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NNPC refineries as metaphor for all that is wrong with Nigeria

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By Dele Sobowale

Refineries lose N96bn in nine months, says NNPC— News Report.

THE story published in a national newspaper on December 30, 2018 elaborated by pointing out that “The Federal Government-owned refineries lost N96.34bn in the first nine months of this year compared to N95.09bn in the whole of 2017.” Certainly, unless things have changed in the last quarter of 2018, the refineries alone would have thrown about N132bn down the drain by the time you are reading this article.



Nigeria’s crude oil production rises 9%

It is not exactly the best beginning to what we should collectively expect to be a prosperous new year. But, for those knowledgeable about the NNPC and especially, the four refineries located in Kaduna, Port Harcourt (2) and Warri, the results were not unexpected. Quite the contrary, they were predictable. Even under more competent Federal Governments in the past, the refineries were notorious pipes of corruption draining national cash into the pockets of those close to the corridors of power in Abuja. They remain so till today.

Part of the hidden agenda embedded in the lopsided appointment of Northerners into the operations of the NNPC group was to consolidate the vice grip of the cabal now in government – with the refineries as focal points. And, if anybody wants to know why the Petroleum Industry Bill, PIB, will never see the light of day as long as Buhari is President, they only have to get close to the way the FG manages the refineries. NNPC is not run as a business, but, more like a racket. It has always been.

The refineries were deliberately crippled to ensure they could not process anything close to their 450,000 barrels of crude oil per day right from the time Abacha acquired 30 per cent interest in the West African refinery, which was confiscated by General Abubakar on May 28, 1999 in a little-known decree. Abacha opened the eyes of his successors to the opportunity for corrupt self-enrichment via the issuance of fuel import licences to a selected few officers. I was shocked to the marrows when on a visit to the officer handling such import licences during Yar’Ádua’s regime a call came through to him from a former Head of State wanting to know when he could send his staff to pick up his own import documents which would later enable him, not only to make huge profits at face value of the contract, but to later collect “subsidies”.

So much for CGFR! When Dr Samuel Johnson, 1709-1784, declared that “Patriotism is the last refuge of the scoundrel” (VANGUARD BOOK OF QUOTATIONS, p 182) I thought the iconoclast had gone too far. A few weeks after our former national leader collected his loot, “Fellow Nigerians” published adverts on his birthday praising him as a “patriot”!!

Every great enterprise starts off with enthusiasm for an exalted aim and ends up bogged down in petty politics—Charles Peguy, 1873-1914.

If ever there was an enterprise which started off with a great deal of enthusiasm and hope, it must be the Nigerian National Petroleum Corporation, NNPC, which was created by Decree 33 on April 21, 1977 by Military Head of State, Olusegun Obasanjo. The NNPC did not wait long to be enmeshed in petty politics and corruption. Indeed, the NNPC had always been that way. It is difficult to pin-point when the group and the refineries abandoned the business of making money for Nigeria and embarked on milking the fatherland for a few people. But, the origins of corrupt practices can be traced to the way the decree was administered by the man who wrote the law himself – Obasanjo.

While the decree stipulated that the affairs of the corporation shall be conducted by a Board of Directors which shall consist of a Chairman. And the Chairman shall be a Commissioner (Minister) and the Board should report to the Federal Executive Council, headed by Obasanjo. Our two-time former Head of State appointed no Commissioner. He kept the post for himself; just as he did as elected President from 1999 to 2006. Thus Obasanjo gave himself absolute powers over the NNPC.

Now, who does not know that “Power tends to corrupt and absolute power corrupts absolutely”? ( Lord Acton, 1834-1902). So, the seeds of destruction of the NNPC were sown by the same man who created it. Obasanjo removed the checks and balances indispensable for accountability and transparency. The atrocities committed under him on the two occasions he was Nigeria’s leader will fill a good-sized book. Buhari has merely borrowed from the bad example set by OBJ by holding on to the post of Minister of Petroleum. If ordinary ants know where sugar is available, what can we expect of men? By the middle 1980s, it was obvious to economic and financial experts that the NNPC had become a mere tool for political patronage by Presidents.

It is interesting that the NNPC is the only national company managing the petroleum affairs of any oil producing country in the world which is making losses or earning revenue without remitting the funds to the national treasury where it is always needed. Directors and managers are obviously not ashamed of themselves. They invariably release statements to “justify” their actions. In short, they do everything but send the money we need to run the country. Some of their most notorious officers have received National Honours!

“It requires wisdom to understand wisdom…”Walter Lippmann, 1899-1974.

But, wait a minute. Why should NNPC managers be embarrassed by their failures? They work for an FG which is itself an embodiment a failure. Only good managers of enterprises can understand good management. In global football, even celebrated club Managers are relieved of their posts before half way into the year once it is clear they are not leading the group in the right direction. The report listed monthly losses as follows: January N13.58bn; February N8.05bn; N11.11.88bn….

No Group Managing Director (read Minister) would have allowed a divisional Managing Director to rack up such losses and still keep him in office for April. But, Buhari does not understand how public and private businesses are managed for the greatest good of the greatest number. It is doubtful if he even understands how such atrocious performance by his appointees to NNPC destroys the Nigerian economy.

If the truth must be told about those refineries, we must admit to ourselves that they will never again work efficiently and can never again be run at a profit. Virtually every part of them is obsolete and not cost-effective. The ritual of awarding contracts for Turn-Around-Maintenance (TAM) is itself corruption in action. The FG is just giving money to contractors for doing nothing. Refineries over 30 years old cannot compete with modern plants. It is just like expecting a Peugeot 504 bought the same year to perform like any car newly built today. Nigerian refineries have become scraps. They should be shut down NOW!

The problem is that we lack leaders with the guts to look the organised labour and the vulture-contractors in the face and tell them that “The party is over” at the refineries. Then we can star on new slates instead of keeping up wiping the old and irredeemably dirty four. They are taking us backwards instead of moving us forward. We don’t need them anymore.

But, knowing Buhari, Osinbajo and the nation’s economic management team, it will require a miracle equal to moving mountains to expect them to do the right thing. Nobody in that government apparently understands economics. So, if they remain in charge we can expect to read next year that our refineries have again lost N200bn. The fault will not be theirs; it will be ours. You cannot expect people to give what they don’t have. These guys cannot run a kiosk successfully!!

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