Some argue that if the government is spending 96.3 per cent of its revenue on debt servicing, while also satisfying other financial responsibilities for infrastructure, salaries and overheads, the government cannot afford any palliatives.
Yet others vehemently insist that the government’s revenue shortage is a result of the trick of the Nigeria National Petroleum Company Limited that is moving funds from one arm to another, what accountants describe as accounting within account.
Here is the explanation, as someone, who has never worked in NNPCL or its precursor, NNPC, offered from the inside of a Lagos “danfo” commuter bus. He says NNPCL sells crude petroleum and earns revenue denominated in American dollars.
That is simple enough to understand, given the understanding between America and Saudi Arabia to lead members of the Organisation of Petroleum Exporting Countries to sell crude petroleum in American dollars.
He adds that, in order to create an opportunity to earn foreign exchange for the rascals who run the Nigerian state and their cahoots, the denizens of NNPCL (deliberately) neglect to run the four government-owned refineries.
Yet thousands of people are hired (to idle away doing nothing at the refineries) only because they are protégés of Nigeria’s oligarchs. Okay, they at least run the petroleum products depots, manage the petrol pipelines and take delivery of imported petroleum products at the Atlas Cove, off Lagos harbour.
But because Nigerians need petroleum products, like petrol, diesel, kerosene and black oil, in order to run their lives within the Nigerian economic space, the operatives of NNPCL resort to importation.
This habit was adopted from the time when the National Union of Petroleum and Natural Gas Workers, led by its Secretary General, Frank Kokori, locked down the oil sector to compel Gen. Sani Abacha to reverse the annulment of the June 12, 1993, presidential election presumed to have been won by Bashorun MKO Abiola, and to return the military to the barracks.
Because the Federal Government has an inefficient tax recovery system, revenue accruals to the government are generally inadequate. The revenue shortage got even more acute when officials looked the other way when powerful individuals engage in oil bunkering, and divert government revenue into private pockets.
To pay for the imported petroleum products on behalf of the Federal Government, NNPCL pays from its reserve of hard currency. It must be from this “ghost” account that NNPCL pays its friends whom it gives licences to import refined petroleum products.
NNPCL then lied that it could not remit revenue earned on behalf of the federation to the Federal Accounts. This may be the source of foreign exchange that senior NNPCL officials give to their friends and Bureau de Change operators.
Having convinced the government of this lie, NNPCL then conducts its internal accounting, transferring revenue from its sale of crude petroleum account to that for payment for the importation of petroleum products.
Incidentally, no internal or external auditor of NNPCL has been asked, or has offered to explain, how the recognition of liabilities or indebtedness and compensations within NNPCL is achieved.
Those NNPCL officers, the agents that they authorise to import refined petroleum products and their godfathers in government, maybe the cabal that everyone is talking about. You just may not know.
No one has been able to ask how the prices of the imported petroleum products were negotiated. What should have been an open, scientific and verifiable process appears to be shrouded in some mystery. Yet Dr. Mele Kyari, claims that the government owes NNPCL some N2.8tn, when imported petroleum products are paid for with crude petroleum.
When Rufai Oseni, co-anchor of Arise TV channel’s morning show, “The Morning Show,” asked him for the price structure of the petroleum products, Dr. Mele Kyari, who is Group Managing Director of NNPCL, paused for a while and eventually failed to answer the question.
That “missing link” probably explains why Socio-Economic Rights and Responsibility Project wants a Federal High Court to compel President Bola Tinubu to direct Nigeria’s anti-graft agencies to probe $2.1 and N3.1tn that the Federal Government reportedly paid as fuel subsidy since 1999.
Following is Chairman, Revenue Mobilisation, Allocation and Fiscal Commission of Nigeria, what Mohammed Shehu, has to say about the opaque voodoo going on within the dark caverns of NNPCL.
“The total amount withheld by the NNPCL, as claimed subsidies for the period (of 1st January to date), amounted to N8,480,553,608.13, as reported by the Office of the Accountant General of the Federation, (even though that figure) is yet to be verified by RMAFC, OAGF and NNPCL.”
By holding on to remittances from the sale of crude petroleum that should have been paid to the Federation Account, NNPCL is holding on as ransom, money that belongs to every Nigerian, even in the face of the Treasury Single Account policy that requires all revenues generated by government-owned enterprises into the common pool.
It’s from that financial pool that every government Ministry, Department and Agency would receive money budgeted for it through the Central Bank of Nigeria payment instrument called Authority to Incur Expenditure.
Meanwhile, NNPCL folks and the Federal Government people kept giving Nigerians the wrong impression that the Federal Government was making budgetary provisions to pay for the fuel subsidy, which is the difference between the price of the petroleum products and the resale price that the government recommends that the products should be sold to Nigerians.
When a smart alec came up with the idea that the government (or NNPCL) needed not pay for the imported petroleum products with the hard currency earned, he suggested a swap of crude petroleum for imported petroleum products.
Thus Nigeria gives crude petroleum to vendors from Organisation for Economic Cooperation and Development countries who return refined petroleum products.
But as you probably know, finished or refined petroleum is more expensive than crude petroleum. So, when Nigeria gives, say, 100 barrels of crude oil, it gets back, maybe, 70 barrels in return as refined petroleum. Though no one has accused NNPCL folks of over-supplying the crude petroleum for refined petroleum products, it is not impossible that this occurs regularly. They probably load their own crude petroleum consignments to sell illegally at the international market, under the cover of NNPCL.
President Tinubu, who has given instructions to NNPCL to end the crude petroleum swap for refined petroleum products, must be commended for the swift manner in which he took the decision.
You shouldn’t be surprised though. He once worked in the finance department of an International oil corporation, and he knows the racket inside out.