Ijeoma Nwogwugwu: Nasir El-Rufai the NNPC slayer

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I have had the privilege of working with Nasir el-Rufai, the Governor of Kaduna State. He is without doubt very brilliant and has a plethora of degrees from some of the best schools in the world to back up his mental aptitude. In addition, he is hardworking, passionate and generally means well; in public engagements, he knows how to hold his audience spellbound, and is unafraid to take unpopular but the right decisions. I am unashamed to say that I admire him and have a particularly soft spot for his ability to lead and inspire. For now, he is the only governor, among the current crop, that I have put on my “To Watch List”. Yes, I expect him to deliver and serve as the bellwether for other governors to follow.

Yet, el-Rufai is far from perfect. Back in the day when I worked with him at the Bureau of Public Enterprises (BPE), some us used to surreptitiously devise strategies to “help Nasir help himself”. Like several people who are passionate, he sometimes allowed his emotions to get the better of him. Whenever he felt strongly about something, he had this knack for making regrettable statements. As he transited from a technocrat to a politician, they became more frequent and culminated in his book “The Accidental Public Servant”. I need not elaborate on some of his verbal blunders, but I am certain that those who are conversant with el-Rufai’s utterances have a rich repertoire to reference from.

Unsurprisingly, el-Rufai managed again to hug the limelight recently. Other than his ongoing war with the beggars in his state who have vowed to seek legal redress for taking them off the streets of Kaduna for security reasons (incidentally, he has my full backing on this), he took on the Nigerian National Petroleum Corporation (NNPC). At a public lecture on the oil sector last Monday, el-Rufai made a case for the complete annihilation of the state-run oil company and the establishment of a new national oil company (NOC).

In summary, he premised his advocacy on the fact that NNPC had failed to remit to the treasury N3.670 trillion, which in his estimate, represented 42 per cent of monies earned by the country from her oil and gas operations from 2012 to the first half of 2015. El-Rufai angrily told his audience that NNPC feels entitled to consume more resources than the 36 states, the FCT and the federal government combined. “This country can no longer afford to maintain an NNPC that arrogantly, unlawfully and unconstitutionally spends an unhealthy proportion of national oil earnings on itself,” he said. Accordingly, NNPC should be “killed” and replaced with a brand new organisation that is fit-for-purpose, and among others, a commercialised and corporatised NOC.

To be fair, his revelation that NNPC had retained an estimated N3.67 trillion was not new. He was simply confirming last year’s PricewaterhouseCoopers’ (PwC) forensic audit report and the 2013 report of the Presidential Committee on Verification of Subsidies headed by Aigboje Aig-Imoukhuede, which both revealed that the corporation retains some 46 per cent of oil earnings for its operating cost.

But what I found befuddling was that el-Rufai, who more than anyone else knew that NNPC had been creaming off oil earnings for years, was making mince meat of the issue and calling for the slaughter of the company. Indeed, I was bemused that he feigned ignorance of the NNPC Act, which in contravention of the constitution, permits the corporation to deduct its operational expenses from oil revenue before remitting whatever it deems fit to the treasury for onward sharing by the three tiers of government. I also considered it rather disingenuous that el-Rufai failed to mention the important fact that his former boss, President Olusegun Obasanjo, fostered this habit as the oil minister for seven-and-a-half years by giving NNPC permission to deduct its expenses from oil revenue, essentially enhancing its status as a slush fund.

What I found most bothersome was that el-Rufai who once bore the sobriquet “Privatisation Czar” and was behind the establishment of the Oil and Gas Implementation Committee of the National Council of Privatisation (NCP), which was the progenitor of the Petroleum Industry Bill (PIB) now feels the best solution for the oil industry is to “kill” NNPC. Come on Nasir, those of us who look up to you, expect better!

