By Ifeanyi Izeze
There are things one sees in this country that rekindles hope that Nigeria will still be better for its people to live and enjoy their lives. Few people in this country are still bent on standing on the truth option even against all odds to right the ongoing wrongs in the management of the faith and affairs of this country.
The Editorial by the African Oil and Gas Report on the Nigerian National Petroleum Company Limited (NNPCL’s) widely distributed Press Release about a loan it secured from AFREXIM Bank to support or rather stabilise the Naira as it claimed, is a classic that everyone that have the interest of this country at heart must read.
It is a gross disservice to restrict the classical piece: “NNPC should focus on the technical job, not playing games with financial engineering,” to players in the Oil and Gas industry only. It should rather go far beyond that constituency. The National Assembly, the Presidency and even state governments should be availed the opportunity of the discuss as concerns this sleaze centre called NNPC(L).
For whatever intentions the apex oil concern has, it is obvious the company is over– reaching its bounds and the danger is that if it’s allowed unchecked, there would come a time that it becomes too strong or rather too enmeshed into governance fabric of the nation that no arm of government will be able to checkmate it.
When did the NNPC(L) become the Ministry of Finance/Central Bank of Nigeria that should be assigning itself the mandate of supporting the Naira? So NNPC, a private company goes abroad to batter our oil reserve (yet-to-be produced crude oil) with huge loans running into billions of Dollars and the people sitting in government don’t see anything wrong with that? Haba Nigeria!
Whether anybody wants to hear this or not, the present NNPC leadership has behaved like a chokehold on the Nigerian economy and they have been getting away with it. The present hardship in the country as a result of the unreasonable hike in the price of petrol was singularly caused by this same NNPC that felt equal or even bigger than the President of the Federal Republic, Bola Ahmed Tinubu. Immediately the president in his ‘high mood’ announced the cancellation of subsidy payment, Mele Kyari followed few hours after to unilaterally announce a new price regime of almost 450 percent increase. The rest is history as Nigerians now bears increase prices of every needed essential for daily living. How he arrived at the new prices still remains obscured at best and at worst, blurred.
Without a solid achievement in getting crude oil and gas out of the subsurface by its own competence, NNPC resorted to going abroad to collect loans on behalf of Nigeria. Shame of a nation!
NNPC should ordinarily be ashamed and concerned that the drop in crude oil output, which will help worsen the value of the Naira, is largely of its own doing that borders much on its incompetence, sleaze, and unnecessary busy-bodies into partisan politics. And rather than concentrating on the technical job of producing and managing the nation’s oil and gas resources as the enabling law mandates it, this company prefers to dabble into areas it has neither the know-how nor the mandate to tread.
If it continues to dabble into everything, the spirit of the Petroleum Industry Act (PIA) that supposedly created the new conscription will backslide into what we had before: a docile, corruption infested, terribly run apex oil concern. As at today, there’s nothing to show there’s a paradigm shift in the ways and manners of the organisation except in the change of name: “I formally known and addressed as NNPC, now wish to be known and addressed as NNPC Limited. All former documents and dubious business practices remains valid.” That’s Nigeria for you!
It is a known fact that the loan announcement came at a time of steep drop of the Naira against the American Dollar which also coincided with the news that crude oil output had plunged Month- on -Month by 13 percent from 1.25million barrels per day in June to 1.1 million barrels of oil per day in July 2023 as disclosed by the Nigerian Upstream Regulatory Commission (NUPRC).
In the face of the crash in crude oil output and the plunge in the Naira’s value, NNPC’s position ought to be, how it can find a way to boost the nation’s daily oil production volumes within the next few months. That should have been its valid concerns if it is a serious technical organisation propelled to be profitable to the country and not this jack- of- all -trade disposition of the current leadership of the company.
NNPC has over 55 per cent equity in the largest producing oil and gas fields in Nigeria. While the general perception is that the company is mainly a joint venture partner in producing assets that it doesn’t operate, the reality is that NNPC has 100 percent in several producing assets, most of them underperforming because of the company’s poor technical delivery.
NNPC should be focusing single-mindedly on improving its technical efficiency so it can deliver into the terminals more of the crude oil locked behind pipes as a result of its suboptimal operational procedures.
Is it not an absurdity for NNPCL to unilaterally go across the globe pledging our crude oil in different forms of financing arrangements? A significant portion of NNPCL/NEPL crude has been pledged under different financing arrangements such as pre-export financing, Eagle Exporting, NLNG third party financing, forward sale financing etc. Nigeria is worse off these financing arrangements just because a group of people holding our common patrimony in trust deliberately chose to be dubious.
The worry being expressed by industry experts is that there will definitely be an unfavourable cost to the loan, and the cost will not just be to the NNPCL but also to the Federation. The interest will contribute to the company’s costs, which in turn will affect its profitability and the dividends due to its shareholders. Also, the cost of servicing the facility will be higher when oil prices swings. The lower the price of oil, the more barrels of oil that will be needed to pay the principal and interests of the loan. You see where NNPC has tied Nigeria!
Without doubt, NNPCL will serve the country better by concentrating on producing, processing and selling crude oil and/or gas and doing it well.
As said by the Africa Oil and Gas Report in its classic editorial: “NNPC should focus on the technical job, not playing games with financial engineering.”
- Mr. Izeze is a National Daily Columnist and can be reached via iizeze@yahoo.com; 234-8033043009