This Yam, This Goat, This Country: Pwc On NNPC – Part 2

No one has the right to retain money that should come to the federation account. Constitutionally, it should come and then , if expenses are legitimate, they should be presented transparently and properly approved. To even admit that you have withheld $10bn or $12bn and then say this is what I did with it is, frankly speaking, not even the beginning of an argument” – Sanusi Lamido Sanusi, speaking to Gavin Serkin, author of ‘Frontier

Part 1 is here if you missed it.

We now know the measurement of the yam ($69bn) that was left in the care of the NNPC goat. And we also know how much the goat handed back to the Nigerian treasury ($50bn). The debate now is what right the NNPC had to eat so much ($20bn) of the yam belonging to the Nigerian people, if it had the right to eat any at all.

A lot of the corruption and mismanagement and outright theft going on in NNPC is sickening and frankly, depressing. And it leaves Nigerians and especially the incoming government, who campaigned from Potiskum to Port Harcourt with the message of ‘Change’, with a question to ponder – What do we do with NNPC? Can NNPC change? Can it be reformed? How do we change it? If you prevent the theft or mismanagement of even $1bn, that is potentially 1,000MW of electricity you can add to the grid. The sums in question are not small.

I Have Good News

In 2010, Transparency International and Revenue Watch carried out assessments of 44 oil companies (private and state-owned) around the world, including NNPC. On the question of Organisational Disclosure, here’s how NNPC scored in their ranking:

Screen Shot 2015-04-29 at 20.57.15

Yep, our own dear NNPC came last (or first from behind). TI and RW went on to describe NNPC as the world’s most secretive oil company. Nobody knew the size of the yam to begin with except the goat itself and it was never going to publish it in the newspapers. Any attempt at openness was always resisted.

Sanusi Lamido Sanusi, as CBN Governor, said he became ‘obsessed‘ with understanding how the oil industry worked and where the leakages were happening. People who are obsessed about something can be very useful indeed.

It is important to understand this point – SLS had no direct access to NNPC’s books. From his letter to President Jonathan dated September 2013, it is clear that he got no cooperation from NNPC. All the numbers he used were investigated and determined by his office.

And yet, he came very close. He calculated NNPC’s revenues in the period to be $65bn while PwC calculated it to be $69bn – he missed the target by 6%. Here we have the ‘world’s most secretive oil company’ but someone looking from the outside was able to, with a bit of hard work and ‘obsession’, come close to figuring out the numbers. (PwC had access to NNPC’s numbers and documented all the revenues with over 30 pages of calculations in their report).

This is the good news I have to share – It is now possible to know almost the exact size of the yam even if NNPC don’t want us to know. They can lie all they want, obfuscate all they want, pretend all they want – that will not stop a serious and determined person from knowing. The game where the goat repeatedly under reports the size of the yam or even tell us there was never any yam to begin with, is over.

How Much Yam Did The Goat Eat?

Now that we are able to determine the original measurement of the yam, independent of NNPC, the next step is to figure out how much of it has been eaten.

The even better news is that this one is easier to determine. If NNPC pays money into the federation account, many people will know about it. The account is at the CBN. The only other place NNPC can send money to is FIRS, the taxman. This was the cause of the initial discrepancy where SLS said the amount outstanding was $49bn – some of the money had apparently been sent to FIRS instead of CBN. No problem.

The important point here is that CBN and FIRS are outside of NNPC. If NNPC don’t cooperate, other people can.

This is the second leg of the equation – we can determine the amount of yam sent to the Nigerian treasury. This greatly reduces the challenge of dealing with an opaque organisation that refuses to cooperate.

And it means we can reduce the issue to a simple question that puts NNPC on the defensive – the original yam was $69bn, you have given us $50bn. Where is the rest of it and what did you do with it? Simple.

Before PwC There Was KPMG

In 2010, KPMG was hired by the Federal Government to investigate the usual NNPC shenanigans. It submitted its report in November 2010. Find it here.

Here’s what they were asked to investigate as part of their ‘Forensic Review of NNPC’ (that forensic word again eh?):

Screen Shot 2015-04-29 at 21.46.32

 

Screen Shot 2015-04-29 at 21.48.40

It is not much different from what PwC were asked to do last year – determine the size of the yam and compare with what had been declared.

