NNPC Profile, Law, Structure, Strategic Business & Corporate Services Units and some Corruption stories that have linked with NNPC operation.
The Nigerian National Petroleum Corporation (NNPC) is the Oil Corporation through which the federal government of Nigeria regulates and participates in the country’s petroleum industry. The NNPC business operations are managed through Strategic Business and Corporate Services Units (SBUs/CSUs) in diverse locations across Nigeria. In that case; The Nigerian National Petroleum Corporation (NNPC) initiated a recruitment scheme and since then, until date the NNPC recruitment have been a yearly scheme.
NNPC was established on 1 April 1977 as a merger of the Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel. NNPC by law manages the joint venture between the Nigerian federal government and a number of foreign multinational corporations, which include Royal Dutch Shell, Agip, ExxonMobil, Total S.A, Chevron, and Texaco (now merged with Chevron). Through collaboration with these companies, the Nigerian government conducts petroleum exploration and production. In 2007, the head of the Nigerian wing of Transparency International said salaries for NNPC workers were too low to prevent graft.
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The NNPC Towers in Abuja is the headquarters of NNPC. Consisting of four identical towers, the complex is located on Herbert Macaulay Way, Central Business District Abuja. NNPC also has zonal offices in Lagos, Kaduna, Port Harcourt and Warri. It has an international office located in London, United Kingdom.
LEADERSHIP
President Buhari appointed Mele Kyari as the New Group Managing Director Of NNPC. Kyari replaces Maikanti Baru. The new GMD and the other appointed NNPC officials would work alongside the current officers in the same position until 7th of July 2019.
Dr. Maikanti Baru is the former Group Managing Director (GMD). He was appointed Group Managing Director on July 4, 2016, under the presidency of Muhammadu Buhari; he succeeded Dr. Emmanuel Ibe Kachikwu, the current Nigerian Minister of State, Petroleum.
NNPC ORGANISATIONAL STRUCTURE
The NNPC Group comprises the NNPC Board, the Group managing director’s office, Seven operational units as listed below. Each of the Unit is headed by a chief operating officer (COO). Its Divisions are headed by Group General Managers (GGM) while its subsidiary companies are headed by Managing Directors. NNPC has several subsidiaries, two partly owned subsidiaries and 16 associated companies.
Autonomous Business Units:
• Upstream Company
• Downstream Company
• Refining Company
• Ventures Company
• Gas & Power Company
Corporate Services Units:
• Finance and Accounts
• Corporate Services
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Strategic Business & Corporate Services Units:
| SBU’s/CSU’s | SBU’s/CSU’s |
| National Petroleum Investment and Management Service | NNPC Trading Company |
| Crude Oil Marketing Division | Nigerian Petroleum Development Company |
| Government & Labour Relations | Integrated Data Services Limited |
| Corporate Secretariat, Legal Division | NNPC Retail Limited |
| Corporate Social Responsibility | Nigerian Petroleum Marketing Company |
| Marine Logistics | Nigeria Pipeline & Storage Company |
| Renewable Energy/Frontiers Exploration | Kaduna Refining & Petrochemicals Company |
| Group Public Affairs Division | Warri Refining & Petrochemicals Company |
| Financial Controller | Port Harcourt Refining Company PHRC |
| Treasury | Gas & Power Investments Company |
| Liabilities Management | Nigeria Gas Marketing Company |
| Group Human Resources Division | Nigeria Gas Company |
| Engineering & Technology | NNPC Properties |
| Information Technology Division/SAP | NNPC Shipping with NIDAS & NIKORMA as Independent Subsidiaries |
| NNPC Medical Services | National Engineering & Technical Company |
| NNPC Leadership Academy | NNPC Oilfield Services |
| NNPC Capital | NIGAZ (NNPC/GAZPROM JV) |
| Nigeria LNG Limited NLNG | NNPC Pension Fund |
NNPC Establishment
NNPC has sole responsibility for upstream and downstream developments, and is also charged with regulating and supervising the oil industry on behalf of the Nigerian Government. In 1988, the corporation was commercialised into 11 strategic business units, covering the entire spectrum of oil industry operations in Nigeria on exploration and production, gas development, refining, distribution,
petrochemicals, engineering, and commercial investments.
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On Wednesday July 10, 2019 at a meeting of Nigeria’s revenue generating and monitoring agencies with the leadership of the Senate at the National Assembly Complex, Abuja, the group’s Managing Director, Mele Kyari called for adequate funding of the petroleum sector. The subsidiary companies include: Nigerian Petroleum Development Company(NPDC).
NNPC Legal Frame Work
According to the Nigerian constitution, all minerals, gas, and oil the country possesses are legally the property of the Nigerian federal government. As such, the oil corporations operating in Nigeria appropriate portions of their revenue to the government, which accrues nearly 60% of the revenue generated by the oil industry in this manner. The revenue gained by the NNPC accounts for 76% of federal government revenue and 40% of the entire country’s GDP. As of 2000, oil and gas exports account for 98% of Nigerian export earnings.
Oil and gas industry experts have condemned the provision in the NNPC enabling Act, which allows the corporation to first recover its operational cost from oil sales before remitting whatever is left to the Federation Account.
