NNPC and the rest of us, by Hassan Gimba

NNPC and the rest of us, by Hassan Gimba

The Arbiter 

This was published July 13, 2020 but still relevant.

Decree 33 of 1977 saw to the birth of the Nigeria National Petroleum Corporation (NNPC) on April 1 of that year through the merger of the Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel. The main purpose was for it to add value to the nation’s hydrocarbon resources “for the benefit of the nation’s economy…”

NNPC’s Kaduna, Warri and Port Harcourt Refineries, among others, were built solely for the “benefit” of the Nigerian economy. Completed and commissioned in 1980, the Kaduna Refinery was meant to be a modern conversion refinery having two parts: 50,000 barrels of fuel plant and another 50,000 barrels lubes plant for the production of lubricating oil blendstocks and waxes and bitumen.

The Warri Refinery, commissioned in 1978, was built to process 100,000 barrels of crude oil per day. In 1987 it was upgraded to process 125,000 barrels per day. Mainly, it was supposed to add value to some refinery by-products such as propylene rich stock and decant oil.

There are two refineries in Port Harcourt. The old one was commissioned in 1965 with a capacity of 60,000 barrels per day while the new refinery commissioned in 1989 has an installed capacity of 150,000 barrels per day.

Unfortunately, this is just on paper as Nigeria imports fuel rather than produce for local consumption and for export.

At one point in this country, NNPC was Nigeria’s feeding bottle because it was in charge of Nigeria’s main source of livelihood, the one commodity that provides nearly all our foreign exchange inflows.

However, the audited annual reports and financial statements for the year ended December 31, 2018, for the NNPC and its 20 subsidiaries and business divisions, signed by the group managing director of NNPC, Malam Mele Kyari, and the chief executives of the various subsidiaries showed that the three refineries recorded a combined loss of N154 billion while Kaduna refinery also recorded zero revenue for the group.

Details showed that Kaduna refinery spent N24 billion in direct costs to record zero revenue and an operating loss of N64 billion for 2018, as against N2 billion revenue and N112 billion loss the year before.

A breakdown of the direct costs and administrative expenses showed that it incurred N447.7 million in Training Expenses, Security expenses of N230 million, Communication expenses of N37.3 million, and Consultancy fees of N843 million.

For the Warri Refining Company, the audited financial statement showed that the company earned N1.98 billion as revenue while it incurred N12.74 billion as cost of sales, resulting in a gross loss of N10.57 billion and an operating loss of N45.39 billion.

The Port Harcourt Refining Company’s recorded revenue of N1.45 billion in 2018 is swallowed by expenses of N24.04 billion, a gross loss of N22.58 billion.

In simple words, these three refineries lost almost N160 billion and earned about N3.5 billion in 2018.

Interestingly, the NNPC has a total staff strength of 6,621 as of April 20, 2020, whose salaries are in billions – they earn stupendous salaries and are among the best paid in the country. Its directors alone pocket billions in emoluments. A director in NNPC can earn more than N33 million a year. A breakdown of the payments made to directors at the Kaduna Refinery alone showed that total employee cost was put at N23 billion in 2018. This includes salaries and wages, death benefits, administrative expenses, etc.

NNPC’s salary structure is such that an entry-level worker can have four times the salary of another entry worker in other sectors. Therefore a barely passed degree holder who secured employment there can have four times the salary of a first-class graduate who is employed as a teacher elsewhere.

Apparently, instead of being there “for the benefit of the nation’s economy”, NNPC is just there for the benefit of less than 7,000 privileged Nigerians. No wonder, only the well connected get employed there. In truth, the NNPC is a burden Nigeria can ill afford to continue shouldering.

In the build-up to the last election, Alhaji Atiku Abubakar, the presidential candidate of the opposition Peoples Democratic Party, PDP, at a town hall meeting with Kaduna State ward, local government and state party leaders, said that the NNPC had failed to serve the purpose for which it was established in 1977 and promised to sell it if elected.

He lamented that Nigeria, one of the biggest producers of crude oil, still imports refined products for local consumption at exorbitant prices to the detriment of the common man. Atiku was of course vilified but an organisation filled with fat cats can cause a lot of propaganda damage to anyone who wants to wean it off its feeding pipe.

Nigeria and NNPC remind me of a donkey and salt story I read many years ago. There was a man who had a donkey and used it to transport some bags of salt to the market in another village half a day’s journey away or something like that.

Halfway to the market, there was a bridge over a small pond. One day, the donkey accidentally fell into the pond. When it came out of the pond, its load was lighter because almost half of the salt had dissolved in the water and so it happily moved on. If donkeys could whistle, that donkey must have whistled happily all the way to the market.

The next day, the now enlightened donkey ran towards the bridge and jumped into the pond and came out to continue the journey, its burden easier to bear. It repeated this the next day, which made the salt trader wisen up to his donkey’s game. He then came up with a solution.  The next day he loaded his bags on the donkey as usual and they started on their journey. On getting to the spot, the donkey saw the pond and, as usual, it jumped in with relish. However, this time around it came out grunting, for the load on its back had tripled in weight. The salt trader had loaded cassava flour (garri) instead of salt on the donkey. Since that day, the donkey carefully avoided falling into the pond again.

Nigeria is trudging under the weight of the NNPC and it needs to shed this weight. But who will bell the cat?

Employment Slots

When did we descend this low as a nation? Since when have appointments and even admissions to government institutions become property to be shared?

This practice is well known, even if not accepted by helpless Nigerians. One cannot get a federal job except if a member of the National Assembly or head of a ministry, department or agency who gets slots, slots in one’s name. This practice is replicated at the state levels by state counterparts of the aforementioned. Traditional rulers, too, get their own share and, depending on their national status, even get at the federal level. Some of these “beneficiaries” even take theirs to the markets and sell to the highest bidders.

Unfortunately, this illegal practice, which has no respect for merit, serves more to dampen the spirit of the active youth and deprives them of hope in the future. Hope is what makes one work hard; without it, people lose the zeal to put in their best and they psychologically feel alienated from society.

Such a class of people ultimately become disenchanted with the system, feel betrayed by their leaders and never ask what they can do for their country. They become idle and indolent, and an idle mind is the devil’s playground. So they readily form the recruitment base for all types of crimes. Some may even take up arms against a country they see as having consigned them to the backwaters of society.

This breeds the discontent and restiveness we see all over the country and gives rise to the ‘them’ and ‘us’ schism that is dangerous to societal peace.

Members of the legislature and executive may fall on the excuse that their constituents inundate them with CVs. However, it is also true they started the whole untidy business while trying to compensate loyal ‘boys’.

We were recently regaled with the drama of Mr Festus Keyamo and lawmakers in the House of Reps over this “sharing” formula. The lawmakers were not satisfied with 15% slots in the federal government’s determination to give temporary jobs to 1000 people per local government. Nigerians ever in search of heroes hailed Keyamo. But the truth is that the executive, ever wily and always painting the legislature as the devil’s incarnate, wanted to hijack the remaining share.

A few days later, Keyamo, however, accompanied his senior minister back to the lawmakers to apologise for his behaviour. Didn’t anybody tell him that after such grandstanding, the honourable thing was to resign rather than go back to his vomit?

It is high time we build competitiveness and confidence in our youth by encouraging them to work hard and reap the reward of working hard irrespective of who they are or where they come from. It is the only way for a nation to develop and Nigeria can only develop when we begin to promote hard work and merit.

Hassan Gimba is the Publisher and Editor-in-Chief of Neptune Prime.

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