As usual, KPMG found NNPC up to their usual goat tricks and games. The one below was my favourite:

Screen Shot 2015-04-29 at 21.52.42

They did not even bother to tell a plausible lie. This is the confidence of an armed robber in action. Of all the places to obtain an exchange rate for something so serious as remitting money to the federation accounts, these goats claimed they got it over the phone despite the fact that the CBN published the exchange rates on its website.

So many issues were identified with the way NNPC ran its operations. Subsidy issues featured prominently as you’d expect. Here’s another sample:

Screen Shot 2015-04-29 at 21.58.15

The same goat games yet again. Every single failing identified came with a recommendation on how to fix it by KPMG. And what happened? It went in NNPC’s left ear and came out of the right ear immediately. In 2009, NNPC reported that it lost N8bn due to pipeline vandalism. KPMG recommended increased monitoring of pipelines and use of technology. Ok. By the time of the PwC report, they were spending $48m on ‘pipeline surveillance systems’. Alas, the amount reported as losses from pipeline vandalism has now transformed to $760m. Sebi you people said they should deploy technology? Ehen na.

In 2010, KPMG observed that they were using Sun Accounting Systems and noticed that the system was not robust enough for its needs given that the system was not fully integrated and excel was being used quite prominently. It recommended that SAP, a more robust system, be implemented as quickly as possible. No problem. By the time PwC did their work, they confirmed that NNPC was indeed using SAP. Yet, all that has happened is that a bigger piece of yam has disappeared.

See what KPMG said on their data management in 2010:

Screen Shot 2015-04-29 at 22.22.18

Now compare with what PwC found last year:

Screen Shot 2015-04-29 at 22.23.38

Dem no dey hear word. Goats.

Are We Here For Tea Party? 

Do we really have time for this merry-go-rounding where we will be carrying out a forensic exercise on NNPC every 4 years like it’s the olympics? And then the document is filed away and they pretend like nothing happened. I am not convinced that NNPC will suddenly come to a kind of enlightenment where they are able to look at the yam and leave it untouched.

In the meantime, there is a country in need of so much fixing that the problems are almost overwhelming. Every kobo counts and we can’t really afford a situation where people are making addition ‘mistakes’ costing $40m. We are not here for tea party as the intellectual Nigerian Minister, Musiliu Obanikoro, famously put it not too long ago.

There is something devious about NNPC and the way it seduces any government in power. Everybody ‘probes’ it but no one ever really reforms it. Obasanjo ‘temporarily’ made himself Petroleum Minister in 1999. He ended up doing the job for 8 years. NNPC enters the government like a virus and typically, when politicians are broke and looking for money, NNPC can produce the cash. This is how the corruption starts and typically, it can never be reversed.

A fundamental question must now be asked – is it really worth anyone’s time to embark on ‘reforms’ of NNPC? Are the chances of success for such reforms up to 10%, if not dead on arrival?

With Love From Mexico

In August 2014, Mexican President, Enrique Pena Nieto, signed a landmark energy reform bill into law. After 76 years, the law effectively turned Petroleos Mexicanos (PEMEX) into a private company. It will now need to be audited regularly and publish reports like any other private company.

Part of the problem with NNPC is that it gets too much time alone with the yam before anyone checks what is going on. So we are reduced to the roundabout games of ‘forensic audits’ every 4 years for something that should be done regularly. 4 years is a long time – long enough for a multitude of yams to disappear without trace. Certainly, if NNPC was forced to publish reports quarterly and being audited yearly (with a regular half-year audit), there will be less room for the kind of long standing problems we are seeing.

I don’t think privatising PEMEX was an easier job than for NNPC, and yet a President who was determined to do it before he ran out of steam, managed to get it done. What’s Nigeria’s excuse?

With Love From China

Western countries have typically privatised their national oil companies e.g BP in Britain. This has not stopped oil from flowing out of the North Sea. The government simply focuses on collecting the taxes. True, the Norwegians still have Statoil (67% owned by the government) but we can all agree that the Norwegians are outliers – they don’t even spend their oil money hence their mammoth sovereign wealth fund. Also worth noting that Statoil is not fundamentally different in structure from Petrobras in Brazil. Yet, they couldn’t be more different judging by the ongoing scandal in Brazil that has hobbled the President, Dilma Rousseff.

The Chinese take a different approach – instead of having just one national oil company, they have three – PetroChina, Sinopec and CNOOC – mighty ones which compete against each other in some ways and also go out into the world to gain business and expertise. Further, you can find the accounts for CNOOC, PetroChina and Sinopec on their websites. Go to NNPC’s website. If you can find any accounts there, I owe you goat meat pepper-soup.

