Diezani Alison-Madueke deserves commendation, not condemnation

By Dafe Warriboko

The much awaited Price Waterhouse Cooper (PWC) forensic audit of NNPC and its subsidiaries has finally been laid bare for all to see. One must commend President Goodluck Jonathan for ordering the release of the report. But as usual, the release of the report has brought the Minister of Petroleum Mrs Diezani Alison Madueke into the spotlight as if she created and designed NNPC herself. The PWC reveals that the many problems of NNPC came long before her tenure in office.

Many writers in the media have become judge and jury overnight, advising the incoming government on what their response must be. In fact since appearing to public view the PWC report has generated so much heat and light as media gurus seek the most attention grabbing headlines. However such a complex report deserves a very serious study. We predict that much more in terms of sober facts will emerge beyond the headlines we are currently seeing.

For example, early on (Page 16) the report accepts and relies on the legal opinion of the Attorney General of the Federation that the transfer of former Shell (SPDC) assets to the NPDC were not illegal. The report states:

“We have relied on the Legal Opinion provided to the Senate Committee by the Attorney General (AG) on the subject of the transfers of various NNPC (55%) portion of Oil leases (OMLs) involved in the Shell (SPDC) Divestments which impact crude oil flows in the period. The AG’s opinion indicated that these transfers were within the authority of the Minister to make. Thus, these assets were validly transferred to NPDC.”

The PWC report therefore indirectly responds to the recent allegations by a Nigerian journalist, who has tried desperately to link an alleged “assassination attempt” on his life with his allegations that the Petroleum Minister has acted illegally in the transfer of those assets to NPDC.

The PWC report also debunks the idea that the NNPC spending its income to run operations before paying into the Federation account is illegal. That is how the current laws the NNPC as an organisation many years ago, when Mrs Diezani Alison-Madueke was probably still a student in school. As troubling as the PWC report may be, it does nothing to show that the Minister or the President are the cause of the problems at NNPC. The Jonathan Administration even tried to remove the fuel subsidy, and the bad feeling that politically sensitive move generated was probably the beginning of him losing the recent elections.

The PWC report found that the problems with NNPC are very long standing and deep rooted, and certainly did not start with the present Government. The report also makes it clear that many of the practices and procedures of NNPC while they fall below international standards of company operations, are in fact legal in Nigeria because of the laws that set up the NNPC.

PWC also shows clearly that anyone managing NNPC would struggle to be independent of Government, because they are managing what is almost the sole revenue earner of the Government that appointed them into office. Anyone appointed Petroleum Minister under the current structure of the Ministry and the NNPC will never have a free hand to manage the corporation according to normal company practice. We see the following passage from the report on page 51:

The current NNPC business model in relation to the usage of the domestic crude is inadequate as can be seen from the foregoing. The business model that informed the creation of NNPC is a subsidy minded model. This model is responsible for several of the weaknesses and lapses that have already been outlined and the net effect is an erosion of value to the Federation.

Furthermore, the accounting and reconciliation system for crude oil revenues used by all Government agencies appears to be inaccurate and weak. We noted significant discrepancies in data from different sources. The lack of independent audit and reconciliation led to over reliance on data produced from NNPC which may not necessarily be accurate. This matter is further compounded by the lack of independence within NNPC as the business has conflicting interests of being a stand-alone self- funding entity and also the main source of revenue to the Federation account. (Sections underlined by the Author)

Forced to produce their report within a tight time frame, the PWC, experienced the frustration of trying to find documents and other records in an organisation with an over-bloated bureaucracy, inefficient administration and unwieldy organisation; that over many years had already become a haven for waste and corruption, long before the arrival of Diezani Alison Madueke there as the Minister for Petroleum Resources.

From reading this PWC report, even a technocrat from heaven, will soon find any attempt to bring commercial practices of the NNPC into line with established international practice, will quickly stumble under the sheer morass of inefficient, inertia or quite simply be sabotaged by vested interests within the industry. Welcome to government agencies in Nigeria, very few of whom can show value for investment, and most of which cannot be reformed because of the laws that set them up.

What the PWC report shows us, is that the bad structure of the NNPC was established by law and can only be changed by law. It is on multiple record that Mrs Diezani Alison Madueke repeatedly appealed to the National Assembly, (Houses of Senate and Representatives) for help to reform the Petroleum Ministry, and the NNPC through the Petroleum Industry Bill; but got zero support from them. Hence the NNPC remained in the confusion that she inherited from others and for which she is now being almost solely blamed. The PWC report paints a much deeper and more complex picture.

The PWC should now be invited to look at every agency of the government operating in Nigeria, and we will see how many will pass the test!

Dafe, a public affairs analyst wrote from Abuja