Business

NNPC: Tough route to transparency

The Nigerian National Petroleum Corporation (NNPC) published its audited account for the first time in 43 years, a development seen as biggest attempt at transparency and accountability since 1977, and equally greeted with positive reactions across the country. Adeola Yusuf reports

 

 

A

handful of those who have been following the historic opacity in Nigeria’s oil industry believed the Group Managing Director of the Nigerian National Petroleum Corppration (NNPC), Mallam Mele Kyari, when, on August 6, 2019, he promised to publish the audited account of the corporation.

 

 

Newspapers and broadcast media across the country were awashed with the news that was later taken with a pinch of salt by many. They have never witnessed one published account from a corporation that has been managing oil revenue and expenditures on behalf of the country since it was established in 1977.

 

Seven months after this, the NNPC boss again reiterated his promise and at this point he must have been under presure as everyone was waiting for what was termed unprecedented.

 

The bearish, bullish side of the report

 

 

Penultimate Sunday, the corporation took to the internet to published its audited report. Characteristic of any audited report, there were negatives as well as positives in the report. For instance, the Kaduna refinery, it was revealed, made zero naira revenue in the entire 2018.

 

Despite suffering zero naira revenue, the refinery, the 2018 audited financials of the corporation published on NNPC website showed, still incurred a total cost of N64 billion.

This summed the total losses suffered by the three refineries in the year to N154 billion.

 

 

A recent report by the NNPC had indicated that none of the country’s refineries, with a combined capacity of 445,000 barrels per day, produced any refined crude between 2019 and 2020.

 

This development has further renewed the call for the privatisation of the refineries.

 

 

A good tale to tell

 

 

Stating that it published its audited financial statements online in a bid to improve transparency around its operations, the corporation also published online the audited accounts of its 20 subsidiaries and business divisions for the first time.

 

 

 

The National Petroleum Investment Management Services (NAPIMS) is the group’s most profitable division, according to the statements, signed by Kyari. It reported revenue of N5.04 trillion ($13 billion) in 2018 and profit of N1.01 trillion. That compares with a loss of N1.65 trillion in 2017.

 

 

The report shows total assets managed by NAPIMS at N18.6 trillion, with the oil and gas components valued at N14.2 trillion.

 

 

Its oil production subsidiary, the Nigerian Petroleum Development Company, reported a post-tax profit of N179 billion in 2018.

 

 

A peep into books of others

 

 

The Integrated Data Services Limited (IDSL), another subsidiary of NNPC, recorded significant revenue increase by about N1.3 billion (or 7.76 per cent) in 2018 from 2017.

Profit for the year 2017 includes about N2.9 billion foreign exchange rate gain but exchange rate loss of N1 million in 2018.

 

 

Profit for the year also includes about N1.7billion actuarial valuation of employee benefit expense in 2018 but no actuarial valuation in 2017 due to the company starting to comply with IAS 19 on employee benefit in 2018.

 

For the Nigerian Gas Company (NGC), a subsidiary in charge of gas resources, the revenues also supparsed expenditure.

 

 

The same applied to Duke Global Energy, where the story of result appeared to toe same line.

 

 

The NNPC Retail, another key subsidiary of the corporation, which was audited by Aminu Ibrahim and Co made N236.635 billion revenues in the year under review with results from operating activities totalling N936.853 million.

 

 

The company posted N1.095 billion profit before income tax while its profit after tax stood at N2.276 billion.

 

Tongues wagging

 

 

Though the NNPC didn’t publish consolidated audited accounts for the group, reactions have expectedly greeted the published audited accounted.

 

Reacting to the first ever publication of audited financial statement by the NNPC, Executive Secretary of Nigeria Extractive Industry Transparency Initiative (NEITI), Waziri Adio, maintained that the disclosure “is good for transparency and accountability.”

 

“I urge them to make this a regular practice and in open data format,” he said in a response to a private message on Twitter.

 

 

 

Going down memory lane, NEITI boss acknowledged that this historic development fulfilled a pledge made by Kyari to the management of NEITI at a meeting in 2019, a pledge which Kyari reiterated on November 25, 2019 during the official visit to Nigeria of Mr. Mark Robinson, the Executive Director of EITI.