This options means we break NNPC into say, 3 new companies that compete directly with each other. Some might say when you have a problem like NNPC, why do you want to multiply it into 3? Good question.

The point here is that there are several ways to achieve the same thing. There is absolutely nothing that says we should have this NNPC model and keep ‘reforming’ or threatening to ‘reform’ it every few years. Or we can vote for change just like we just did in the national elections.

Scatter The Place

There is however another option. The first thing to understand is that it is not by force to have a national oil company. The decision that gave birth to NNPC in the 1970s – a creation of Obasanjo – cannot be said to have been the correct one. Indeed, at the time Nigeria was going about nationalising things, the West and China were moving towards market economies. Since 1977 when it was established, the company has been a constant source of pain for the country. Much of what we are seeing today is not new.

My preference is for NNPC to be completely dismantled and the government moves to a tax based system. For it to cease to exist. For it to be completely neutered. We have had enough of this monster that no one is able to control anymore and which answers to its own rules. And now is the best time to deal it a decisive blow from which it will never recover. It has been exposed and is no longer able to be the secretive organisation it once was. If it lies, with a bit of investigation, we can find the truth. Nobody trusts a word it says anymore and the old trick of telling the public that we do not ‘understand how it works’ has now expired. We really do not even need to know. Once we know the original size of the yam and the amount it tendered, it will need to come up with an explanation for any differences.

What is needed now is political will to bring this goat to heel. It is all well and good making the right noise as President Buhari surely will. But the follow through is the koko. So many names are already being bandied about as possible petroleum ministers (mostly cowboys and charlatans so far). We are going to need someone who is determined and can zero in on a cause to smash this goat that corrupts a nation and its government to pieces. The person will need to have integrity in bundles. Ability to pray will be a bonus for we know there are demons in there.

Margaret Thatcher famously said that if you want something done, you should ask a woman. I know a woman who fits the bill for this job.

Her name is Obiageli Katryn Ezekwesili.

FF  

P.S I think it’s fairly obvious that people need to be severely punished for what has gone on in NNPC. But in case it’s not obvious that this is my position, I’m restating it. NNPC only gets away with what it is allowed to get away with. This must stop.

As someone said to me recently “I did not queue for hours on March 28th to vote for people to get soft landing”. President Buhari, be guided – People Must Go To Prison. No Ifs, no Buts. 

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38 thoughts on “This Yam, This Goat, This Country: Pwc On NNPC – Part 2

  1. I don’t understand account and its process hence I read your posts. Most if not all Nigerians can understand from your simple analysis that their is corruption of unimaginable (before now) proportion in NNPC. Moving away clearly from this mad house is what the incoming government must do as a matter of urgency else the next round of figures we’ll be having will be worse than the above.

  2. “Margaret Thatcher famously said that if you want something done, you should ask a woman..” The country already asked Mrs Madueke.. This should not be a sexist argument. Frankly I think the powers of the Minister of Petroleum as regards NNPC should be significantly reduced. We don’t see the MoF wielding as much power over the CBN.

    The PIB in its current state might not be passed as I expect a significant push back from the northerners regarding the derivation and various tax benefits accruing to the oil producing states. I also think the powers of the MoP on the unbundled company boards are totally unnecessary. However, the NNPC should be unbundled, successor companies listed on the NSE (or any other exchange) and the MoP should be at best a non executive member of the resultant boards. There’s really no need to test the integrity of any individual with the juiciness that is NNPC. I fear that the incoming administration will also want to conduct another thorough audit before finally taking concrete actions to address the issues. The sooner this is completed, the better as the corruption in that organisation runs deep and every delay costs the country. There’s also the question as to how far back the audit should go, I think it’s important that we quantify in actual terms how much we’ve lost through the organisation from inception, it will be premature to only audit the GEJ era.

  3. This is indeed a brilliant piece. I agree to the recommendations and align myself totally with the concluding part. People found culpable must account for their actions. Not only by returning stolen monies but by going to prison where possible.

    In Oby Ezekwesili I find a role model and have always fantasized with the idea of her serving in GMB’s govt. With your suggestions here, I believe she’s a perfect fit for the role of Petroleum Minister. After all, she is still fondly remembered as madam due process!

