Nigerians will know the outcome of the probe into the accounts of the Nigerian National Petroleum Corporation, the Minister of Finance, Mr. Olusegun Aganga, has said.
Aganga, who spoke in an exclusive interview with one of our correspondents in Abuja on Friday, said the Ministry of Finance had begun work on the audit as directed by President Goodluck Jonathan.
He said that unlike previous audits, the current process would be transparent as the public would be carried along the different stages.
He disclosed that local and international firms had already been invited to execute the directive, but he did not name particular firms.
The minister said, ”Mr. President directed that we should carry out an audit of the NNPC and we have started acting on that directive. We have invited international firms, local and firms to begin the audit.
”What I have read is that there had been quite a number of audits and that people knew when those instructions were given; they sometimes did not know when they were implemented, but more importantly, they didn‘t get to hear the findings. This time, you will hear the findings.”
Jonathan had last Monday removed Alhaji Shehu Ladan as the Group Managing Director of NNPC and ordered a comprehensive audit of the corporation‘s accounts.
Some oil unions and experts are, however, sceptical about what the probe will achieve.
According to them, the exercise should not be a publicity stunt but a painstaking exercise to determine the true financial health of the corporation.
It had been expected that a comprehensive audit of the NNPC should precede the passage of the Petroleum Industry Bill, a comprehensive bill designed to reform the Nigerian oil industry, scheduled to be passed into law in August.
Long seen as a company not governed by transparent financial rule, the NNPC has changed course over the years from a national oil company, virtually into a government department where top management staff are changed at will by successive governments and where contracts are awarded to cronies of people in power.
A former Executive Director of the NNPC, Mr. Alex Ogedegbe, said, ”NNPC, like any other corporation, public or private, must by law have its accounts audited by an externally appointed auditor annually, and the results approved by its board. The board is also obligated by law to publish the approved accounts in the media.
”However, the Federal Government as the owner of NNPC can also authorise additional, special or extraordinary audit. Then specific issues and terms of reference must be given to the auditing company so chosen for the assignment. This is to ensure a well focused and successful exercise.”
He added that if the above conditions had governed Federal Government announcement, ”then we shall have to see how they proceed with the implementation and what the Federal Government does with the results.”
He noted that from past experience, it was unusual for such audit to satisfy public expectation because the entire process could be adversely influenced right from the beginning.
He linked this to vagueness or ambiguity of the issues and terms of reference through the selection of the auditing firm to non-disclosure of the final results.
Ogedegbe said, ”All these steps are the prerogative of the principals of the Federal Government, who are put in charge. If the announcement was a political gimmick like the Obasanjo-appointed Constitutional Conference jamboree, then we should expect nothing useful. If different, we shall all see later. Ideally, this should help resolve the many issues surrounding the funding, application of those funds and the overall governance issues of the NNPC management.”
However, to a former Group Managing Director, NNPC, Mr. Chamberlain Oyibo, government was right to have initiated the probe, despite the fact that the company‘s accounts were usually audited every year by the office of the Accountants General of the Federation.
”If there are lapses found, it will help government to streamline them before the corporation will be transformed into a commercial entity,” he noted.
On the importance of the probe, the President, Petroleum and Natural Gas Senior Staff Association of Nigeria, Mr. Babatunde Ogun, said before the passage of the PIB, the financial status of NNPC and its subsidiaries must be known.
”We need to know how the NNPC has been managing the importation of petroleum products and how it has been funding it. If there are losses made, we should know how they came about,” he said in a telephone interview with one of our correspondents on Sunday.
He also said that the assets of the corporation and its subsidiaries should be valued properly in preparation for the passage of the PIB.
”We also need to know the true state of the nation‘s refineries, how much they produce and their true value,” the union leader added.
The Chairman, South West Zone, National Union of Petroleum and Natural Gas Workers, Mr. Nojeem Korodo, supported the current audit, saying, “The union totally supports auditing of the corporation‘s accounts.”
He, however, called for transparency, adding that the audit report should be published at the end of the process.
A former Group Managing Director of the NNPC, Mr. Mohammed Barkindo, had put the negative cash flow of the company before he left office at about N200bn.
According to Barkindo, the refineries lost about N29bn in 2009, while operating at a dismally low capacity utilisation level of 13 per cent. Actual premium motor spirit produced during the same period also dropped to about 18 per cent as against the 30 per cent planned yield.
He noted that the operations of the corporation‘s subsidiary in the upstream sector, the Nigeria Petroleum Development Company, were not particularly encouraging as the outfit was incurring very high production cost, one of the highest in the industry.
Speaking on the challenges posed by the precarious state of NNPC finances, Barkindo said under the 2008 financial year, NNPC recorded negative cash-flow to the tune of N326bn.
”So commercially speaking, NNPC can be said to be technically insolvent. If the corporation were to be operating under the Companies and Allied Matters Act, the company would have been pencilled for liquidation from business,” he said.
Part of the huge negative financial profile was recorded through the contracts for the repair of damage pipelines network, especially the Forcados pipeline, which gulped N11bn and the Escravos-to-Lagos pipeline, which cost the company more than N4bn to fix.
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