NNPC: A State within the State?

By Jide Ayobolu, jideayobolu@yahoo.co.uk

Aug 21, 2006

During the May 2006 meeting of the Federation Account Allocation Committee (FAAC) – comprising states’ finance commissioners and revenue agencies of the Federal Government – the body of States’ finance commissioners accused the NNPC of shortchanging the federation account by N310 billion! This has assumed a rather disturbing trend in the NNPC’s oil and gas sector accounting, vis-à-vis the federation account since 2002.

It is disturbing because this was not the first time that the corporation would be accused of tinkering with the revenue accruals from oil. The February 2006 meeting of the committee had similarly ended abruptly when the commissioners staged a walk-out, to protest an alleged shortfall of N40 billion from the same NNPC accounts. In addition, the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) have, since 2002, drawn attention to the obvious intransigence of the NNPC in reporting the handling of payments to the account. In the entire hullabaloo, President Olusegun Obasanjo has maintained a studied silence.

This is disturbing. Issues arising from these recurrent altercations are not so much about accounting standards per se as they are about the extra-constitutional powers of the corporation, particularly its treatment of the component units in the federation on whose behalf it handles the bulk of the nation’s revenue. Such silence, bothering on contempt, is obviously borne out of misguided assumption of a sole prerogative to determine what is made available to the distributable pool, which represents a clear usurpation of the powers of another body, the RMAFC.

That the NNPC would anchor its defense of the shortfall in remittances to the federation account on something already captured in the budget, is disingenuous to say the least. What is more, the corporation’s explanation that it remits what is termed as core revenue and as the Petroleum Products Pricing Regulatory Agency (PPPRA) must have confirmed “what we have spent and what we are able to recover based on the regulated price” to the federation account, effectively makes the corporation’s the cost accountant to the federation account. In other words, NNPC and PPPRA between them determine what goes to the federation account. Apart from the arrangement not being transparent, this situation is neither envisaged by the constitution nor supporter by any known law: only the RMAFC is statutorily charged with the function.

The NNPC has no business withholding any portion of the funds meant for the federation account- modulator or not, for whatever reason. The well-known truth is that the NNPC thinks it is answerable to no one, except its sole principal, the President who doubles as Petroleum Minister. Clearly, the challenge is for the RMAFC to assume its role as the body statutorily charged with the duty of determining and monitoring receipts into the federation account. Nowhere in the constitution is the function ceded to NNPC or any other agency of government.

The National Assembly has an urgent task to call the NNPC to order through stricter demands for its operations to be truly transparent and open.

The Obasanjo administration came on board in 1999 waving a banner of anti-corruption. The president said categorically that the fight or war against corruption will be total and frontal, and that there would be no untouchables or sacred cows. It was to give effect to these pledges that both ICPC and EFCC were established. To all intents and purposes, what is happening in NNPC with regards to how it handles accruals to the federation account is a monumental financial scam which ought to be and should have been investigated.

The EFCC should have the power to look into the books of NNPC, but instead of doing just this, it pretends as if nothing is really amiss. Yet, sections 80 and 162 of the 1999 constitution are very clear on what to do with the country’s revenues and how withdrawals should be done. The NNPC has become a state within a state. It feels it is not accountable to anybody, but President Obasanjo since he is the Minister of Petroleum.

If the present administration sweeps this financial scam under the carpet, then it would have made nonsense of the anti-corruption posturing of the present administration. As for the executive, this sort of selective fight against corruption has made many perceptive Nigerians to conclude that EFCC has become a tool in the hands of the President, to prosecute his political and personal battles.

Yet, it must be understood that corruption, more than any other factor, is the primary cause of underdevelopment in Nigeria. Corruption is the reason why nothing works and for which Nigeria has acquired the image of a country where “anything is possible.”

Corruption assists poverty to fester, reduces the propensity of the country to grow, stalls progressive development, and enhances leakages in the system. If Nigeria wants to truly grow and develop, it must be serious about dealing decisively with this festering sore of corruption.

What the President and the NNPC leadership appear to have done are to circumvent the constitution which they swore on oath to uphold. It is therefore imperative for the President to look closely at the issue at stake and deal with them.

The point should be restated: the N 310 billion that cannot be accounted for should be recovered. If the amount is spent on health, education, agriculture or roads, it would have an appreciable positive impact on the lives of the people. Development is about the collective interest of the people and the overall interest of the Nigeria state. Therefore, not only should the missing funds be recorded and accounted for, the culprits should be brought to book to serve as deterrent to others.