2019 Presidential Election and Future of NNPC

–By Fred Ojiegbe

The future of the Nigerian National Petroleum Corporation (NNPC), the State owned oil company, appears to be hanging in the balance, going by political developments preceding the 2019 general elections in the country.

The survival of the corporation could be determined by the outcome of the February 2019 presidential election, largely seen as a two-horse race between the ruling All Progressives Congress (APC) candidate, President Muhammadu Buhari, and the candidate of the opposition Peoples Democratic Party (PDP), Atiku Abubakar.

A win by Buhari could mean that the status quo will remain, meaning that NNPC will remain in the hands of government, while a win by Atiku means radical reforms of the company, often seen as the nation’s cash cow, including its privatization.

Under the present government, NNPC and the petroleum ministry, which is headed by the president, has witnessed many internal and external reforms/programmes that were intended to liberalize the petroleum industry, improve its transparency, reduce its cost of operations and incentivize some investment opportunities so as to attract foreign and local investments.

Many critics of the government still believe that the activities of NNPC have remained opaque and short of transparency, some of whom mainly members of the opposition, often referring to the unfortunate episode that occurred sometime in 2017 when the Minister of Petroleum Resources, Dr. Ibe Kachikwu, accused the Group Managing Director of the Corporation, Maikanti Baru, of unilaterally awarding $25 billion contracts without seeking the approval of the NNPC Board.

In a letter to President Muhammadu Buhari, the Kachikwu said Baru did not consult him or the Board of the NNPC before awarding the contracts.

The memo, dated August 30, 2017, said “the legal and procedural requirement is that all contracts above $20 million would need to be reviewed and approved by the Board of the NNPC. Mr. President, in over one year of Dr. Baru’s tenure, no contract has been run through the Board. This is despite my diplomatic encouragement to Dr. Baru to do so to avoid wrongfully painting you as a President who does not allow due process to thrive in the NNPC.

“Given the history of malpractices and the public perception of the NNPC as having a history of non-transparency, the NNPC Tenders Board (NTB) cannot be the final clearance authority for contracts it enters into. The NTB, which is a collection of level NNPC executives and COOs, with the GMD as chairman cannot continue to be the final approval authority for multimillion dollar contracts and transactions involving NNPC to the exclusion of the Board.”

It was unfortunate that despite the numerous reforms embarked by Buhari administration, this singular face-up between the two major actors of the petroleum industry has given the opposition the joker to nail and rubbish all what was achieved. To most of the critics, NNPC under the present administration is not different from the one under the previous administrations.

This may not have gone down well with a lot of Nigerians who believe that NNPC should be run as a commercial entity like other national oil companies. Petrobras, which serves as Brazil’s national oil company is a public quoted company, with the Brazilian government having 64 percent equity. China Petroleum and Petrochemical Corporation, also known as Sinopec, the world’s largest oil refining, gas and petrochemical conglomerate is listed in Hong Kong and also trades in Shanghai and New York Stock Exchanges.

Atiku Abubakar, a former vice president and the major challenger to the current president in the February 2019 presidential election, has vowed, during one of his campaign sessions, that if elected president, even if he will loss his life, he would sell at least 90 per cent of the NNPC “not to my family but to my friends.” He was also quoted as saying rhetorically that “are my friends not entitled to be rich?”

According to Atiku, “without a stable regulatory framework, the oil and gas companies will find it difficult to invest more in Nigeria. At the time we pushed for the passage of the new law. We expected that Nigeria would be able to export up to about 4 million barrels per day, but here we are still at less than 2 million per day. The government should have a very minor shareholding. Nigeria is in dire need of funds to develop its infrastructure and other sectors of the economy.”

But how can Nigerians trust the sale of NNPC without scandals based on negative perception of Atikus’s past role as vice president from 1999 to 2007, when he presided the sales of some strategic assets of the country.

One foreign media has been quoted as saying that “Nigerians will have to choose between a former dictator and an alleged kleptocrat.”

Then, another newspaper, the International Guardian, was not so diplomatic of their adjectives to describe the two leading presidential candidates in the Nigerian election.

It has been quoted as saying that “Nigerians have to decide between “a stingy rightwing dictator and an established thief.”

In the same article, the newspaper said, “without a doubt, this race might boil down to a choice between Buhari, a timid, nepotic but stingy rightist who would sit down on the national wealth without a clue about how to invest, and a lavish and irresponsible spender called Atiku, who could share the national treasury with the wolves that currently surround his candidacy.”

According to Azubuike Ishiekwene, CEO of The Interview magazine, “whatever may be the shortcomings of Buhari and Atiku, their parties believe they are the best candidates they can produce at this time. Buhari was pressed into the race by APC kingmakers who not only regard him as the party’s best bet to retain the centre, but also as their own insurance to keep the spoils, get re-election or both.

“Atiku’s candidacy, on the other hand, is a child of a convenient marriage between a few influential PDP old soldiers fed up with Buhari’s obtuseness and an extremely wealthy business class used to easy money and unhappy with Buhari’s old school economics.”

Whatever way the victory pendulum swung between the two candidates, the nation’s oil and gas industry is in need of a president that will transform the industry and make it efficient so that the country can attain its full potentials and make it competitive to attract the right investment.