  4. Damn the anti-climax of the sequel.

    Anyway, I’d have you know NNPC does not just eat yams in the stalls or farms in its village, it legit travels several miles to other villages to take more yam. Shell sent the location coordinates of an illegal barge that approached one of the pipelines to JTF one time, couple minutes later, they got a response that it was “an NNPC vessel”.

    You might be needing two Ms Obiageli Ezekwezili to sterilize the sector.

  5. This goat has become fat enough to be slaughtered, lets take it to the abbatoir and make Goat meat pepper soup out of it. The government needs to take it to pieces and privatise the monster. Enough is enough!!

  6. I couldn’t agree more with Feyi’s submissions. Succinctly delivered. But there’s a curious point between the lines:
    “…There is something devious about NNPC and the way it seduces any government in power. Everybody ‘probes’ it but no one ever really reforms it. NNPC enters the government like a virus and typically, when politicians are broke and looking for money, NNPC can produce the cash. This is how the corruption starts and typically, it can never be reversed.”
    And therein lies the tale. And it’s obvious that they have perfected the art of seduction, for even GEJ himself and his cronies was defending the goat, and waving off the claims that it has eaten some massive dollar yams. But can the incoming folks garner the will to resist the suggestive advances of this seductive monster? Can they afford the political will that will finally tame this wild goat? Or maybe outrightly put an end to its ability to eat yams? And why?! “I did not queue for hours (actually, the queue in my polling unit was not long!) on March 28th to vote for people to get soft landing”. “President Buhari, be guided – People Must Go To Prison. No Ifs, no Buts.”

  7. After reading 147 pages of the reports and your two-part review, all I can pray is that someone is touched by the spirit to offer me an all expenses paid vacation to somewhere same; for you see, I’m TRAUMATISED!

  8. Giving literary complement to your analytical presentation is well deserved. Your analysis gives a good insight into the mind set of the goat and it’s morbid relationship and intentions with and for the yam. I’m perplexed at the level of rot in NNPC. This isn’t corruption, it is arrant robbery….day light robbery. How did a nation hand it’s common wealth to a breed of unintelligible criminals. Please if you must steal, give the man sent to catch you some challenge. How does one miscalculate figures and omits $40million. Lol. How does an organization remit more than it claims to have generated. Haaaa God is tired of watching this goat, he has looked away. Now the job is in the hands on the butcher…..let the goat bleat in pain now..time to shit porridge

  9. Absolutely brilliant analyses and written with great humour, I thoroughly enjoyed the read. I have my own ideas about what we need in a Petroleum Minister and I don’t think Oby has what it takes, though I think she would be an excellent candidate for some other ministry. Here’s my take, if you’re interested…

    What We Need In An Oil Minister : OPEN LETTER TO BUHARI http://www.olisa.tv/2015/04/30/open-letter-general-muhammadu-buharipresident-

  10. Nigeria doesn’t need a petroleum minister, we need an energy minister who focuses on our energy needs and not selling crude oil! As you rightly mentioned, the country should move to a tax and royalty system and play no part in economic activity of oil. No more JVs or crude lifting, leave it to the oil companies. Our people have neither the discipline nor the temperament to unlook when in close proximity to significant sums of money, it is best that we take away the goat’s unfettered access to yam once and for all by putting NNPC and all its affiliates to the sword once and for all.

  11. I really like your brilliant analysis, but the truth must be told, PwP did not do their Job quite well as far as am concern… if the any NNPC subsidiaries refuse any cooperation in providing document or preventing them from access to their documentation.. they should throw in the towel as a display of their professionalism in the auditing.

    1. It wasnt an audit per se. An audit usually involves a set of accounts. No accounts were being audited here. They were simply asked to go and see if what Sanusi said was true

  12. Pingback: A Must Read :This Yam, This Goat, This Country: Pwc On NNPC – Part 2 | Agùntáṣǫólò | IkonAllah's chronicles

  13. Reblogged this on emotanafricana.com and commented:
    This is Part 2 of “THIS YAM, THIS GOAT …” carried on this blog yesterday in a series, Nigeria & the way forward.

    This will be the 4th essay in a series I plan will contain my thoughts as well as essays by others either directly submitted to me or culled from across the web on the onerous task before a government most Nigerians have invested (no be cash, o) a lot on.

