The NNPC story I once told (part 1)

The Nigeria National Petroleum Corporation (NNPC) will collapse like Enron did a couple of years back. The reckoning will come after that and it will be as disastrous as the collapse of Nigeria Airways, NITEL and others, with lives of thousands of employees, many pension funds disappearing overnight.

Like Enron and NITEL, the NNPC story is classic case of greed gone wrong. This is not about finding an excuse to be gloomy again about a company’s future because what has emerged in the last few days is the fact that the corporation is addicted to fraud allegations, it has issues with its internal audit processes and federal officials are helping the corporation fool the public about the ‘big financial rot’.

The corporation which was established in April 1, 1977 and mandated by law to manage the joint venture between the federal government and a number of foreign multinational corporations has since become one of the biggest fields for financial filth in the country.

Since 2000 it has recorded dozens of cases of fraud allegations on its joint venture dealings running into several billions of Naira including several judicial probes on the corporation and its subsidiaries as well as damning revelations about its insurance deals.

Here are some of the most intriguing documented cases: In 2001, $130 million, being interest on a $65 million joint venture cash call disappeared after some yoyo deals. The money in the first place was alleged to have been ridiculously invested outside oil venture. One year later the $65 million seed money was miraculously returned to the coffers of the corporation. Nobody asked questions.

Between 2000 and 2002, Pan Ocean Oil, which did not operate JVC was paid $5.9 million. Nobody knew what the payment was for. Another oil and gas company, simply named Oil & Gas was paid $31 million in 2002. Nobody has record of the company’s existence till date. In July 2005, NNPC allegedly paid $25.6 million to Texaco a performance balance, a company that was as at then no longer a JVC partner.

It also emerged that the oil corporation paid a total of $2.09 billion to oil companies as performance balance between 2001 and 2007.

In 2009, the House of Representatives set up an Ad hoc committee to probe the activities of the corporation since 1999, in apparent reaction to some of their bizarre transactions. First, in December 2009, they asked NNPC to account for N179 billion. Before then, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) and Federation Account Allocation Committee (FAAC) in November of same year queried the corporation over $545 million JVC funds that obviously filtered off the surface of the earth. Also in August of same year, eyebrows were raised on $4.5bn gas cash realized from the operations of the Nigeria Liquefied Natural Gas (NLNG). They were also queried by the House of Representatives in October 2009 on the non-remittance of contracts totaling $1.2 billion. The billions lost (stolen?) through their insurance scam for which they have taken out millions of Naira advertisement in the papers to cover up is still not fully explained.

Against these outrageous disappearances, it announced first, in 2008 financial year that it had a hole amounting to N326 million in negative cash-flow.

Now former Group Managing Director, (GMD) Segun Oniwon, told Nigerians that the corporation will not be able to pay (INSOLVENT) N450 billion owed the FAAC until reimbursement of N1.156 trillion on fuel subsidies being owed by the Federal Ministry of Finance. (Clearly saying that NNPC is BROKE)

 

 

To be Continued next week

 

CHARLES IKE-OKOH