Wednesday, 9 January 2013
$1.5b loan: NNPC under fire
Former World Bank Vice President Dr. Oby Ezekwesili has joined the condemnation of the Nigerian National Petroleum Corporation’s (NNPC’s) planned $1.5b syndicated loan to pay off its debts.
She lashed out at the decision in her twitter account yesterday, her criticism following that of the Senate, which on Tuesday queried the plan, saying it was not informed about it.
According to Mrs. Ezekwesili, the process the NNPC is following to obtain the loan, which she said was unnecessary, is not transparent.
Lagos Lawyer Femi Falana (SAN) urged the National Assembly to probe the oil giant.
Reuters news agency blew the whistle on the loan at the weekend, but NNPC spokesperson Ms Tumini Green said it had not been obtained, although the process was being finalised.
The state oil company is believed to be owing major commodity trading houses, including Glencore and Mercuria, about $3.5 billion in unpaid fuel supply bills.
President Goodluck Jonathan is reported to have authorised the loan.
The NNPC spokesperson said: “The loan has not been obtained yet. It is still being worked out. This is a purely business transaction and it is done in good faith. If you owe somebody, you have to look for how to pay. So we are looking for money to pay our debts.”
Ms Green said the loan deal was a crucial measure to help the corporation stay in business, insisting that by taking that step, NNPC had not contravened any aspect of the law establishing it as a state-run oil company.
She added: “Why would anybody not want us to pay off our debts, especially when it is done legitimately? I don’t think it is right.”
Sections 6 (1)(c) and 8 (1)(2) of the NNPC Act states: “The corporation, in fulfillment of its duties, can enter into contracts or partnerships with any company, firm or person, which in the opinion of the corporation will facilitate the discharge of the said duties under this Act.
“Subject to the other provisions of this section, the corporation may from time to time borrow by overdraft or otherwise howsoever such sums as it may require in the exercise of its functions under this Act and the corporation shall not, without the approval of the National Council of Ministers, borrow any sum of money whereby the amount in aggregate outstanding on any loan or loans at any time exceeds such amount as is for the time being specified by the National Council of Ministers.”
Managing Director, Financial Derivatives Company (FDC), Mr Bismark Rewane, also justified the NNPC’s borrowing.
He said if the NNPC failed to honour its obligations for offshore processing transactions, it would affect the country’s international credit rating.
“If the NNPC does not borrow and pay its foreign creditors, our (Nigeria’s) credit rating will go down and this is not good for our financial institutions and the country,” he said.
But the Chairman of Senate Committee on Media and Public Affairs, Senator Enyinnaya Abaribe, said: “Under the law, no government agency can borrow money without the approval of the National Assembly.”
Senate Committee chairman on Petroleum (Downstream Sector), Magnus Abe, said there was no record of the deal before the Senate.
Dr. Ezekwesili, a former Minister of Education and one-time chair of the Nigeria Extractive Industries Transparency Initiative (NEITI), warned that such financial recklessness and lack of transparency in the NNPC should not be allowed to continue.
“What?” she exclaimed. “Counter Trade in 2013 to pay commodity traders opaque debt?
“This level of elite parasitism that has been the hallmark of our oil sector is fatal. It’s unsustainable.”
Dr. Ezekwesili, pioneer head of the Budget Monitoring and Price Intelligence Unit – known as Due Process Unit – also lampooned the Federal Government for allowing what she termed “Federal Republic of NNPC”, wondering: “Why does this administration encourage the idea of a “Federal Republic of NNPC in a Democratic Nigeria in 2013?”
She faulted insinuations that the delay in cleansing the rot in the NNPC and the oil sector was caused by the non-passage of the Petroleum Industry Bill (PIB). He insisted on twitter: “The government can drive a change agenda in the messy sector even without the PIB. It is all about sincere commitment.”
Wondering why the unbundling of the NNPC has taken so long, she said plans to unbundle and make the corporation a public company was already in place before President Olusegun Obasanjo handed over power in 2007.
“We had left behind building blocks to take NNPC out of opaqueness by subjecting it to market discipline.”
Responding to an enquiry, Dr. Ezekwesili stated: “The demand for the cleanup of this decadent oil sector has to be sustained. It (decadent oil sector) is killing the greatness of this nation. This paradox of affluence that has been our lot with oil needs to end soonest. We cannot sustain our nation on ironies. Not only has elite binge on oil corrupted our governance, it has also dulled the brain of our nation to all other prospects for greatness.”
The former minister urged Nigerians, particularly the youth, to demand answers and transparency in government.
She advised them to speak out to engage the National Assembly and other arms of government.
Falana said: “The decision of the NNPC to take a loan of $1.5 billion is illegal and unconstitutional. The federal government or any of its agencies has no right to take local or foreign loans without the approval of the National Assembly. Section 6 of the NNPC Act which empowers it to borrow money with the approval of the Federal Executive Council has to be read subject to the powers of the National Assembly before taking such loans.
“In the 2013 Appropriation Bill awaiting the assent of President goodluck Jonathan, there is no provision for the loan of $1.5billion.
“Apart from stopping the loan, the National Assembly should investigate the pit of corruption that the NNPC has been turned into. The NNPC is owing the Federation Account the sum of N450 billion. In the fuel subsidy scam, the NNPC benefitted to the tune of 50 per cent.