After operating for several years without a board of directors, President Goodluck Jonathan Monday approved a new board for the Nigerian National Petroleum Corporation (NNPC).
The reconstitution of its board coincides with a revealing audit report, which according to Reuters, has exposed the magnitude of improper loans running into millions of dollars that were given out by NNPC to the Federal Government and some of its agencies.
It is expected that with a reconstituted board, NNPC will be better managed and the board will institute corporate governance standards that will shield it from political interference and demands that it provides loans to ministries, departments and agencies of government.
It was gathered that the yet-to-be published audit report was conducted by an independent organisation at the instance of the Federal Government, as part of government’s renewed commitment to improve transparency in NNPC.
The organisation was given unhindered access to the accounts of the NNPC in the course of its investigations.
The audit report, which is quite revealing, shows that the Federal Government owes the NNPC for improper, informal loans used to cover a range of expenses, from a presidential helicopter to maritime security.
For example, NNPC paid for a $14 million presidential helicopter, and is owed $106 million by the Power Holding Company of Nigeria (PHCN) and $124 million by the Nigerian Maritime Administration and Safety Agency (NIMASA).
The report will reveal outstanding debts owed NNPC by other ministries and agencies of the government.
When contacted by THISDAY, the acting spokesman of the corporation, Mr. Fidel Pepple, said relevant information concerning the issue was not immediately available to him.
THISDAY, however, gathered that PHCN’s indebtedness to NNPC was largely for gas supply by the Nigerian Gas Company (NGC), a subsidiary of the corporation, to the power stations.
NNPC’s annual budget is approved by the National Assembly but it collects revenue from oil sales, which is paid into the Federation Account.
However, the revenue is allegedly being tampered with before it is paid into the coffers of the government, raising transparency issues.
State governors last week threatened court action against the Federal Government over illegal tampering with oil revenues that should be shared by the three tiers of government.
The Ministry of Finance and the presidency did not respond to requests by Reuters for reaction. “We are aware of many of these debts, obviously it isn't an ideal situation,” an NNPC source said on condition of anonymity.
The NNPC needs its own funds to pay for joint ventures with foreign oil companies, some of which have lain dormant due to lack of government investment in proportion to its equity.
“It does highlight the extent to which NNPC has been drawn into the more opaque areas of government - and will give ammunition to those critics who say it has operated at least partly as a slush fund for government,” said Antony Goldman, Nigeria oil expert at PM Consulting.
“It points to the huge difficulties in making independent a corporation with such a complex web of assets and liabilities, at least some of which appear not to have been contracted solely on a commercial basis,” he added.