 

 

Adio welcomed the audited account published by the NNPC, declaring that making the document public has helped in unlocking Nigeria 62-year old oil-industry’s opacity.

A pact with history

 

 

He describing the act by NNPC to make public its audited accounts for the first time in its history with the publication of its 2018 audited financial statement on its website as laudable.

 

During the August 2019 advocacy meeting, the NEITI management had, according to a statement by NNPC, urged the then new GMD of NNPC to consider demonstrating his espoused commitment to transparency by making public the corporation’s audited accounts, which Kyari acceded to on the spot.

 

 

“We welcome the eventual fulfilment of this important pledge and obligation,” the statement quoted Adio to have said.

 

 

“Given NNPC’s antecedents and its prominent role in the sector and in the country, the publication of its audited accounts is positive, signaling more openness for the oil and gas sector and for Nigeria.”

 

 

“When combined with the monthly reports that NNPC started publishing in 2016, this development marks a sea-change for a national oil company that used to be renowned for opacity,” Adio added.

 

 

He said: “We urge NNPC to make this a routine practice and to mainstream transparency into all facets of its operations.”

 

 

NEITI calls on NNPC to go further by publishing its previous audited accounts and in open data formats so that the reports can be more accessible to citizens who are the shareholders of the corporation. NEITI also urges NNPC to strengthen and sustain its commitment to data mainstreaming and systemic disclosure.

 

 

NEITI is working closely with the NNPC in this direction through a joint committee on remediation and mainstreaming. The committee, set up by the two organisations, was tasked with the responsibilities of examining the status of legacy and other lingering issues about NNPC in NEITI’s reports over the years and to recommend workable strategies for resolving the issues.

 

 

The committee was also charged to devise action plans on systematic disclosure of information on NNPC’s operations in an open and accessible format, as well as data mainstreaming, among others. The work of the NEITI-NNPC joint committee on addressing the remedial issues is already at an advanced stage and the report will be made public very soon.

 

Anger against refinery

 

 

Nigerians took to Twitter to angily demand the shut down and sell off of Kaduna refinery, which generated zero naira but incurred N64 billion in 2018.

 

 

The 2018 audited financials of the corporation showed that N64 billion incurred summed the total losses suffered by the three refineries in Port Harcourt, Warri and Kaduna in the year to N154 billion.

 

 

A twitter user, @Ambrosia_Ijebu, wrote that the refineries should be shutdown instead of spending huge funds with no return of investments.

“Banter aside, it is a very good thing that we are getting to see NNPC’s financial statements.

 

 

“I hope Nigerians will read it and see why the place needs to be shut down. No sentiments. Shut it down,” he said.

 

 

Corroborating his view, @   ObiVegas asked “Hmmmmm How can NNPC spends such amount of money without any revenue at all?”

 

 

A recent report by the NNPC had indicated that none of the country’s refineries, with a combined capacity of 445,000 barrels per day, produced any refined crude between 2019 and 2020.

 

 

A strategic plan

 

 

As part of its strategic plan and in line with the EITI standard, NEITI said it had, of late, embraced proactive and constructive engagements with entities covered under the its reports with a view to reducing audit issues, deepening commitment to transparency, and encouraging proactive disclosures.

 

 

“We do not want to be the only entity talking about and practising transparency,” Adio stated. “There is little use being an island of transparency. Our goal is for all our stakeholders to believe in and model transparency.

 

 

“And to demonstrate our commitment to this new way of working, we are engaging with all covered entities bilaterally and collectively on outstanding issues and how we can further push the boundaries of openness.”

 

Last line

 

 

The NNPC under Kyari made history by making public its audited accounts that were, hitherto, shredded in secrecy. Though a lot of revelations and reactions have expectedly greeted the accounts, everyone, who desires transparency and accountability, should toe NEITI’s line by welcoming the bold step taken in the 43 year-old history of the corporation, so as to be able to act the Oliver Twist; demand for more.

 

 

 

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