NNPC And Its $1.5 Billion Loan - Editorial

THE Nigerian National Petroleum Corporation is once more flexing its muscles, eyeball-to-eyeball with the National Assembly, over the firm’s unilateral move for a $1.5 billion syndicated loan. Typically, the state-owned company had completely ignored the parliament when seeking the hefty external loan and Nigerians only learnt of the deal through a dispatch by Reuters, an international news agency. For once, the parliament should stand firmly on the side of the law, with resolve to end NNPC’s lawlessness once and for all.

The news report indicated that Standard Chartered Bank was leading a consortium of banks, including PNB Paribas and Standard Bank UK, to provide the $1.5 billion five-year amortising loan with a final agreement sealed last year and for which NNPC had put up 15,000 barrels of oil per day as collateral. In its initial explanation, the corporation said it would use the money to offset some foreign debts accumulated on imported refined petroleum products. According to a report quoting an unnamed NNPC source, the firm said it opted for the loan to “salvage Nigeria’s credit rating,” arguing rather implausibly, that it did not require parliamentary approval to take the loan.

The company’s justifications became more bizarre as the days wore on. For instance, Andrew Yakubu, its Group Managing Director, declared to reporters in Lagos that “NNPC is not borrowing; we are only using our resources to offset long-standing debts.” Like others, he claimed that it was a “purely commercial decision.” Details of the loan are, in fact, well known in the international financial market. The Reuters report cited a finding last year by the Ministry of Petroleum Resources that the NNPC owes major global commodity houses led by Glencore and Mercuria about $3.5 billion in unpaid fuel supply bills.

For how long will the National Assembly allow the Presidency and the NNPC to get away with such perfidy? Contrary to Yakubu’s waffling, what he arrogantly refers to as “our resources” – 15,000 bpd of crude – belongs to the state and the Federal Government is the sole shareholder in NNPC.  Enyinnaya Abaribe, Chairman of the Senate Committee on Media, emphasised last week that “under the law, no government agency can borrow money without the approval of the National Assembly.” But the legislature has continued to appear helpless in the face of NNPC’s insistence that the law does not apply to it. At the height of the furore over the N2 trillion petroleum subsidy fraud early last year, the Minister of Petroleum Resources, Diezani Alison-Madueke, had pointedly told the Senate that the corporation was entitled to spend its income as it pleased. Although the lawmakers disagreed with this stance, they have failed to use their parliamentary powers to rein in the corporation or censure the Presidency. For over a decade, NASS demanded detailed audited accounts of the corporation to no avail. When eventually it bowed to pressure, it only filed summaries to the Office of the Auditor-General for the Federation.  Testimonies by the AGF and lawmakers that they had not been receiving detailed audited reports of the NNPC attracted insults from the corporation’s spokespersons who said the summaries were sufficient.

The National Assembly should, for once, match its words with action. It should follow through on its resolution calling on the government to suspend the loan and resolve, once and for all, the issue of oversight of this corruption-riddled state firm. All constitutional means, including seeking an interpretation from the courts, should be explored to establish parliamentary oversight over the NNPC.

Everything about this dubious loan stinks. There is no reason in the first place for NNPC to incur debts on refined petroleum products when the country produces 2.4 million litres of crude per day – the world’s sixth largest. President Goodluck Jonathan and the parliament continue to drive the nation towards ruin by sustaining this shameful dependence.  Jonathan has recently approved a proposal by Alison-Madueke to spend another $1.6 billion on turnaround maintenance on the four loss-making, inefficient state-owned refineries. Nigerians are paying dearly for the perfidious mismanagement of our officials. Late last year, NASS approved a further N161 billion supplementary spending on fuel import subsidies for 2012, in addition to the N888 billion earlier approved and reportedly overdrawn in the same year.

The NNPC is all about corruption. The firm gets away with its lawlessness aided by Presidential connivance and parliamentary timidity. The looting should stop. Lawmakers should realise that the Presidency is the real problem. According to the report of the Petroleum Revenue Special Task Force headed by former anti-corruption czar, Nuhu Ribadu, the Federal Government regularly dips into NNPC’s coffers. It cited a N51 billion taken to finance, among other things, a new presidential jet; N2.23 billion taken to buy a new helicopter; N19.87 billion for a PICCOMS, a maritime safety project, and N11.47 billion and N4.1 billion for projects of the Ministry of Science and Technology.

When the government itself raids NNPC for extra-budgetary funds, it compromises its supervisory role in the cash cow. But no other democracy in the world allows such reckless, unchecked spending by the Executive, and Nigeria should not remain the only one.