by Barrister Musa Eleojo
On the surface, the recent tiff between Aliko Dangote, Founding President/CEO, Dangote Group, and Engr. Farouk Ahmed, the CEO, Nigerian Midstream, Downstream Petroleum Regulatory Authority, NMDPRA, would appear to be the trigger that drew in the House of Representatives to open what it calls an investigation into factors working against the petroleum sector.
Dangote had alleged that NMDPRA was licensing product importers who bring in substandard, dirty diesel into Nigeria. To put such foggy allegation in the public space, in effect attempting to smear the reputation of one of the nation’s most serious regulatory bodies, was tantamount to a declaration of war. Even Dangote appeared to have forgotten that after the deregulation of AGO years ago, NNPC Ltd did and does not import diesel.
Even more curiously, Dangote had also alleged that NNPC Ltd was trying to stifle competition in the refining sector. Engr. Ahmed had appropriately dismissed the allegation as harebrained, or at best, ridiculous. Read him: “How can NNPC Ltd stifle any competitor in the refining business (or any other sector) when it is the major advocate for the revamp of local [refineries and] refining? While NNPC Ltd was rehabilitating its refineries in Port Harcourt, Warri, and Kaduna, it made a deliberate commercial decision to invest in the Dangote Refinery.”
Apparently as a consequence of these jiggery-pokery allegations, the House of Representatives (HoR) invited itself into the energy sector arena to provide a questionable “oversight.”
Subsequently, HoR’s Special Joint Committee set sail to investigate “factors working against the petroleum sector.” Most importantly, last Wednesday (July 31, 2024), it directed the Nigerian National Petroleum Company Limited, NNPCL, to halt what it called the “mortgage of Nigeria’s future crude oil” until its assignment is concluded.
The committee’s directive followed reports that NNPCL is planning to borrow an additional $2bn in crude oil-backed loans from international creditors to boost its financial inflow.
The Group Chief Executive Officer, GCEO, of the NNPCL, Mele Kyari, according to the panel, reportedly stated that the national oil company is in discussions with international creditors to raise an oil-backed credit facility. Is this the hand of Esau and voice of Jacob scenario being replayed?
It could be recalled that the HoR’s committee chaired by the lawmaker representing Ideato South/Ideato North Federal Constituency, Imo State, Ikenga Ugochinyere, had last week commenced probe of what it called “shady deals” in the sector.
In a statement issued by Ugochinyere on Wednesday, July 31, 2024, the company urged the NNPCL not to undermine the forensic investigation by the House of Representatives with another fresh loan. What a contrived legislative drama obviously instigated by a hidden hand.
The Reps even cleverly drew from President Tinubu’s proactive intervention in the midstream sector which insisted on crude supply to local refineries in naira, to clothe its surprisingly uninformed and obfuscating agenda by claiming it “received intel of plans to mortgage future crude revenue and oil for another loan at a time the nation is struggling.”
One of the key dimensions to progressive legislative interventions is knowledge. A country’s legislature must navigate with knowledge to effectively aid the development journey in an increasingly disruptive global milieu.
Clearly, this so-called dodgy oversight intervention – a jaundiced and compromised investigation/intrusion – is subtly funded by a key midstream/downstream energy sector player who erroneously believes he is being hounded by the regulatory authorities. The writing on the wall doesn’t need a seer to decode.
First, the NNPC is a CAMA company – no longer a government corporation. The Companies and Allied Matters Act, 2020 (CAMA 2020) is a Nigerian federal legislation that governs the establishment and management of companies in Nigeria. It supersedes and replaces the Companies and Allied Matters Act, 2004, which was itself an update of the Companies Act of 1968.
Because of its new CAMA status, the NNPCL does not get budgetary subventions from the government. Companies of the nature of NNPCL across the globe run on loans which are paid back upon negotiated repayment plans. NNPCL and its contemporaries have a number of high-net-worth investments and expansion projects to deliver in the critical oil sector. These require huge financial outlays and investments. Since resources at its disposal are not limitless, NNPCL must necessarily prospect for funding options to keep afloat as a going concern. For instance, the NNPCL obtained a loan of $1b to fund its equity stake in Dangote Refinery which helped it (Dangote Refinery) to take off financial pressure at a point when it needed to deal with some operational difficulties.
The dodgy Reps’ members in the investigative committee should hang their heads in shame. They should be properly called out for placing personal interest over national interest. They are acting in cahoots with not-so-shadowy sponsors to defend a monopolist at the detriment of the interest of other Nigerians who should not be shut out of the oil and refinery businesses.
The Honourable Speaker of the Lower House, Tajudeen Abbas, PhD. should rein in this blatant, dishonorable deviance. Apart from being the Speaker, he is well educated and knowledgeable. He is expected to provide the house with a leadership that is pristine, robust and honourable. The shenanigans being exhibited by members of the committee do not conduce to preservation of the honour associated with his office and the hallowed chamber. The Speaker should not allow desperate wheeler dealers to drag the reputation of the House in the mud. It is like the cocoon of their comfort nest is now obstructing logical cogitation. Several other critical intervention imperatives beg for attention as hungry and angry Nigerians take to the street. Their antics must not be allowed to dilate the growing anxiety in the sector.
Nigerians would recall that the same folks who criticized NNPCL’s decision at the time are now supporting Dangote. Desperate to push the back of the NNPCL to the wall and perhaps render it prostrate and unable to keep fidelity with its core mandates, these House of Reps’ folks have suggested that the national oil company should suspend crude-for-loan deal, which has come in handy as one of its strategic funding options. It is either these reps are ignorant of how the company works or they are just being outright mischievous.
Now consider again the intervention of Engr. Farouk Ahmed, the CEO, Nigerian Midstream, Downstream Petroleum Regulatory Authority, NMDPRA, when the narrative was almost twisted against the NNPC by the sympathisers of a burgeoning monopolist: “the NNPC Ltd borrowed $1billion (which was) paid directly to Dangote Refinery. We can reliably confirm that NNPC has allocated over 35 cargoes of crude to the Dangote Refinery.”
This coming squarely from the horse’s mouth cannot be contested. Illuminating the facts even more, the NMDPRA boss had disclosed that indeed Dangote had received about 23 cargoes, rejected 2 based on pricing, and was currently negotiating pricing on at least 9 cargoes. His words: “The Dangote refinery has received a discount of close to $1 per barrel, saving up to $30 million in discounts. What else does he want? Is he selling cheaper to Nigerians? The answer is no. He wants to underprice the crude and overprice the product.” This is the tragic momopoly and threat to energy security that the House of Reps’ folks are using their privileged position to defend.
It is unconscionable and, indeed, sad, that the committee members are dragging the House into this murky, high-octane, cloak and dagger energy sector game. They have either unwittingly or deliberately inserted themselves into it through the quirky cover of legislative oversight. The dangers are obvious in a country sorely challenged by several existential threats, including the threat of foisting a monopoly on the oil and refinery business at the detriment of energy security in Nigeria.
The House of Representatives certainly should not be gaming NNPCL in a contrived, sponsored high-octane script. Many other crucial constitutional issues beg for attention – beyond dancing and gyrating to the sound of a not-so-hidden drum beater.
Barrister Eleojo, writes in from Warri, Delta State
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