When Trillions Go To Waste

The state-owned petroleum corporation is a drain on the economy

The recent reports put out by the Nigerian National Petroleum Corporation (NNPC) on its webpage indicated it lost N228.1 billion between April and November 2018, a period of about seven months. To buttress that, the National Bureau of Statistics (NBS) also reported that the amount spent by the federal government on the importation of petrol soared by nearly 50 per cent to N2.95 trillion last year. Much of this money was spent on the petrol sold at the government regulated price of N145 per litre while the four refineries owned and operated by the NNPC are in a shambles.

It is instructive that the NNPC data noted that the corporation’s revenue dropped from N520.4 billion recorded in April 2018 to N292.3 billion in November 2018. This implied that instead of consolidating on its gains, it dropped the balls. Simply put, a company is said to be grossly mismanaged if within a sevenmonth period of its business year, it lost a whopping sum of N228.1 billion instead of adding to its operational returns. That NNPC is a loss-making cost centre is a notorious fact. The Kaduna, Warri and Port Harcourt refineries contributed N81.718 billion of the deficit within the seven-month period and grossly underperformed by 9.8 per cent over a one-year period. The NNPC’s corporate headquarters also in the 2018 accounting cycle recorded a loss of N138.064 billion.

Based on its own account, the NNPC’s refineries in Kaduna specifically did not refine a drop of crude oil between February and November 2018, while those in Warri and Port Harcourt operated at levels that were inconsistent with their capacities. For example, the corporation said that in February 2018, both refineries in Warri and Port Harcourt recorded capacity utilisations of 8.3 per cent and 24.6 per cent respectively, but this later vacillated in the following months until they posted capacity utilisation levels of 27 per cent and 27.7 per cent respectively in June. The capacities of the three refineries didn’t do any better in the later part of the year, and were unable to refine oil for Nigerians to use.

There is also the naughty issue of subsidy expenditure which the NBS said was N2.95 trillion in 2018 alone, up by nearly 50 per cent of the previous year. As at December 2018, NNPC’s Group Managing Director, Maikanti Baru, told Nigerians that the government was paying N25 as subsidy on every single litre of petrol consumed in the country, and that the national daily consumption at that time had gone up to over 50 million litres. But the claims lack transparency and accountability. Unlike before when subsidy expenditures are budgeted and approved by the National Assembly, the NNPC now appropriates at will, leaving so much to be asked about transparency in the process.

We are of the strong view that this financial bleeding of Nigeria should not continue under a government that sermonises about corruption. It is not in the interest of Nigeria to continue to waste scarce resources on things that do not directly benefit its economy and people. In the interest of Nigeria and the NNPC itself, there is an urgent need for the reforms of its operations. Sadly, the opportunity provided with the passage of the Petroleum Industry Governance Bill (PIGB), and other supplementary Petroleum Industry Bills (PIBs), was wasted by President Muhammadu Buhari.

Whatever may be the reason for withholding assent to the PIGB, what is not in doubt is that the present situation in NNPC is unsustainable.

IT IS NOT IN THE INTEREST OF NIGERIA TO CONTINUE TO WASTE SCARCE RESOURCES ON THINGS THAT DO NOT DIRECTLY BENEFIT ITS ECONOMY AND PEOPLE