✕ CLOSE Online Special City News Entrepreneurship Environment Factcheck Everything Woman Home Front Islamic Forum Life Xtra Property Travel & Leisure Viewpoint Vox Pop Women In Business Art and Ideas Bookshelf Labour Law Letters
Click Here To Listen To Trust Radio Live
SPONSOR AD

The great PIB swindle: Nigeria’s oil money under siege

In the corridors of power, the Petroleum Industry Bill (PIB) was hailed as the panacea to Nigeria’s oil sector woes – a landmark legislation promising…

In the corridors of power, the Petroleum Industry Bill (PIB) was hailed as the panacea to Nigeria’s oil sector woes – a landmark legislation promising transparency, accountability and fair distribution of the nation’s oil wealth. Yet, as the dust settles it reveals a disconcerting reality of promises not meant to be fulfilled.

Running the NNPC Ltd like a fiefdom

Let’s do a quick refresher. According to the latest data from both the U.S. Energy Information Administration, Nigeria is ranked 11th in the world and 4th in Africa in crude oil production as at September 2023, with an average of 1.14m barrels/ day. While its crude oil production quota approved by the Organisation of Petroleum Exporting Countries for December 2023 is 1.72m barrels/day, no figures could be traced or anchored to the NNPC Ltd within the same period.

The four government-owned refineries in Nigeria built between 1965 and 1989 have all been shut down for donkey years due to, chief amongst them, structural neglect. Their total refining capacity is 445,000 barrels/day. Data provided by KNOEMA – a global data platform, shows daily consumption of 520,000 barrels/day in December 2023.

Data available as at 2019 shows about 43 licences were granted for large and modular refineries, out of which only about 4 modular refineries may be operational with a total capacity of 34,000 barrels/day to grow to 135,000 barrels/day.

The Dangote refinery which cost $19bn and already commissioned in 2023, but yet to start operations, has a production capacity for 650,000 barrels/day. Through ‘Project Bison’, and not through the Sovereign Wealth Fund (SWF),  the NNPC has audaciously gone ahead to acquire a 20 percent stake in the refinery for $2.76bn and to rub salt to injury will also deliver 300,000 barrels/day of crude to Dangote at a discount and to forfeit 100 percent dividend that will be declared within the repayment period.

Additionally, ‘Project Gazelle’ – a loan of $3.2bn was collected from AFREXIM bank to fund the Federal Government dollar liquidity crisis while repayment will be from crude oil.

Despite going to own 130,000 barrels/day of oil from Dangote, NNPC chose to squander $1.5bn in 2021 to renovate the antiquated Port Harcourt refinery, which lacks readily available spare parts. The renovation project is expected to take 44 months (until July 2024) and its first phase progress is unknown. The condition of the other three refineries is also unclear.

Who owns the oil?

Nigeria is supposed to use its God-given oil revenue for various purposes, including funding the federal, state and local governments budget, investing in infrastructure, education, health, agriculture and saving for future generations. However, the management of oil revenue in Nigeria has been plagued and besieged by fiscal indiscipline, corruption, misallocation and inefficiency, resulting in poor development outcomes and welfare.

According to WIKIPEDIA, Nigeria’s Sovereign Wealth Fund (SWF) is meant to save and invest some of the oil revenue for future generations, as well as to stabilize the economy during oil price shocks, established in 2011 with an initial capital of $1bn now has $2.3bn as at June 2023, a paltry $1.3bn increment after 12years. It will be interesting to know how much was squandered on salaries and perks of office within those 12 years.

What is disconcerting is that the NNPC Ltd remitted $2.7bn to its CBN accounts from January to June 2022, with $645m from NLNG dividends and $1.786bn from operational activities, predating the PIB’s enactment. Post-PIB, remittance details are elusive. Remember, the PIB purportedly seeks to overhaul the oil sector, establish new regulations and transform NNPC into a transparent limited liability company for improved efficiency. Yet, transparency regarding post-PIB remittances remains uncertain.

