The ovation that welcomed the announcement of a forensic audit of the Nigerian National Petroleum Corporation (NNPC) over the alleged non-remittance of billions of petrol dollars into the Federation Account is understandable. Given the pervasive corruption and abuses bedeviling Nigeria’s oil industry, anything capable of sanitizing the system can only be assumed to be in the national interest and the country’s future. The infractions in the NNPC inflict a credibility crisis on the national economy in ways that not only erode investors’ confidence; it somehow advertises a certain reluctance to do things right. President Goodluck Jonathan must take full blame for dereliction of duty, having over the years, condoned the opaque handling and retention by the NNPC of significant amounts of oil proceeds that ordinarily should have been audited regularly and remitted to the Federation Account (FA).
Better late than never, the euphoria may, however, have been tampered by acerbic reservations injurious to the success of the audit. In the first instance, the question arises; why the Minister of Petroleum, Diezani Alison-Madueke and others indicted in previous probes of the agency were not asked to step aside, in order not to compromise the exercise, especially given the weighty allegations against them by the former CBN Governor, Lamido Sanusi. With her petulance, erratic temperament and imprudent conduct, Alison-Madueke has further impoverished the indignity of the office of Petroleum Minister in ways that continue to make her appointment seem like an error.
The other point to ponder is the political will to act on the final report. Nigerians suspect, with good cause, that the audit might be a mere subterfuge to deflect pressure from the oil minister and other NNPC officials involved in the alleged missing $20 billion. There had been too many of such audits in the past at public expense that turned out to be mere sound without fury. The 2010 report by the US-based audit firm KPMG; the 2012 Nuhu Ribadu-led EFCC report and the Berne Declaration all indicted the NNPC as a cesspool of corruption, yet nothing has been done to those indicted in the probes. There is no need for any rigmarole; even the House Ad-hoc Committee on the fuel subsidy regime found that the government has been subsidizing corruption and not Nigerians.
This, however, is not to discount the importance of a forensic audit as an instrument of accountability. The alleged missing funds, whatever the figure, are too large to be glossed over by any serious government. There are at least two areas to rummage for unremitted oil revenues. To begin with, an analysis of CBN data on NNPC crude oil liftings since January 2012 shows the amount that cannot be reconciled by the relevant agencies tallies with the value of approximately 47% of domestic crude allocation (DCA) of 445,000 bpd over the period that was swapped or refined offshore. Because the combined value of non-petrol derivatives of crude oil that was refined offshore exceeds that of the petrol portion that was imported, the NNPC nets some profit on swapped crude oil which, after reconciliation, should be remitted in dollars to the Federation Account.
NNPC locally refines the remaining 53% of the DCA. Apart from petrol, refined petroleum products including kerosene (in practice) are deregulated. NNPC, therefore, enjoys full cost recovery and even earns profit on locally processed DCA. Consequently, the value of the entire petrol obtained from the DCA (using the world price of crude oil) should be remitted to the FA. The foregoing shows that in addition to swelling the FA, “if NNPC properly manages the allocation of 445,000 barrels per day effectively, the availability of (various refined) products can be achieved by the NNPC alone”, as the House Ad-hoc Committee on Fuel Subsidy concluded in April 2012. Almost two years on, the NNPC has stuck to its operations. This, to all intents and purposes is an act of economic sabotage. In the circumstance, the need for urgent measures to reduce the endemic corruption in NNPC’s operations cannot be over-emphasized.
Firstly, the domestic crude allocation should stop. Like refineries elsewhere, government or privately owned refineries in the country should purchase their crude oil in the open market at prevailing prices. Second, to ensure optimal performance, NNPC refineries should be privatized as planned. Third, all volumes of crude oil and gas produced and sold by various oil marketers should be published daily for ease of monitoring. This will shed light on the huge discrepancy between data published by importing countries and NNPC oil export figures. Fourth, the National Assembly should enact the long-delayed Petroleum Industry Bill (PIB) to help enthrone transparency; reassign and redefine responsibilities of the various institutions of the oil sector accordingly.
The allegations of unremitted oil revenues, whatever the figure, remain a stigma that must be cleared with thorough investigation. It is pathetic that at a time when government revenue is dwindling and states are complaining of being short changed; public officials would have so much leeway on profligacy. This is more so as the average citizen buckles under the severe yoke of poverty; and the failure of government to discharge its statutory and moral responsibility to the people. The World Bank puts Nigeria’s GDP per capita at $2,883. It is an assault on logic that a country with such a paltry income and where about 70% of its citizens survive on less than $2 per day could still afford such an obscene and reckless display of imprudence in the management of public resources. This is a country where over 11 million children, the largest in the whole world, roam the streets instead of being at school. Nigeria has the second highest infant and maternal mortality rates in the world. Access to potable water was put at 17% by the US State Department, while the British-based Economist Intelligence Unit rated Nigeria last year as the worst place for a child to be born. The list is almost inexhaustible.
In the face of competing demands for scarce resources, the government still manages to lose such stupendous wealth to the extent of making itself the laughing stock of the world and a liability to the citizens. The huge loss to the state, damage to the people’s psyche and truncation of a people’s destiny are best imagined when public funds are pillaged in a way that advertises a certain impunity at the highest level of Nigeria’s leadership. The result is that, once again, corruption and the absence of accountability in the highest realms of governance are on display. All these notwithstanding, Nigerians expect the President to address the point at issue: accountability. It is important to note that the current situation is due to the weakness of appropriate government agencies to live up to their responsibilities. If the offices of the Auditor-General of the Federation and the Public Accounts Committees of the National Assembly with their investigative remit had been up and running; Nigeria would have been spared this mess. For, after all is considered neither the course of Nigeria’s economy nor that of graceful purposeful leadership is being served; a tragedy that Nigeria can do without.