President Tinubu should Turn hisv Focus on NNPCL:

A Necessary Move for Nigeria’s Economic Growth.

Titus kyautah

President Bola Ahmed Tinubu made a bold and strategic decision to remove fuel subsidies in Nigeria, a move aimed at liberating the country from unsustainable economic policies and paving the way for growth. However, there is one critical piece of the puzzle that requires his immediate and focused attention—the Nigerian National Petroleum Company Limited (NNPCL). As the country’s flagship oil company and custodian of Nigeria’s most valuable resource, crude oil, the NNPCL has been embroiled in inefficiencies, lack of transparency, and a failure to deliver tangible economic benefits to Nigeria.

Over the past decade, Nigeria has struggled to earn foreign exchange from NNPCL’s oil operations. Even the Ministry of Finance is often uncertain about the actual revenue generated from crude oil exports. The big question remains: if NNPCL is not significantly contributing to Nigeria’s economy, what is the benefit of the company’s operations? How can a state-owned oil company be running at a loss while monopolizing Nigeria’s only major export industry?

NNPCL’s Performance: An Anomaly in Global Context

Nigeria’s experience with NNPCL is an outlier compared to other national oil companies (NOCs) around the world. Countries like Brazil, Saudi Arabia, Venezuela, Iraq, and Kuwait have leveraged their state oil companies to grow their economies and generate massive revenues. Here’s a look at how NOCs operate in these nations:

1. Saudi Arabia (Saudi Aramco)

Aramco, the world’s largest oil company, is a key driver of Saudi Arabia’s economy. It contributes significantly to the country’s GDP, provides substantial foreign exchange reserves, and has positioned the kingdom as a global energy powerhouse. Saudi Aramco’s financial and operational transparency, as well as its efficient management, ensures that the company continues to generate profits for the government, even during fluctuations in global oil prices.

2. Brazil (Petrobras)

Petrobras, Brazil’s national oil company, has been central to the country’s energy sector. Despite facing corruption scandals, Petrobras has continued to invest in exploration and production, while diversifying its revenue streams by entering renewable energy markets. Brazil’s government has historically benefited from Petrobras’s earnings, using it as a tool for national development.

3. Venezuela (PDVSA)

Though facing significant economic turmoil, PDVSA, Venezuela’s national oil company, has been a vital source of foreign exchange for the country. Mismanagement and sanctions have hurt the company’s profitability, but its central role in Venezuela’s economy is undeniable. The government depends on oil revenue for everything from infrastructure to social programs.

4. Kuwait (Kuwait Petroleum Corporation – KPC)

KPC is one of the most efficient NOCs globally. Kuwait, with one of the world’s largest oil reserves, relies on KPC’s operational efficiency and export earnings to sustain its economy. The oil revenue is managed prudently, supporting the country’s development projects, healthcare, education, and public services.

5. Iraq (Iraq National Oil Company – INOC)

INOC, despite political instability, continues to be a major revenue source for Iraq. The Iraqi government uses oil revenue to fund rebuilding efforts, stabilize the economy, and support its war-torn infrastructure. The oil sector is the backbone of Iraq’s economy, with INOC playing a pivotal role.

6. United States (Private Oil Giants)

While the U.S. does not have a national oil company, private giants like ExxonMobil and Chevron drive its oil sector. These companies are profit-oriented, and their operations are transparent and regulated. They contribute to the U.S. economy by creating jobs, generating taxes, and supporting energy independence. The level of accountability and profitability expected from these companies contrasts sharply with NNPCL’s underperformance.

NNPCL: A Monopoly Operating at a Loss?

The case of NNPCL stands in stark contrast to the examples of successful NOCs around the world. The company is essentially a monopolist in the Nigerian oil industry, without any competitors, setting its own prices for products, and yet consistently running at a loss. Worse still, NNPCL imports substandard fuel, sells it to Nigerians at exorbitant prices, and somehow claims to be unable to make a profit. This raises fundamental questions about the company’s operations and the transparency of its financial management.

Despite being at the center of Nigeria’s oil sector, NNPCL’s revenue and export numbers are often shrouded in mystery, even to the Ministry of Finance. For more than a decade, Nigeria has failed to accurately track how much oil is being exported and how much revenue is generated from those exports. The crux of the issue is that the NNPCL appears to have become an inefficient, bloated organization that is not only failing to benefit Nigeria but also may be actively harming the country’s economic prospects.

The company has also spent billions on Turnaround Maintenance (TAM) for refineries that still do not function. Where has this money gone? Why are Nigeria’s refineries still non-operational, despite these massive investments?

President Tinubu Must Take Action

For Nigeria to fully benefit from its natural resources, President Tinubu must turn his searchlight on NNPCL. The company’s leadership and operational structure need a thorough review. The President should consider appointing an interim management team while a forensic audit is conducted by a reputable accounting firm, with assistance from anti-corruption agencies like the EFCC. The audit should cover NNPCL’s financial dealings from 1999 to the present day.

This is not just a matter of economic necessity—it’s about restoring trust in Nigeria’s oil sector. The inefficiencies and alleged corruption within NNPCL are costing the country billions of dollars in lost revenue, and without immediate intervention, the situation will only worsen. If Nigeria’s oil sector is properly managed, the country can overcome its energy crisis, generate substantial revenue, and provide a foundation for economic growth.

Breaking the Camel’s Back: Reforming NNPCL

President Tinubu’s success in removing fuel subsidies was a step in the right direction, but to truly fix Nigeria’s energy sector and free the economy from dependence on external factors, NNPCL must be reformed. The current model, where the company operates as a loss-making monopoly, is unsustainable. Bold reforms are needed, including:

1. Forensic Audit and Transparency

NNPCL must be held accountable for its financial operations. The lack of transparency surrounding oil revenues and export data is unacceptable. An independent, thorough audit will help shed light on where the money is going and expose any inefficiencies or corruption.

2. Leadership Overhaul
The current leadership of NNPCL should be held accountable for the company’s performance. Arresting key leaders involved in mismanagement and appointing an interim management team is necessary to stabilize the company during the reform process.

3. Operational Efficiency
Learning from successful NOCs like Saudi Aramco and Kuwait Petroleum, NNPCL must focus on becoming more efficient in its operations. This includes addressing the refinery maintenance issues, ensuring that any money spent on upgrades is justified by improved performance.

4. Diversifying Revenue Streams
NNPCL must explore diversifying its operations beyond crude oil production. Global energy transitions are underway, and NNPCL must adapt by investing in renewable energy sources and exploring new revenue models, similar to Petrobras’s approach.

Without these reforms, President Tinubu may face increasing pressure and opposition from the Nigerian public. The inefficiencies within NNPCL are too glaring to ignore, and they represent a critical barrier to Nigeria’s economic recovery. Reforming NNPCL could be the key to unlocking Nigeria’s full economic potential, ensuring sustainable growth, and creating a more prosperous future for all Nigerians.