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The state-owned oil company revealed that it owes $6.8 billion to petrol suppliers. While the public was not shocked by the existence of debt, the abrupt acknowledgment after months of denial from a government-owned entity was hard to fathom.
Reports indicate that the NNPC's debts to its suppliers have impeded the availability of adequate fuel supplies. In July, it was reported that Nigeria's debt to petrol suppliers exceeded $6 billion, complicating the NNPC's ability to reconcile fixed pump prices with international fuel costs.
According to a Reuters report, the national oil company began facing difficulties earlier this year when late payments for Premium Motor Spirit (PMS) exceeded $3 billion. It was noted that the company had not settled payments for some imports from January, leading to an accumulation of debt.
Since June, the volume of Nigeria's tenders for PMS has decreased, with traders indicating that by now, five suppliers have ceased providing PMS to the NNPC due to unpaid debts. Olufemi Soneye, the company's spokesperson, had previously refuted claims of outstanding debts to PMS suppliers on several occasions, including a strong denial in August regarding the $6.8 billion owed to international oil traders.
“NNPC Ltd does not owe the sum of $6.8bn to any international trader(s). In the oil trading business, transactions are carried out on credit, so it is normal to have outstanding amounts at certain times. However, NNPC Ltd, through its subsidiary NNPC Trading, maintains many open trade credit lines with several traders. The company is fulfilling its obligations on a first-in-first-out (FIFO) basis,” he stated.
The company, showing no signs of regret, reversed its position and acknowledged its debt to oil suppliers.
“NNPC Ltd has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers. This financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply,” Soneye said in another statement.
Nigerians continue to express frustration over the ongoing fuel crisis that has persisted since July, and the recent acknowledgment of a claim previously denied by the NNPC has raised concerns about the integrity of a government-owned corporation.
Prior to this, the NNPC had also revealed that it had been selling petrol to marketers at half the market price, contradicting its earlier statements that there were no subsidy payments on PMS. As the sole importer of petrol, the NNPC confirmed that the Federal Government is subsidizing the current price of PMS, which marketers have recently set at N1,117 per litre.
Despite the NNPC's previous denials of providing fuel subsidies to marketers over the past nine years, it has now stated that the government permits it to sell at a price lower than the landing cost.
The Chief Financial Officer of the company, Alhaji Umar Ajiya, commented on the situation, “In the last eight to nine years, NNPC has not paid anybody a dime as a subsidy; no one has been paid kobo by NNPC in the name of subsidy. No marketer has received any money from us by way of subsidy.
“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price. So the difference between the landing price and that half price is a shortfall.
“And the deal is between the Federation and NNPC to reconcile. Sometimes, they give us money, so there is no money exchanging hands with any marketer in the name of subsidy,” he said.
Numerous individuals have inquired whether the recent disclosures accurately reflect the actual condition of NNPC or if they are merely a tactic to mislead Nigerians, as the government aims to increase petrol prices to N900 per litre.
“Why should we believe you now when you lied to us in the past? Where is the trust? Where is the integrity,” a netizen asked.
Many individuals have expressed concerns over the years regarding the NNPC's lack of transparency and accountability.
A recent revelation by Alhaji Aliko Dangote, President of the Dangote Group, that the NNPC holds only a 7.2 percent stake in his refinery surprised many Nigerians, who had believed the nation owned a 20 percent stake.
In response to this news, former Minister of Education Oby Ezekwesili reflected on her past interactions with the NNPC during the Olusegun Obasanjo administration, emphasizing that the organization could not operate independently as if it were a federation.
“When we were in government, I often told the NNPC leadership that they cannot carry on as though there is a ‘Federal Republic of the NNPC’ just because they think of themselves as ‘the goose that lays the golden egg’.
“The opacity of the NNPC was the reason we took great delight in designing the Multi-Stakeholders Nigeria Extractive Industries Transparency International in the early 2000s that I pioneered as chairperson. We went above global minimum voluntary standards of transparency requirements by entrenching ours in an Act that established NEITI as the transparency regulator of the oil and minerals sector,” she explained.
Since the conclusion of Obasanjo’s administration in 2007, the NNPC has undergone numerous transformations and changes in leadership.
The introduction of the Petroleum Industry Act marked a significant shift, transitioning the NNPC from a corporation to a limited company.
Despite these changes, critics argue that there has been little improvement in the organization's transparency. In a recent interview, Senior Advocate of Nigeria, Olisa Agbakoba, expressed concerns regarding the lack of clarity within the NNPC.
He advocated for the repeal of the PIA, asserting that it granted excessive power to the NNPC, while also noting that its operational efficiency has not reached the standards set by Saudi Aramco.