As one of the few persons in this government with the mental capacity and the track record to boot, el-Rufai knows that his recommendation for the slaying of NNPC was tantamount to a call for its liquidation. Even if we were to balkanise and sell off the assets of NNPC through liquidation, it is the federal, states and local governments that would assume its liabilities and by extension Nigerian taxpayers. Besides, for a corporation that has been so badly mismanaged as NNPC, I can bet my bottom dollar that the humongous liabilities on its books – on and off balance sheet – would by far exceed the N3.67 trillion that el-Rufai said the state-run oil firm retained in the three years plus. Is that another debt a country with a “virtually empty treasury” (a discussion for another day) wants to add to its mounting debt stockpile?

Lest he forget, el-Rufai must have closely followed the privatisation process in the power sector, another reform programme he originated. Surely, he must know that the winding up process for the Power Holding Company of Nigeria (PHCN) has still not been concluded a decade after the Electric Power Sector Reform Act was passed into law. Add to this the salient fact that the entire privatisation proceeds of well over $3 billion from the sale of 11 power distribution companies and six generation companies was used to offset personnel liabilities alone. This implies that the federal government would still have to cough up funds to offset other contingent and stranded liabilities of PHCN. Yet, PHCN is not half the size of NNPC. That should give us food for thought.

What I expected of el-Rufai was the recommendation that the federal government headed by President Muhammadu Buhari should work with the legislature to speed up the passage of the PIB. The irony was not lost on some of us that all of his recommendations last Monday for the wholesale reform of the oil and gas sector are already contained in this extremely important legislation.

The PIB, for instance, prescribes for the privatisation of NNPC’s commercial assets such as the refineries, and concession of its oil and gas pipeline infrastructure. It also provides for the corporatisation of the joint venture assets, and the restructuring of NNPC and the National Petroleum Investment Management Services (NAPIMS) into a fully commercialised enterprise so that the state-run oil company will gain financial autonomy and go to the markets to raise funds like a Shell or ExxonMobil. In fact, one of the primary objectives of the PIB is to see NNPC someday listed on the Nigerian Stock Exchange (NSE) so that Nigerians can own a stake in the goose that lays the golden egg.

However, the body language of this administration has shown that it is not particularly enamoured with the PIB. There could be no better evidence than Buhari’s completely misguided decision to retain fuel subsidies in the face of a “near empty treasury” and intense pressure on the country’s foreign reserves and the naira. That being the case, a quick fix would be for the government to ask the legislature to amend the NNPC Act, barring the corporation from applying a first line charge on oil earnings and compelling it to submit its yearly budgets for appropriation. The snag, however, is that this measure could take away NNPC’s ability, even with the best contingency plan in place, to be responsive in times of crisis such as fuel shortages, vandalism of oil infrastructure or even unanticipated breakdowns at the refineries. Therein lies the problem.

Given the limitations associated with the amendment of the NNPC Act, ultimately, the federal government cannot shy away from the PIB. With the right counsel and guidance from oil industry experts with the best interest of Nigeria at heart, the Buhari administration could be educated on the nuances of the bill, because contrary to what Buhari thinks, the oil and gas sector today is no longer the same as the one he headed almost four decades ago. It has institutional structural defects that spawn corruption, rent seeking, oil theft and vandalism. These could only be addressed with the right legislation and reforms.

More important, it is high time we stopped the NNPC bashing and focused more on how to fix the corporation. Without contention, the corporation has been mismanaged and billions stolen. Those who have stolen the billions should be investigated and prosecuted to serve as a deterrent to others. But we would not be doing ourselves any favour if we carried on with the politicking, as fun as that may be for those who think that they are still on the hustings, without taking the difficult but necessary decision to transform NNPC into a transparent, world class NOC that abides by the rule of law. I believe the PIB would help us achieve that. All the federal government needs to do is to take advantage of the popularity it currently enjoys and make hay while the sun shines.

Thescoop – culled from: http://www.thescoopng.com/ijeoma-nwogwugwu-nasir-el-rufai-the-nnpc-slayer/#sthash.kFiWd2Q4.dpuf

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