NNPC Ltd and Challenges in the Oil Sector: Banire Misconceives the Facts, Promotes Biased Views
By Olufemi Soneye
The Nigerian oil and gas industry has faced significant challenges over the years, particularly with issues surrounding the supply of petrol and the broader management of the nation’s oil resources. Amidst these challenges, it has become commonplace for commentators to cast blame on the Nigerian National Petroleum Company Limited (NNPC Ltd), portraying it as the core reason for the sector’s dysfunction. Recently, Dr. Muiz Banire, a Senior Advocate of Nigeria (SAN) and former Lagos State Commissioner for Transport and Environment, has joined the chorus, penning a sharply critical column in The Sun newspaper, where he referred to NNPC Ltd as the “black hole of Nigeria.”
While Dr. Banire’s critique may resonate with the frustrations of many Nigerians who continue to grapple with fuel scarcity and rising petrol prices, it is crucial to examine his claims through a lens of objectivity. It is easy to vilify NNPC Ltd without understanding the complex and multifaceted challenges confronting the oil sector. Unfortunately, like many others who have recently attacked the NNPC Ltd, Banire’s commentary appears to be driven more by sentiment and misunderstanding than by a thorough grasp of the facts.
Misrepresentation of Fuel Subsidy
In his article, Dr. Banire traced the origins of Nigeria’s fuel scarcity issues to as far back as 1973, attributing the persistent problem to the fuel subsidy and the alleged incompetence of the NNPC Ltd. However, this assessment is misguided. The policy of fuel subsidy is not the creation of NNPC Ltd, nor is it within the company’s purview to determine whether subsidies should be implemented or removed. The various Nigerian administrations that have come and gone since 1973 are responsible for the subsidy regime, implementing it as a means of cushioning the cost of petroleum products for ordinary citizens.
NNPC Ltd, as the national oil company, has merely been tasked with carrying out the policy of the government, whether that means implementing subsidies or overseeing their removal. For instance, in 2012, when the government attempted to remove the fuel subsidy, the country was thrown into a state of protest. A similar scenario unfolded in 2019, further underscoring the fact that NNPC Ltd is not responsible for the existence of the fuel subsidy. It merely plays its role as mandated by the government. To blame the company for the problems arising from the fuel subsidy is to miss the point entirely.
The Real Challenges: Smuggling, Vandalism, and Oil Theft
It is also worth noting that Dr. Banire’s critique fails to acknowledge the myriad of challenges that NNPC Ltd faces daily. The company must contend with rampant smuggling of petroleum products, pipeline vandalism, and the theft of crude oil. These illicit activities severely hamper the smooth operation of the oil sector, yet NNPC Ltd has continued to ensure the availability of petrol and crude oil in the face of such adversity. This monumental effort is often overlooked by critics who are quick to vilify the company for perceived failings.
Barely three months after the federal government removed the fuel subsidy, a new crisis emerged when independent and major petroleum marketers found it impossible to import petrol due to the nation’s stringent foreign exchange policies. They were unable to secure the necessary foreign exchange to continue imports, leaving the NNPC Ltd as the sole importer of petrol. Despite financial challenges, NNPC Ltd continued to import petrol and sell it at nearly half the international market price, fulfilling its obligation under the Petroleum Industry Act (PIA) to act as the “supplier of last resort.”
While there have been supply disruptions due to financial constraints, it is crucial to recognize the company’s effort in ensuring that Nigerians still enjoy lower pump prices than what they would have paid without NNPC Ltd’s intervention. Had NNPC Ltd not stepped in as the sole supplier, the consequences for ordinary Nigerians would have been much more severe.
Inaccurate Accusations of Black Market and Smuggling
Banire’s attempt to place the blame for smuggling and black market sales of petrol on NNPC Ltd is not only unfair but also lacking in evidence. While there is no doubt that some unscrupulous marketers divert petroleum products meant for domestic consumption to neighboring countries, there is no evidence to suggest that these marketers are working on behalf of NNPC Ltd. Likewise, the street vendors who peddle fuel in jerrycans on the black market do not source their products from NNPC Ltd retail stations.
One would expect that a lawyer of Banire’s standing would provide a more nuanced and evidence-based analysis rather than speculative claims. By blaming NNPC Ltd for problems like black market sales and smuggling without any concrete proof, Banire undermines the credibility of his critique.
NNPC Ltd’s Transformation and Growth
In recent years, NNPC Ltd has undergone significant transformation, positioning itself as a commercially focused entity. Since 2018, in anticipation of the Petroleum Industry Act, NNPC Ltd has deepened its commitment to transparency and accountability, regularly publishing its audited financial statements and showing steady growth. For the financial year ending in 2023, the company recorded an unprecedented N3.29 trillion profit—an achievement that goes unnoticed in Banire’s diatribe. While it may be convenient for critics to claim that nothing has changed, the facts paint a different picture.
NNPC Ltd is no longer the state-run corporation burdened by inefficiencies of the past. Instead, it is a dynamic entity that has broken away from its legacy challenges, despite the ongoing efforts of some to portray it otherwise. The legal maxim, res ipsa loquitur—the facts speak for themselves—comes to mind in this instance. NNPC Ltd’s growth and profitability are undeniable, regardless of whether Banire acknowledges them.
Misrepresentation of Regulatory Influence
Banire’s assertion that NNPC Ltd exercises undue influence over regulatory bodies like the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is another mischaracterization. These bodies operate independently, and it is legally and operationally impossible for NNPC Ltd to exert overbearing control over them. NNPC Ltd operates under the same regulatory framework as any other player in the sector and is subject to the same rules and oversight.
Conclusion
While it is easy to criticize NNPC Ltd, especially during periods of fuel scarcity or supply challenges, it is important for commentators like Dr. Banire to base their critiques on facts rather than speculation. NNPC Ltd has made significant strides in transparency, profitability, and efficiency over the past few years, and its role in sustaining Nigeria’s fuel supply should not be dismissed lightly. Instead of casting blame, stakeholders should focus on working collaboratively to address the deep-rooted issues in the oil sector. Only by doing so can Nigeria hope to achieve lasting solutions to its energy challenges.
Olufemi Soneye is the Chief Corporate Communications Officer of NNPC Ltd.
