Nigeria’s ongoing effort to grapple with low revenue in the face of contending demands for government spending is posing a real challenge. Even more so as it puts up a situation that, literally speaking, leaves managers of the economy with the hard choice of going cap in hand to borrow. It is on the basis of this scenario that there are persistent calls for the privatisation of some national assets to release the much-needed revenue for pressing development-related programmes.
This call becomes more strident with, for instance, the N12 trillion budget deficit in the 2023 appropriation bill awaiting passage at the National Assembly. Specifically, the N19.76 trillion budget has a deficit of N12.43 and copious provisions made for by the government to borrow to finance it.
There is no contesting the fact that Nigeria has her own fair share of the difficult times that seem to be enveloping the world. But the peculiarity of her own situation stems from the fact that it is, in the main, self-inflicted. In the public sphere, graft in the running of government business, alarming oil theft and a deplorable state of security, continues to hamper genuine efforts to get the required revenue for government activities.
Now, more than ever before, the nation, as a mono economy, continues to turn to its proverbial cash cow, the Nigerian National Petroleum Company Limited (NNPCL) for financial relief just as its operations, until recently, were dogged by allegations of graft in the face of needless opacity.
The coming into effect of the much-awaited Petroleum Industry Law has led to some plausible reforms, which if sustained, will signpost a better deal for the nation and its people. That notwithstanding, revenue from the sector keeps plummeting and is no longer enough to cater to the myriads of government’s expenditure.
Sadly, in the opinion of this newspaper, Nigeria is yet to fully reap the gains of the windfall from the oil price, which made it possible for countries like Angola for instance, to reduce public debt to 56.5 per cent of GDP, down from 79.7 per cent in 2021, and 123.8 per cent in 2020.
We observe that it is in line with the reforms enabled by the passage of the PIB that the NNPCL recently released its two-year financials. Much as it is a commendable effort by the current managers of the nation’s oil company, the details throw up a lot of undesirable items.
According to the financials, the national oil company spent a whooping N788 billion on salaries, N 15 billion on telephone calls and N13 billion on entertainment. For a nation that is grappling with revenue shortfalls, to say these are, on all counts, evidence of extravagant spending will be an understatement.
A breakdown indicates that NNPCL incurred a total of N788.7 billion on administrative expenses in 2021, a steep increase from the 2020 figure of N648.6 billion
Also, the company spent N11 billion on entertainment in 2021 as against N1.8 billion expenses on entertainment recorded in 2020. Additionally, the financials showed that the company spent N15 billion on postage and telephone expenses as against N5 billion spent on the item in 2020.
Similarly, NNPCL spent N388.4 billion on staff salaries in 2021 as opposed to the N397 billion spent in 2020; N81 billion was also spent on converting its oil earnings to local currency in 2021 as against N42 billion spent in 2020. Curiously, even in the face of alarming revenue challenges facing the nation, NNPCL spent N10 billion on travels in 2021.
In our considered opinion, these expenditures as captured in the company’s report are, to say the least, not sufficiently frugal. Perhaps this explains why, the subsidy payment notwithstanding, the NNPCL has not been able to remit any funds to the federation account for eight consecutive times. Like most Nigerians, this newspaper believes the time is ripe for full privatisation of the NNPCL to enable it function effectively like its peers in other climes.
We are not oblivious of the fact that the commercialisation and the ongoing reforms in the company are part of the process geared towards making it more effective. However, has anything tangible changed? Is the Company still not taking government money? Are there dividends, even though there have been declaring profits?
In our considered view, the financials released by the NNPCL showed clearly that the time is ripe for the government to hands-off participation in the oil and gas sector. Or, at least, make it private sector driven. We make this suggestion, in utmost good faith, with the intention of putting the company in proper shape to stand on its own. That, in our view, is a more practical way of reducing the pervasive waste incurred in the management of the NNPCL.
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