A scam on Nigerians 

Nigerians were presented with flimsy rationale for restructuring the NNPC, citing:

  1. Reliance on government funding, making it less competitive for global investors.
  2. Political influence causing bureaucratic delays, unsettling International Oil Companies.

iii.  The NNPC had a workforce employed for political reasons, hindering its success as a commercial entity. Meanwhile the 4 refineries are un-operational and its large number of staff are still paid all entitlements without producing a single drop of oil.

  1. High credit sales and indebtedness hindering operations, but remember they borrowed $3.2bn from AFREXIM bank to be paid with crude oil.
  2. Low revenues and gross profits impeding success. 

The question remains: How much has the NNPC remitted to the CBN to date?

Here enters the PIB

The 2021 Petroleum Industry Act, identified as Gazette No.142, comprises 5 chapters, 319 sections and 8 schedules. It addresses very distressing, disconcerting, frightening and upsetting issues that will impact over 200 million Nigerians, including the Domestic Base Price and Pricing Framework, Gas Price Formula for Gas-Based Industries, Capital and Production Allowances, Petroleum Fees, Rents, Royalty, and allocations to Host Communities and Frontier Basins. Due to space constraints, a detailed analysis of these provisions is not feasible here, but their implications are significant and wide-reaching for the populace.

Challenges inherent therein:

  1. The PIB provides for the establishment of new entities, such as the NNPC Ltd, the Ministry of Petroleum Incorporated, the two regulators, and the host communities trust fund, and the dissolution or transfer of existing entities, such as the NNPC, the Department of Petroleum Resources, and the Petroleum Equalization Fund. It also provides for the transition of the existing petroleum licenses and leases, contracts and agreements, assets and liabilities, and staff and personnel, to the new entities or arrangements, within specified periods and conditions. However, implementation will face challenges such as legal disputes, political interference, bureaucratic delays, resistance etc.
  2. The PIB mandates the improvement of operational and technical capacities, as well as funding sources, for both new and existing entities in the industry. It emphasizes the need for alignment and coordination of activities and funding mechanisms to foster synergy and harmony. However, addressing these challenges will be daunting, given existing skill shortages, technology gaps, and infrastructure limitations.
  3. The PIB necessitates the creation and execution of monitoring, evaluation, and feedback mechanisms to uphold compliance, accountability, transparency, and performance. It underscores the importance of collecting, analysing, reporting, and disseminating data and information from these mechanisms to inform decision-making and policy formulation. However, such endeavours will face challenges in terms of data quality, availability, accessibility, and security, given the intricacies and crafty nature of those involved in the drafting and sign-off processes.
  4. The undertaker

Given that the architects of the PIB still maintain authority, the PIB is a tool wielded by the masterminds to maintain their stranglehold on the nation’s resources, resembling a situation where “the fox guards the hen house”.

While the complicity of those involved in this charade is reprehensible. It behoves on Nigerians to rise against this tyranny of deception and to dismantle this facade of deceit.

Considering these circumstances, wouldn’t it be prudent to suspend or abandon the PIB and revert to the status-quo ante before it becomes a quick sand?

Rabiu, a public affairs commentator sent this piece from Kaduna 

 

LEARN AFFILIATE MARKETING: Learn How to Make Money with Expertnaire Affiliate Marketing Using the Simple 3-Step Method Explained to earn $500-$1000 Per Month.
Click here to learn more.

AMAZON KDP PUBLISHING: Make $1000-$5000+ Monthly Selling Books On Amazon Even If You Are Not A Writer! Using Your Mobile Phone or Laptop.
Click here to learn more.

GHOSTWRITING SERVICES: Learn How to Make Money As a Ghostwriter $1000 or more monthly: Insider Tips to Get Started. Click here to learn more.
Click here to learn more.

SECRET OF EARNING IN CRYPTO: Discover the Secrets of Earning $100 - $2000 Every Week With Crypto & DeFi Jobs.
Click here to learn more.