    The first was sent to me by Professor Ladipo Adamolekun, an essay that reduces what many of us are thinking would form part of a template for the new government and the second contains my thoughts on a 2010 essay that dismisses Dr. Bukola Saraki as a name that should not come up for the Senate presidency.

    The two essays from aguntasolo.com form a basic and unquestionable reason for “PEOPLE MUST GO TO PRISON. NO IFS, NO BUTS.”
    TOLA.

  14. Please let the new govt take the goat to abbatoir, place watchdog to guard the yam and feed the dog with the goat parts. Lets EFCC,ICPC,CBN and other financial instutions check and publish NNPC records quarterly for public review and scrutiny. There should be annual audit of its accounts. Furthermore,I believe the probe should go well back in time to the inception of the new democratic govt.(1999)so as to make past presidents and their petroleum ministers accountable for their tenure. Justice be done to persons found guilty. Please the probe end should open the lid of other ministries too. God save us in this nation.

  15. Lol…………..from one who was in the room with the yam and the goat for three years. Despite your so called ‘insightful’ analysis you are still missing the blindingly obvious on so many levels it’s hilarious.

  16. Ezekwesili is no angel, do not arrogate such high respect to her. What was her achievement has minister of Education during OBJ’s. That was the time the greatest downfall of education that is giving birth to unemployable graduates today started. Everybody that did WAEC during and after her time in office must have either failed or pass through “Expo” or “Orijo” or must have attended a private school where school fee are been paid heavily. Even some of the private school also get involve in examination malpractice. That she is leading #BringBackOurGirls campaign does not make her a saint. Just has OBJ wasn’t either. Govt business always have inherent in it malpractices and corruption tendencies. Some people from time time goes to change the employ date on their file swear to a new affidavit reduce their age to remain in govt employment because their you can collect salaries for coming to the office to watch Africa Magic . Four people are paid salaries to a job meant for one person. This are the very seed of corruption sowed which eventual germinate and produce the fruit we all see today. Though the incoming govt already cancel the thought of privatising the downstream sector which the perfect solution to the problem but we should all pray that God will help them. As it were, it a different thing to make noise while the problem remains and an entirely different ball game to prevent this from continuing. God bless Nigeria.

  17. Brilliant FF!
    I attended a Mine Africa Inc Conference in London sometime in 2012. During the networking session, I met the President of the organization- Mr. Bruce Shapiro and we got talking about the mining industry in Nigeria…then, we talked a little about Mrs. Oby Ezekwesili..I would paraphrase him
    ”…i respect her to the Level of Margret Thatcher…I have a told her a couple of times, should you want to start a company, count me in…”
    That made me a Proud Nigerian. Oby was once a minister of Solid Minerals. I love her so much! I respect her so much!

  18. these assholes paid themselves 1.5 billion dollars in salaries??…298 billion naira..can you dig it? this is the biggest insult to nigeria, nigerians, humans, dogs, cats, living things in general for eternity, its the equivalent, sort of, of an ambulance running you over 20 times, then stopping, to piss on you

  19. It’s a shame the situation Nigeria finds herself, but thank God she has an opportunity to correct it. In the meantime let the yam be processed so that the goat would not be attracted to it. And let grass be provided for the goat.

  20. Dr Edmund Olu Ayoola, a retired GED (Exploration & Production) of NNPC is the best man for the job not Oby kan-kan. An upright and God fearing man, he has worked or headed just about every key NNPC SBU. The only NNPC staff to retire voluntarily after 35 years of service (all others were prematurely sacked along the way) because he was impeccable technically, was very hardworking, had a squeaky clean record and was fiercely liked by all (even when he would not partake in their sleaze), you can bet he knows the inner workings of NNPC well enough to clean it up. Check him out if you can find him – he is probably the only EX-NNPC executive that doesn’t live in a fancy mansion in Ikoyi or VI. Good luck to Nigeria in overcoming these monumental, self inflicted tragedies….
    Well done for a good job FF. Keep up the vigilance and good work.

  21. Reblogged this on Uniqely Mustered and commented:
    The Completion of the Mess I earlier posted.
    Would hope to get a study from those in the field so as to suggest a recommendation to eradicate this mess. Please if you know or are competent in sharing and discussing this, then please make out time to say or post anything about it.

  22. Read both Part 1 and 2. If you have got strength, lets view the Country whose account is there for perusal and help build a new structure and strategy for this government. It is all we have to contribute even though it generates silent praise to our personality. Please FF, let us do all we can!

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