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Tolu
Ogunlesi (Image source: The Punch)
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In the months ahead,
President-elect Muhammadu Buhari will appoint new officials to powerful
positions in the oil industry – the Ministry of Petroleum Resources, the
Nigerian National Petroleum Corporation, the Petroleum Products Pricing and
Regulatory Agency, and the Department of Petroleum Resources, etc. The Guide
below is for those people lucky enough to be appointed. It is also for all other
Nigerians who are tired of reading about other people enjoying billions of
dollars of government oil money, and would instead like to have others read
about them doing the enjoying.
One.
Innovate, Innovate, Innovate. What was the greatest invention of the Goodluck
Jonathan administration? SWF? SURE-P? NMRC? Akin Adesina’s GES? No. The clear
answer is the Strategic Alliance Agreement. It’s a complicated arrangement, but
let me try to break it down in simple English. Pre-Jonathan, standard practice
was to ensure that Nigeria’s oil fields were managed as joint ventures between
the NNPC (representing the government and people of Nigeria; and holding a 55
per cent stake) and the International Oil Companies (like Shell, Mobil and co;
holding 45 per cent).
Then,
in the late 2000s, some of those private companies decided they wanted to sell
their stakes in about five oil blocks. What you’d have expected was they’d be
allowed to sell to other willing private companies, especially the indigenous
ones, who would then continue the existing arrangements. But no, our government
people decided to be “innovative”, and decided that it, through the Nigerian
Petroleum Development Corporation, a subsidiary of the NNPC, would acquire the
divested stakes. So in effect the Nigerian government came to own 100 per cent
of the blocks. But there was a slight problem: funding. Historically, the
government (i.e. the NNPC) has always abdicated its own funding responsibilities
to the IOCs (Both parties are meant to share the cost of producing oil from the
blocks).
Now
that there was no IOC to push the funding to, the government had to find a way
out. And so the SAA was born. It involved inviting two private companies (Atlantic
Energy and Seven Energy, both founded, coincidentally, in 2011) to provide
funding, in exchange for a share of the proceeds from the sale of the crude
oil. Now, during the IOC regime, what happened was that the IOCs would get 45
per cent of the oil output, take out the cost of production (which they had
singlehandedly funded), and then pay royalties and taxes on the balance (i.e.
“profits”) to the Federal Government. These payments to the FG would amount to
about 70 per cent to 80 per cent of that profit, leaving the IOC with no more
than 20 per cent to 30 per cent as their own earnings. In the age of the SAA,
things changed. The new partners were entitled to take anything between 20 per
cent and 70 per cent of the profits. In many cases, the profit was taken not in
cash but in barrels of oil – which means the SAA allowed the private companies
to take billions of dollars’ worth of crude oil annually, for which they didn’t
have to pay.
Two.
You need to stay in control. One of the first things that happened after
Jonathan became President in 2010 was that the Oil Minister he appointed
relocated the PPPRA – the agency in charge of calculating subsidy payments –
from the Presidency to the Ministry of Petroleum Resources. The said Oil
Minister also regularly gave the middle finger to the Big Men under her watch –
how else do you show who’s boss? According to one count, she fired, in her
first four years as minister, three DPR bosses and four NNPC GMDs. If you’re
going to succeed, you have to be in total control.
Three.
The Loophole Principle. Find your own Loophole. Let’s use kerosene as an
example. On June 15, 2009, President Umaru Yar’Adua ordered the cessation of
payment of kerosene subsidies. Since he was President, his word was obeyed. But
then he died in office, and, in June 2011, the Jonathan government decided to
reactivate the payment of the subsidies. Through that “loophole”, hundreds of
millions of dollars have vanished monthly into private pockets, since then.
Four.
Lower the Bar. This is simple common sense. If you want it easier, you’ve got
to make it easier. Again, let’s go back to 2011. Pre-Jonathan, the requirements
for qualifying to be issued an oil import licence were quite stringent. You had
to prove that you had the capacity to pay upfront for a minimum shipment size
of 5,000 metric tonnes of product. You also had to prove that you owned retail
outlets for the distribution of the imported product. Under President Jonathan,
these conditions were removed, essentially making it possible for every
Tom(iwa), Diek(ola) and Ari(gbabu) to import petroleum products. Also, in the
crude oil swap arrangements with private oil companies, the companies were
never required to bring in anything other than petrol. So, they’d take
Nigeria’s crude oil, sell or refine it abroad, and bring back only petrol, even
though there are dozens of products that accrue from the refining of crude oil,
including the very valuable jet fuel. Ask yourself: Where were all the other
products going?
When
you lower the bar, you not only make it easier for the oil to flow, even more
importantly, you make it harder for busybodies to follow your tracks. Instead
of one set of footprints on the crime scene, why not allow for a thousand.
Let’s see who’s going to succeed in tracking the origins and destinations of a
thousand footprints. In 2005, Nigeria licensed five companies to import petrol.
In 2007 (election year) it doubled to 10. In 2008 (new President), it again
doubled to 19. By 2011 (election year; new President), there were 140 oil importers
(116 of them got oil importation licences that predated their letters of
application for such licences).
Five.
You’ve heard what they say about technology helping to promote transparency?
Well, good news: you can use technology to promote bad behaviour as well. The
golden rule of technology use remains, “Garbage In Garbage Out”. Since
computers can be deceived, you should strive to learn how to deceive them.
People will see you/your government deploying technology, and commend you for
it, while having no idea that it’s all a ruse. What’s not to love about that?
One example: For the computation of subsidy payments, the PPPRA used (uses,
perhaps?) a software application called “Analyzer”, which, one, had no user
manual, and two, allowed a single user to singlehandedly input and edit and
approve entries.
Six.
Never be scared to set up a probe panel. If Nigeria got an OPEC-endorsed oil
price increase of one dollar per barrel for every probe panel set up since
1960, we’d be by far the richest country in the world today. Every government
since 1960 has done it, who are you to abandon a winning formula? Probe panels
are important because they let the world believe that you’re serious about
tackling corruption. They are also a good way to dispense patronage – panels
need members, panel members need aides, etc.
Seven.
Think big. Remember the US$12.4bn scandal of the early 1990s. The Gulf War
drove oil prices up, leading to a massive windfall for Nigeria. The money was
reportedly deposited in a number of Special Accounts in the Central Bank of
Nigeria, from where it reportedly grew wings. But at least it came into the
CBN. The US$20bn that Lamido Sanusi said was unaccounted for did not even have
the courtesy of first showing up in the federation account. It was taken
straight from the ‘cloud’, pre-download. Twenty years from now, expect a US$40bn
oil scandal – in keeping with the growing scale of Nigerian ambition.
Eight,
last but not least: Make sure Nigeria never learns how to count. How many are
we in Nigeria? 170 million, based, not on a count, but on projections based on
dubious census figures. So, in fact, we don’t actually know. America might
know, of course. How much petrol do we consume daily in Nigeria? Depends on who
you ask, and why? Since we’re not really very good at numbers, and have to
guesstimate everything, we can be forgiven for making mistakes and paying for
59 million litres per day, when in reality (is there really a reality?) we’re
consuming an amount much closer to half of that. Which is what’s been happening
in recent years. Moral: the day Nigeria learns to count, helping yourself to
oil money is going to become more difficult. You have a duty to ensure that
Nigeria NEVER learns how to count.
Follow me on Twitter: @toluogunlesiCulled from The Punch
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