The head of the Nigeria National Petroleum Corporation promised “a new season of transparency and accountability”, pushing back against critics calling for the break-up of the state oil company as the country struggles to manage the fallout from battered oil prices.
Mele Kyari, group managing director at NNPC, oversaw the public release this month of audited accounts for 20 of the company’s subsidiaries for the first time in the firm’s 43-year history.
The publication, while incomplete, provided a window into a notoriously opaque organisation. It revealed how NNPC’s profitmaking investment, exploration and retail arms are propping up lossmaking subsidiaries, particularly the country’s four refineries, which logged hundreds of millions of dollars in losses in 2018.
“We have done the right thing . . . we have followed the law,” Mr Kyari said in an interview, noting that a requirement to publish accounts was written into the legislation that established NNPC. “This is a new season of transparency and accountability for the company of our country.”
Critics conceded that the release was a good first step, but said it had not gone far enough. The lack of a consolidated audited account statement for the entire business meant the disclosure had provided an incomplete overview, said Oluseun Onigbinde, from budgIT, a Nigerian transparency organisation. The details that were published painted a worrying, albeit unsurprising, picture of a giant, dysfunctional company that must be broken up, he added.
It’s something that civil society and transparency organisations like us have been clamouring for some time - Waziri Adio, head of the Nigerian Extractive Industries Transparency Initiative
“We need to dismantle the whole monolith and allow the subsidiaries to try singly — that’s the only thing that will make NNPC more efficient,” Mr Onigbinde said. “You have oil prices bleeding, state financials are not solid enough, the federal government has to step up and say it’s time to rebuild this.”
Founded in 1977, NNPC dominates the oil industry in Africa’s biggest crude producer. It produces, buys, sells and trades crude, mostly through joint ventures operated by oil majors including Shell and Total, and regulates itself.
For decades the company has been viewed as a cash machine for politicians and is currently the subject of several multibillion-dollar, international lawsuits related to alleged corruption. Former vice-president Atiku Abubakar called NNPC a “mafia organisation” during his presidential campaign last year, in which he vowed to break it up and sell off the refineries.
Mr Kyari acknowledged that NNPC had failed to run its refineries profitably and said it was in the process of rehabilitating the facilities to be run by private companies in partnership with the government.
The four refineries generated a N162bn ($450m) loss in 2018 on just N3.44bn in revenues, the accounts showed. The facility in Kaduna, in the centre of the country, generated no revenue in 2018 at all but incurred a N64bn loss.
The NNPC boss said the company planned to complete the refurbishment work on all four facilities by 2023 but admitted that only the Port Harcourt refinery, in the oil producing south, had a “clear line of sight on financing” needed to complete the work.
Culled from Financial Times
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