The following submission by Dr Lasisi Olagunju, columnist and Editor of Saturday Tribune that “nothing we do or say will change Nigeria, unless it turns back from its present (self-inflicted?) plunge,” probably summarises the ungodly algorithm for Nigeria’s oil sector won’t bode well.
So much is wrong with the entire upstream, midstream and downstream value chain of Nigeria’s oil sector that works on streams of lies, half-truths, taqiyya that accepts the expediency of concealment, incompetence and lack of professionalism.
Just think of a system with no guardrails, but designed to always guarantee the scarcity of petroleum products that are strategic to the Nigerian economy. This algorithm provides no touchy-feely between Nigerian citizens and their political leaders.
It is designed to always fail to deliver value, in terms of foreign earnings and availability of petrol products. It only delivers penury and scarcity, hoarding, crude oil bunkering, pipeline vandalism and black-market racketeering.
Though the political class is complicit in the failure of the oil sector, it is actually the petroleum sector bureaucrats that run the sector and the top brass of maritime security agencies that are mainly responsible. They grant the impetus and the indulgence to the carpetbaggers that loot Nigeria’s commonwealth.
What they do is to turn the funnel to the advantage of the thieves at the detriment of the unwary people of Nigeria. What you must know is that oil bunkering is written into the DNA of Nigeria’s oil industry, and that is why those illegal Niger Delta refineries will never go away.
International Oil Companies, that compromise metering procedures, are also culpable in the stealing of crude oil– up to $1 billion. Gbenga Komolafe, Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, hinted as much in a recent appearance on Arise TV.
Komolafe’s admission that “about 40 per cent of what is adjudged (to be) crude oil theft is attributable to metering inaccuracies,” and his pledge that, going forward, the NUPRC will ensure that engineering integrity audits are conducted across the 187 flow stations, is enough confirmation of the breach.
When revenue was going down with the reduction of oil production, some smart alecs suggested selling petroleum futures and collecting the payments ahead of shipments. It provided another thieving opportunity for the rascals.
General Yakubu Gowon (retd.) had been conned in the 1970s into creating the Petroleum Equalisation Fund, a subsidy designed to ensure the uniform resale price of petroleum products throughout Nigeria, regardless of where it was refined or imported from.
The managers of this scheme quickly got their friends to purchase land tankers to freight petroleum products from Lagos, Port Harcourt and Warri up North and reap the windfall, from which they probably profited.
Some of the emergency transporters or crony capitalists got so rich and began to establish airlines, with neither exposure nor skills in the field of shipment and logistics. The game was soon up for the vultures who only came in for the scam. They folded up.
Even when some individuals came up with the idea of establishing a refinery in Kaduna, the bureaucrats made sure it didn’t work. They ensured that the pipelines neither delivered crude oil to the Kaduna refinery, nor petroleum products from southern Nigeria.
The lockdown of the midstream and downstream by the Nigeria Union of Petroleum and National Gas Workers, in order to actualise the presidential mandate given to MKO Abiola on June 12, 1993, offered another subsidy opportunity.
To bypass NUPENG that refused to run the refineries, some bureaucrats encouraged the late General Sani Abacha to import petroleum products. To avoid the imported inflation and additional costs that accompany imported goods, the bureaucrats suggested the grandmother of subsidy that gave them the opportunity to write, for themselves, cheques for products that were not imported.
Former governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, now Emir Muhammadu Sanusi II of Kano, who shouted himself hoarse about the scam, was hounded out of office. He alleged that applications for payment of shipments of petroleum products were higher than the ships that the two Lagos ports could handle at one time.
The whitewash by Umar Isa Ajiya, Chief Financial Officer of Nigerian National Petroleum Company Limited, that “in the last eight or nine years the NNPC Ltd has not paid anybody a dime or one naira as subsidy. No one has been paid one kobo in the name of subsidy. That means no marketer has received money from the (NNPCL) by way of subsidy,” only identifies the new recipients of the subsidy.
He admitted: “What has been happening… we’ve been importing PMS (or petrol), landing at a certain price… and government is telling us to sell at half price. So the delta, (a mathematical term for difference) between that landed price (and the half price is what we call the shortfall, or (you) call it subsidy.
“And the deal is between the federation and (NNPCL) to reconcile. Sometimes (government) gives us money. And sometimes, we do net-offs (or deduct the difference from remittance due to government). So, there is no money exchanging hands with any marketers.”
On the streets of Lagos, the response to that willful handing over of good money to marketers, or NNPCL officers, shippers and brokers, will be, “We hear you.” Whether the money is handed to marketers or absorbed through NNPCL accounting-within-accounting, “all na subsidy!” It’s just that the receivers are different.
When President Bola Tinubu gave the directive that crude petroleum due to NNPCL should be sold to local private sector refineries, like the Dangote refinery, those who profit from the subsidy binge finally came out of the woodworks, to claim that petroleum is an “international citizen,” and can only be traded in the US dollar.
As the price of crude petroleum gambols up and down, the pump prices of petroleum products also continue to go out of wonk; unpredictable and difficult to plan with. Thus, the naira-based economy of Nigeria will be difficult to plan, as imported petroleum products, its most strategic consumer products, may continue to be denominated in dollars.
It is becoming clearer that efforts to produce petroleum products at the refineries owned by NNPCL have always been shot down deliberately, and the huge sums of money claimed to have been spent on several Turn-Around-Maintenance were likely to be “owo mugu,” payment by unwary novices to the clever boys, who had no intention of running the refineries.
It has also become obvious that the oil bunkering, unfaithful oil production metering, and forward sales of crude petroleum by the government, would always make it impossible for Nigeria’s oil fields to provide enough feedstock to the local refineries.
When some critics began to ask for increased production from the oil fields, the explanation came that Nigeria’s oil fields operate just 19 oil rigs. And that was not enough to produce the two million barrels per day that the government was promising.
And, in any case, they added, IOCs, including Shell, Exxon-Mobil, Italy’s Eni and Norway’s Equinor, the joint venture partners that carry out the mining of Nigeria’s oil fields, have left Nigeria, because of “poor governance, weak institutions, deteriorating security conditions, spiralling economic decline and uninspired leadership.”
If all these confusions and contradictions are not corrected, this import-oriented economy will never experience stability. And the denizens of the Nigeria’s oil sector will continue to suck the commonwealth dry.
