The Nigeria Governors Forum (NGF) yesterday questioned the veracity of the profit recently declared by the Nigerian National Petroleum Corporation (NNPC) Limited, insisting that there was some opacity in the way the figure was arrived at.

Speaking on the last day of the Nigeria International Energy Summit (NIES) 2022 in Abuja, during a session tagged: “Governors Forum on Natural Resources, Energy, Oil and Gas”, the governors further noted that there’s currently an “ambiguous” relationship between oil prices and its impact on Nigerians.

Represented by their Chairman, Dr. Kayode Fayemi, the leaders of the sub-nationals, maintained that it did not add up for the National Oil Company (NOC) to declare profits when it failed to meet its obligations to its stakeholders, including to the federation.

The NNPC which had consistently made losses in the past 44 years of its existence, had in 2021, declared a N287 billion Profit After Tax (PAT) for the year 2020, drawing accolades from President Muhammadu Buhari, at the time.
It came a year after the group published its first audited statement for 2018, indicating that the corporation incurred losses close to N1 trillion, but was reduced in 2019 to N1.7 billion.

Describing the sector as critical, the governors explained that although they are desirous of an industry that is sustainable over the long term, there are areas of concern that should be addressed, particularly around transparency and accountability.

Fayemi stated that a situation where the NNPC was unable to remit a kobo to the joint account at a time that oil prices are soaring, remain inconceivable.

We’ve just had Federation Allocation Accounts Committee (FAAC) meeting a couple of days ago, and the NNPC contributed zero to the Federation account this month.

And this is not the first month that the NNPC is contributing zero. Over the last couple of months, we’ve been having these challenges. Of course, we know why.

Even though oil prices in the international market is going up, maybe $110 today or more, the more it goes up, it would appear that the more we suffer locally now.

So there’s an ambiguous relationship of sorts between what is happening in the international market and what we’re experiencing here in Nigeria and as critical stakeholders in the Nigerian Federation, states are naturally concerned about this.

They are concerned about how to grow this industry and ensure that this industry is sustained over the long term in a manner that it can benefit those who are stakeholders in the industry,

he stated.

According to him, Nigeria continues to occupy a very unenviable position in terms of transparency in the governance of its natural resources.

When you look at the statistics, transparency is central to the challenge this sector faces. On my way here, I was looking at the Natural Resources Governance Institute (NRGI) reports and Nigeria is not doing very well.

We rank 40 out of 58 natural resource countries on the transparency index, because we are still believed to run a largely opaque industry and we see it ourselves

NNPC declares profits, yet it cannot meet its obligations. My simple knowledge of economics teaches me that it is only after you’ve met all your obligations, that you then start talking about making profits.

So if your obligation to the Federation Account has not been met, how can you then talk about profit making?

he questioned.

Fayemi stated that although the Petroleum Industry Act (PIA) has just been passed into law, the governors still have some issues against it, but noted that this is being worked on by the implementation committee.
He urged stakeholders to grow a sustainable institution that would not only respond to the yearnings of the industry, but also the general concerns of the Nigerian public.

He posited that while in principle, the governors understand why the industry in the exclusive list, they also feel the need to strengthen ownership across states and local authorities , if they have the wherewithal to key in.

One of the things that states are interested in, is how institutions, companies that they’ve created themselves or established as private sector entities either in joint venture partnership with other private sector entities or exclusively as a special purpose vehicle to warehouse state interests, should be able to participate actively in the oil and gas industry,

he argued.

However, he singled out the local content part of the industry which he said has been growing, describing it as a positive development.

He added that the states were looking forward to a situation where at some point , the NNPC will run like the Nigeria LNG

So that at the end of the day there’s greater transparency, there’s greater accountability and the governance framework is really built on efficiency of the industry.

Earlier in one of the sessions, Minister of State, Petroleum, Mr Timipre Sylva, had said that Nigeria’s gas potential remains enormous, with natural gas reserves having risen to 206.53tcf, and another 600tcf possible untapped gas.

We are on course to solving both domestic and sub-regional natural gas deficiencies. Like I said at this summit last year, the world expects so much from Nigeria’s gas sector and we need to match that expectation with action. It is time to awaken the giant,

he stated.

Also speaking on “Revitalising the Industry, Future Fuels and Energy Transition”, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, (NURPC), Mr. Gbenga Komolafe noted that for resource-rich nations such as Nigeria, there exists an opportunity to harness fossil fuels in a more sustainable manner by improving the environmental credential.

Justin Nwosu

Justin Nwosu is the founder and publisher of Flavision. His core interest is in writing unbiased news about Nigeria in particular and Africa in general. He’s a strong adherent of investigative journalism, with a bent on exposing corruption, abuse of power and societal ills.