Report: NNPC’s Financial Records Insufficient for Govt Oversight

Chineme Okafor in Abuja

A New York-based Natural Resource Governance Institute (NRGI) yesterday stated that the financial reports of the Nigerian National Petroleum Corporation (NNPC) do not contain systematic financial information that would enable the federal government to demand for accountability in its operations.

In its latest report titled: ‘Resource Governance Index: From Legal Reform to Implementation in Sub-Saharan Africa,’ which was obtained by THISDAY, NRGI said this was also the case with Equatorial Guinea’s GEPetrol.
NNPC and GEPetrol are reported to be the two Africa’s State Owned Enterprises (SOEs) with significant influence over the oil businesses in their countries.

The NRGI is an independent non-profit organisation reportedly dedicated to improving countries’ governance over their natural resources to promote sustainable and inclusive development.
In the report, the NRGI assessed the natural resource governance statuses of countries in Africa, and explained that reports from the NNPC could not be relied on by governments and citizens of Nigeria to hold the corporation to account.

NGRI’s report came just a day after the Group Managing Director of NNPC, Dr. Maikanti Baru, boasted at a conference in Abuja that the corporation has transformed into a clean, transparent national oil company, constantly publishing reports on its operations and finances.
But the NRGI stated: “Despite a few high-scoring companies, sub-Saharan Africa is the lowest scoring region in SOE governance, including for the legal framework alone. Governance has proven especially problematic in many of Africa’s biggest and oldest oil producers. National oil companies such as Cameroon’s Société Nationale des Hydrocarbures, Equatorial Guinea’s GEPetrol and the Nigerian National Petroleum Corporation exercise significant influence over the oil sector.

“Through production sharing agreements with international oil companies, they collect most revenues on behalf of their government. Several of these companies, including GePetrol and NNPC, do not produce systematic financial information that would enable strong oversight by citizens or even other government institutions. This risks public treasuries losing revenues and rendering monies unavailable for social and economic development.”
The report further explained that unlike the NNPC and GePetrol, some emerging oil producers have established strong accountability practices for their SOEs.

“In Ghana and Tanzania, SOEs must present their reports to parliament. All three also disclose revenue transfers between the government and SOE. The majority in the management boards of the Ghana National Petroleum Company (GNPC), Tanzania Petroleum Development Corporation (TPDC) and Empresa Nacional de Hidrocarbonetos (ENH) of Mozambique and Uganda’s National Oil Company are made up of professionals not holding government posts. This is in contrast to many others where government officials control decision-making,” it added.
On oil licenses terms, it said that Nigeria was among the 10 countries in the continent that were doing poorly in transparent and accountable licencing processes.

It stated: “In Nigeria’s oil and gas value realisation component, licensing is the weakest link with a score of 17 of 100. This reflects opacity in key decisions including qualification of companies, process rules and disclosure of terms of extraction.”
“Value realisation covers the transparency and accountability aspects related to awarding oil, gas and mining licenses, revenue mobilisation, managing environmental and social impacts and state-owned enterprises.
“Seven countries in sub-Saharan Africa achieve satisfactory scores on value realisation, with Burkina Faso and Mozambique leading, closely followed by Ghana and Tanzania (for oil and gas), Sierra Leone, Ghana for mining, and Côte d’Ivoire. Equatorial Guinea, Gabon, Sudan and Eritrea are in the failing category,” the NRGI report indicated.