“The GCEO of NNPC today under the PIA wears two caps; it is so confusing when you read the act and cannot tell exactly the job the office does. He is the state regulator of oil, he is also an oil operator; so, he does two things, and he cannot do them well.
“It is either you are regulating like the Minister of Energy in Saudi Arabia, or you are a player like Chevron. The NNPC should be efficient like Saudi Aramco. It doesn’t matter whether it is public or private. It has to refine the interest of Nigeria,” Agbakoba stated.
He requested a complete overhaul of the NNPC and the entire oil sector, “Section 62 of the PIA states that the NNPC can deduct money. Before, NNPC used to deduct money. I hope you know that Section 162 creates a federation account. All monies due to the government from all sources shall be paid into the federation account except for a few things.
“How is it that the PIA legitimizes what the NNPC has been doing? That is shocking. Before now, they used to do it claiming they cannot operate without money. But now, the act says they can deduct all their expenses. That is the opaqueness of NNPC. That’s the problem.”
Wumi Iledare, a Professor Emeritus, expressed skepticism regarding the credibility of the NNPC, particularly in light of its denial of outstanding debts and subsidy payments.
He emphasized that the issue lies not within the organizational structure of the NNPC, but rather in the deployment of its personnel. Iledare criticized the implementation of the Petroleum Industry Act (PIA), which was intended to revitalize the oil and gas sector, describing it as poorly executed.
He advocated for a comprehensive restructuring of the entire Ministry of Petroleum, urging President Bola Tinubu to appoint a dedicated Minister of Petroleum to oversee the sector, as the current ministers of state lack the constitutional authority to fulfill the responsibilities of a full minister.
In a conversation with The PUNCH, Joseph Ambakederimo, Chairman of the Board of Trustees for Community Development Committees in Niger Delta Oil and Gas Producing Areas, expressed his dismay at the situation.
He found it deeply troubling to witness the operations of the NNPC, which he believes should operate at a level comparable to that of Saudi Aramco, a company that effectively manages the nation's revenue.
Ambakederimo raised concerns about whether the country's leadership is satisfied with the current management of the NNPC.
He queried: “The question to ask is what would have happened to Mele Kyari and his management team if the NNPC was to be a responsible corporate organisation that should operate within and regulated by CAMA, taking into cognisance the latest admission of the NNPC owing $6bn to gasoline suppliers after deliberately pushing back on the story?”
He added, “The company practically denied the story, lied about it, cooked its books by declaring evaporated profits, bandied figures and only now to admit without remorse or the board resigning en masse.
“Again, look at the issues with the refineries, with many failures on its functionalities, defaulting on its own timelines set by itself, yet no one is held to account. Certainly, the NNPC is still tied to the apron strings of the Presidency and it has practically been run aground.”
In response to assertions that foreign exchange liquidity hindered the importation of PMS into the country, Ambakederimo urged the NNPC to clarify the whereabouts of the funds generated from the forward sale of crude oil.
“Where is the inflow? Or can we not mention the other very important issues of cost of production that have become a recurring decimal with no gains made, increased production levels and lack of new investments into the sector, all of these were promised by Mele Kyari when he was appointed some five years ago and yet none has been achieved and we are all keeping quiet?
“For me, the NNPC has become an albatross to the country, to the government of President Bola Tinubu, and to Nigerians, except the President is not seeing it that way or perhaps he is being misinformed of the true state of the NNPC and its activities.
“Therefore, my submissions would be that if President Bola Tinubu refuses to sack the board of the NNPC and order a painstaking audit of the company and all of its subsidiaries, then the conclusion would be that the President is insensitive to the plight of Nigerians,” he submitted.
An oil and gas specialist, Henry Adigun, remarked that the NNPC tends to overlook the obvious in its operational approach. He has consistently informed journalists that the NNPC is selling PMS at prices lower than the landing cost, yet the corporation continues to refute this claim. Adigun emphasized the need for greater transparency and accountability moving forward.
The NNPC's acknowledgment of its debts to petrol suppliers has sparked critical concerns regarding its integrity, transparency, and accountability. The organization's history of denial and lack of clarity has diminished public confidence, and its recent reversal has only contributed to the prevailing confusion.
As Nigerians face ongoing challenges related to the fuel crisis and economic instability, it is evident that the NNPC must undergo significant reforms to regain its credibility and operational efficiency. This transformation necessitates a dedication to transparency, accountability, and sound governance, along with a readiness to update its outdated systems and practices.
Ultimately, the integrity issues surrounding the NNPC mirror the broader difficulties confronting Nigeria's oil and gas industry, and addressing these challenges will demand a unified effort from policymakers, industry participants, and civil society.