NNPC Ltd and challenges in the oil sector: Banire misconceives the facts, promotes biased views

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Amid the challenges in Nigeria’s oil sector, particularly the recent constraints on petrol supply, critics increasingly directed blame at the Nigerian National Petroleum Company Ltd (NNPC Ltd). Recently, prominent figures such as Prof. Pat Utomi criticized the NNPC Ltd, labeling it one of the world’s most opaque and unreliable companies. Additionally, an editorial from The Punch referred to the NNPC Ltd as a threat to Nigeria. The latest attack came from Dr. Muiz Banire, a Senior Advocate of Nigeria and former Commissioner for Transport and Environment in Lagos State, who characterized the NNPC Ltd as a “black hole” for Nigeria.

The Case Against Oversimplification

While it might seem justified to point fingers at the NNPC Ltd given the current difficulties in the petroleum sector, many of these criticisms stem from emotional responses rather than factual understanding. Critiquing the NNPC Ltd without grasping the complexities underlying the situation won’t yield positive outcomes for Nigeria. Instead of seeking scapegoats, as Dr. Banire has done, the focus should shift to collaboratively identifying lasting solutions to the oil sector’s challenges.

Misunderstanding Fuel Subsidy Dynamics

Dr. Banire claims that Nigeria has faced fuel scarcity since 1973 primarily due to fuel subsidies, asserting that the NNPC Ltd bears responsibility for this predicament. This assertion, however, remains debatable. The fuel subsidy policy does not solely belong to the NNPC Ltd; various administrations shaped it over the years, each employing different methods to subsidize petroleum products for citizens. The NNPC Ltd’s role has simply involved implementing these government policies. In instances like the protests in 2012 and the subsidy removal in 2019, the NNPC Ltd acted on government decisions rather than initiating these changes.

Overlooking Broader Challenges

It’s unfortunate that Dr. Banire chooses to criticize the NNPC Ltd for the fuel subsidy crisis without acknowledging the significant challenges it faces—namely, product smuggling, pipeline vandalism, and crude oil theft. Despite these issues, the NNPC Ltd continues to manage crude oil production and fuel supply for the nation.

The Role of NNPC Ltd in the Market

After the recent removal of the fuel subsidy, both major and independent petroleum marketers struggled to import petrol due to foreign exchange constraints. In response, the NNPC Ltd stepped in to import the product itself, often selling it at nearly half the market price, in accordance with the Petroleum Industry Act (PIA), which designates it as the fuel supplier of last resort. Although occasional supply disruptions have occurred due to financial limitations, the NNPC Ltd plays a critical role in maintaining relatively low petrol prices for Nigerians. This raises an important question: how can such a company deserve the label “black hole”?

Questioning Faulty Accusations

Dr. Banire’s position implies that the NNPC Ltd is responsible for all issues within the oil sector, even blaming smuggling and the illicit sale of petroleum products on informal street vendors. However, he provides no evidence to support claims that those involved in these activities are affiliated with the NNPC Ltd. We should expect a lawyer of Dr. Banire’s caliber to base his commentary on factual evidence rather than speculation.

Progress Made by NNPC Ltd

Since 2018, the NNPC Ltd has made substantial progress, preparing for the enactment of the Petroleum Industry Act, which officially passed in 2021. The company demonstrates a commitment to accountability and transparency by regularly publishing its audited financial statements. Remarkably, it reported a profit of N3.29 trillion in its 2023 financial report. Such accomplishments seem to elude Dr. Banire, who insists there has been no noticeable difference between the old NNPC and the newly incorporated, commercially focused NNPC Ltd.

The Call for Constructive Criticism

While we welcome constructive criticism of the NNPC Ltd, it should root itself in factual understanding. Individuals like Dr. Banire must avoid distorting facts for the sake of populism. Furthermore, assertions that the NNPC Ltd wields excessive influence over regulatory bodies, such as the NUPRC and NMDPRA, lack a solid foundation. Those well-educated should engage in thorough research to avoid advancing misleading arguments.

Conclusion: The Path Forward

Critics of the NNPC Ltd should take the time to understand the complexities of the oil sector before issuing sweeping judgments. A clear grasp of these intricacies remains essential for meaningful discourse aimed at resolving the industry’s issues. The NNPC Ltd undeniably plays a vital role in Nigeria’s oil landscape and deserves recognition for its perseverance despite significant challenges.

Olufemi Soneye is the Chief Corporate Communications Officer of the NNPC Ltd.

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