Missing NNPC $20bn: Kachikwu recalls external auditors

26 September 2015, Lagos – In line with President Muhammadu Buhari’s change and anti-graft agenda, the Group Managing Director, Nigerian National Petroleum Corporation, NNPC, Dr. Emmanuel Ibe Kachikwu, has decided to revisit the issue of the missing $20 billion NNPC fund.

Dr. Emmanuel Ibe Kachikwu, NNPC GMD.

Dr. Emmanuel Ibe Kachikwu, NNPC GMD.

‘’We are bringing back the auditors to do a full audit of NNPC accounts. The last audit was done in 2010, so we will make the accounts up to date,” he said during an interaction with journalists in Lagos,yesterday. The nation was mired in controversies recently following public bashing and accusations of unaccounted funds, in excess of $20 billion as alleged by former Central Bank of Nigeria, CBN Governor, Mallam Sanusi Lamido Sanusi.

Recall that NEITI, the PRSTF and KPMG all questioned how Nigerian Petroleum Development Company, the producing arm of the NNPC split earnings with its partners, and how much revenues they keep back for themselves. Besides, most of the companies are incorporated in offshore banking secrecy jurisdictions; none of them publish annual accounts.

Furthermore, it has been noted that NNPC has not fully responded to Sanusi’s allegations in public, and the terms of reference, TOR, for the recent PricewaterHouseCoopers, PwC audit did not empower the auditors to probe the strategic alliance agreements, SAAs, the NPDC entered into with its partners between 2010 and 2012, in detail.

Promising to subject the NNPC accounts to another forensic audit,.Kachikwu said part of the ongoing reform of the NNPC is the right of the public to know. “There are no go areas” for as long as the Corporation remains a public establishment. I give weekly briefing to Mr. President because the Nigerian public has a right to know,” he said, adding that the first monthly publication of the Corporation since he took over will be out next week, and ‘’a whole lot of things will be revealed in it.’’

The development comes as Kachikwu threatened that the Federal Government may shut down unprofitable refineries after the 90 days deadline given to their managements and sell off its majority stakes to expatriate management investors, similar to the Nigerian LNG model.

He also disclosed that the lucrative multi-million dollar pipeline vandalism and attendant crude oil and products theft business may come to end soon as the Nigerian Army begins the deployment of drones to monitor the over 5000 kilometres pipeline network that criss-cross the country.

Deployment of drones

While the Muslim faithful are celebrating the Eid el Kabir, the Army is putting finishing touches to launch the first set of drones, this weekend, a development that will also see the replacement of the online monitoring of the pipelines, which hitherto had not yielded much success.

Kachikwu agreed that  some staff of the Corporation and the influential in the society have hand in pipeline vandalism. Kachikwu said: “The first thing we are doing, which is the first deployment of drones, will start over this weekend. This has to do with the replacement of the online monitoring group with the Army corps engineers.

It will provide funding for the Army Corp engineers to improve their skills as the main contractors. It will also provide very strong presence in terms of helping us from where we are today. Yes, it is possible that some staff of NNPC inform the vandals and that’s why we are removing those at the depot this week”

The NNPC promised Nigerians to end oil theft and pipeline vandalism within eight months through the deployment of drones to monitor pipelines and movement of oil vessels in the nation’s territorial waters.

The influential behind vandalism and oil theft

In Kachikwu’s opinion, the poor do not burst pipelines because they neither have the resources nor financial capacity to execute such line breaks, which he described as “a very expensive and syndicated process.” He said: “People who are doing this are influential members of the society, who have the reach of the market where they are going to sell and have the ability to invest monies in this whole process.

It is a very expensive process because if you burst a pipeline you have to tap it, you have to carry it to a vessel or tanker; you have to transport it to be able to sell it. It is a very syndicated process because if you burst it and it is flowing on the ground, it is of no use to you.”

NNPC staff, military also accused of collusion

Due to the nature of the syndicate, Kachikwu also said that some NNPC staff, the military and those in charge of monitoring the pipelines may not be exempted from collusion from the growing business.

