare emphasized the need for restructuring the entire Ministry of Petroleum:
“The entire Ministry of Petroleum and not just the NNPC needs restructuring… President Bola Tinubu should appoint an anchor Minister of Petroleum to oversee the oil and gas sector.”
Joseph Ambakederimo, Chairman of the Board of Trustees, Community Development Committees of Niger Delta Oil and Gas Producing Areas, criticized the NNPC’s leadership:
“What would have happened to Mele Kyari and his management team if the NNPC was to be a responsible corporate organization that should operate within and be regulated by CAMA? Taking into cognizance the latest admission of the NNPC owing $6bn to gasoline suppliers after deliberately pushing back on the story?”
Ambakederimo questioned the NNPC’s accountability: “The company practically denied the story, lied about it, cooked its books by declaring evaporated profits, bandied figures and only now to admit without remorse or the board resigning en masse.”
He emphasized the need for transparency:
“Where is the inflow? Or can we not mention the other very important issues of cost of production that have become a recurring decimal with no gains made, increased production levels, and lack of new investments into the sector?”
Henry Adigun, an oil and gas expert, criticized the NNPC’s denial of obvious issues:
“The NNPC loves to deny the obvious, with the way it has chosen to operate its business.”
Adigun called for transparency and accountability:
“I had repeatedly told journalists that the NNPC was selling PMS below the landing cost, but it was only denying it.”
The NNPC’s admission of debt has raised fundamental questions about its integrity, transparency, and accountability. Experts agree that the company must undergo a radical transformation to restore its credibility and effectiveness.
Key Concerns:
– Lack of Transparency
– Accountability Issues
– Integrity Crisis
– Reform Needs
Proposed Solutions:
– Repeal the PIA
– Manpower Deployment
– Radical Transformation
– Concerted Effort
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