Billions of dollars are going missing within the Nigerian National Petroleum Corporation (NNPC), which absorbs about half of the country’s total production of two million barrels per day, reports Forbes.
Nigeria’s state oil company is riddled with financial irregularities and governance failings, according to an investigation by the Natural Resources Governance Initiative.
Since crude oil sales account for 70% of Nigeria’s government revenue, the country is facing a difficult adjustment to the new low price environment. The price of the benchmark Brent Crude has halved since last summer, leaving export-dependent Nigeria with a major budget hole to fill.
As reported by Forbes, the NNPC has long been a source of controversy in Nigeria. Last year, the then-Governor of the Central Bank of Nigeria, Lamido Sanusi, claimed that $20bn in revenues from NNPC was unaccounted for.
Some 445,000 barrels of oil is allocated by the government to NNPC per day through the domestic crude allocation. It is then sold onto a subsidiary, the Pipelines and Product Marketing Company, PPMC. This is supposed to then be sent onto the country’s state-owned refineries, which would then sell the refined products and repay NNPC for the crude.
However, the NGRI says the refineries only take in around 100,000 barrels per day. The rest is exported or swapped for other products. The money enters NNPC accounts and is used for off-book spending. Between 2010 and 2013, that spending averaged $6bn per year.
According to Forbes, how this money is spent is opaque and lacking in oversight. Billions have been spent on transit and security arrangements, several of which appear to have been agreed at very inflated prices.
Nigeria’s new president, Muhammadu Buhari, has pledged to reform the country’s oil sector and tackle corruption. Since taking office in May, he has fired the NNPC’s board, but has yet to appoint a new minister to oversee the institution.
Source : SunOnline