According to him, “What was happening before is that the same people you send there are the same people that are bursting the pipelines. I will not also claim that people within my system were not part and parcel of all these. So I have a very open mind to realize that as many people as possible are also part of the problems, internal and external.”

He based his conviction on an experience he shared with journalists: “One of the things that shocked me was the first time we tried to pump from Mosimi;  I’d finished the maintenance and I was really looking forward to it and within five to six hours after we started pumping, there was a bridge. People will not know you were going to pump unless people internal were also part of the cartel.”

Dealing with the challenge

Apart from challenging the media to continue to harp on the issue, Kachikwu said his management has devised some strategies that will check the menace. These include redeploying all depots staff, constantly changing personnel at strategic units as well as encouraging the military to all also do same

He said: “One of the things this team has done is, we are posting out everybody who had worked traditionally in the depots, and we are going to try to change them literally, at least for those who are in the mechanics or fields as frequently as we can. We are also encouraging the Army to also change their personnel as frequently as they can.”

In addition to these, he said: “I have a lot of energy around this, we are looking at tracking devices, and we are looking at monitoring devices. We are holding a lot of screening right now. Even on drones and total pictures. Nigerians are very resilient because the moment they know where you’re headed, the amount of proposals I’m getting you’ll think I’m building drones in every backyard, and I’m quite impressed with that. But we really need to throw technology on them, but again we need to find out the cost of the technology.

“But we can’t do it alone with the Army; we have to realize that there are communities; we have to create incentives to the communities to own these pipelines and realize that it is important for them to be there. This comes down to the CSR, we mentioned before. What are the things that we can do to ensure that the people along the pipelines, who suffer from obvious exposures by virtue of their location in those areas see a sense of reward by virtue of being there?

“We are dealing with the Army, we’re dealing with the Nigerian Civil Defence Corps, and the local communities; it’s an integrated model. But in terms of them being located on the pipelines, no, we are going to have the Army located on the pipelines and the others will provide external support.”

Shutting down unprofitable refineries

The NNPC boss in defence of government’s decision to hold on to the refineries against experts’ advice to sell them off to private investors, noted that the sale of the refineries may not be ruled out after all, if they continue to prove unprofitable after all efforts to revive them.

According to him: “What the President wants to do is to first fix the refineries because if you sell them in their current state, you’ll sell them as scraps, so there will be no value coming back to you anyway, which is logical.

“The very intelligent thing to do is, let’s fix the refineries and if they are not performing you sell them as finished, completed and enhanced refineries and you get better value…What I will love to see ultimately is, if they do not work, and I hope that they do work, is to at least on a majority shareholding, the refineries can be taken over by foreign investor who then takes over the technical management, almost something like the Nigeria LNG model.

“So first, we need to fix them. They have a 90 day period and I have the same worries as you have, but I’ve got to have faith. Within these 90 days, I’ve told every manager: ‘prove to me that I don’t need to do something drastic after 90 days.’

“The way it is trending so far, it is likely that Port Harcourt will be the only one that can meet that kind of deadline. If we get to that point, what I will do is to shut down the refineries, of course with the approval of the President, and then do full maintenance of the refineries. It might take me one month, it might take me one year to clean it up and bring it back to full production.

“While that is going on, I stop wasting crude being pumped there at a loss, and take that out and bring in refined products. At least I’ll be saving money, and at the end of the day I have a refinery that can work.

“If after we finish and we think that the issue is management, then we see if there is somebody willing to buy a majority share that has the skills and  market reach internationally to do the work. Obviously if we did that and by then we have expressions of interest, people who are building refineries in this political environment will be given the first right of refusal because they will be able to help manage what is there, help to share skills. I have not lost faith in myself as a business man, but we have to take all the social realities together.”


On the controversial oil subsidy, he could not say whether government would continue to pay for oil subsidy or not but he was certain the the way it was manged was wrong and not sustainable


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