The Nigerian Extractive Industries Transparency Initiative (NEITI) in one of its Occasional Paper series on “Review of NNPC’s Monthly Financial and Operations Report” noted that such a practice, which does not set the limit for such cost recovery was “not transparent and fraught with corruption.”
Some Corruption Cases at the NNPC
KPMG Report
In December 2011, the Nigerian government permitted a forensic report conducted by KPMG to be published. The audit, commissioned by the Ministry of Finance following concerns over the NNPC’s transparency, detailed the NNPC’s sharp business practices, violation of regulations, illegal deductions of funds belonging to the state, and failure to account for several billions of naira that should go to the federation account.
Auditors found that between 2007 and 2009 alone, the NNPC over-deducted funds in subsidy claims to the tune of N28.5 billion. It has not been able to account for the sum ever since.
Willbros Group Inc
In May 2008, Willbros Group Inc, a US company, admitted to making corrupt payments totalling over $6.3 million to officials at the NNPC and its subsidiary NAPIMS, in return for assistance in obtaining and retaining contracts for work on the Eastern Gas Gathering System (EGGS).
ABB Vetco Gray
In July 2004, ABB Vetco Gray, a US company, and its UK subsidiary ABB Vetco Gray UK Ltd, admitted to paying over $1 million in bribes to officials at NNPC subsidiary NAPIMS in exchange for obtaining confidential bid information and favourable recommendations from Nigerian government agencies.
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Trafigura and Vitol
In November 2013 after a report was published by Swiss Non-governmental advocacy organisation – Erklärung von Bern – allegations of heavy fraud surfaced, placing the NNPC under suspicion of siphoning off $6.8 billion in crude oil revenues.
NNPC Unremitted funds (2013–2014)
On 9 December 2013, a letter from the Central Bank of Nigeria (CBN)Governor, Sanusi Lamido Sanusi to the President of Nigeria, Goodluck Ebele Jonathan, dated show of 25 September 2013 details that the NNPC had not remitted over $49.8 billion proceeds of crude oil sales to the Government surfaced. On 13 December 2013, NNPC responded that no money was missing. Reconciliation Committee (comprising representatives of
(i) CBN
(ii) NNPC
(iii) DPR
(iv) FIRS
(v) OAGF
(vi) The Budget Office of the Federation
(vii) Federal Ministry of Finance
(viii) Federal Ministry of Petroleum Resources) was set up.
The Reconciliation Committee estimated unremitted funds at $10.8bn on 18 December 2013 while CBN changed its claim to $12bn. CBN then informed senate committee on Finance on 4 February 2014 that NNPC needs to account for $20bn as the CBN could only confirm receipt of $47bn out of $67bn revenue for the period under review. The then Finance Minister recommended the conduct of an independent Forensic Audit and PwC was officially appointed by the office of the Auditor General of the Federation (AuGF) to conduct a forensic audit into the allegations.
Among the conclusions reached by PwC at the end of their work, as stated in their report, which was made public are:
1. Total cash remitted into the Federation accounts in relation to crude oil liftings was $50.81bn and NOT $47bn as earlier stated by the Reconciliation Committee for the period from January 2012 to July 2013.
2. NNPC has provided information on the difference leading to a potential excess remittance of $0.74 billion (without considering expected remittances from NPDC). Other indirect costs of $2.83 billion which were not part of the submission to the Senate Committee hearing have been defrayed to arrive at this position.
3. A major consideration centres on the ownership of oil and gas assets controlled by NPDC. Subject to additional information being provided, we estimate that the NNPC and NPDC should refund to the Federation Account a minimum of $1.48billion as summarised in the next page.
No staff of the NNPC or Ministry of Petroleum has so far been punished, though on Thursday, 20 February 2014, the whistle-blowing CBN Governor was suspended from office by the President.
No staff of the NNPC or Ministry of Petroleum has so far been punished, though on Thursday, 20 February 2014, the whistle-blowing CBN Governor was suspended from office by the President.
NNPC Unremitted funds 2015
How NNPC failed to remit $16.8 billion into Federation Account- NEITI
The Nigerian National Petroleum Corporation failed to remit $16.8 billion paid reportedly to it as dividends by the Nigeria Liquefied Natural Gas (NLNG) Limited, the Nigeria Extractive Industries Transparency Initiative (NEITI).
The revelation was made at the “Anti Corruption Situation Room Forum – Engaging the Oil and Gas Sector for Service Delivery, Transparency and Accountability: NEITI 2015 Oil and Gas Audit Report as a Case Study” held at Rockview Hotel Royale, Abuja.
NNPC Unremitted funds 2016
An official audit reported in March 2016 that the NNPC had failed to pay US$1.6 billion.
NNPC Unremitted Funds 2018
Despite reforms, NNPC under Buhari ‘pockets’ N1.3 trillion oil revenue
A review of documents prepared by the Federal Ministry of Finance for members of the Federation Accounts Allocation Committee (FAAC) shows that between June 1, 2015 and April 30, 2018, the NNPC earned about N4.7 trillion from domestic crude oil sales.
However, out of that figure, the corporation remitted about N3.4 trillion, or 72.3 per cent into the Federation Account, pocketing a whopping N1.3 trillion (about 27.7 per cent) in less than two years.
The records showed that no other amount was paid into the Federation Account by the NNPC despite continued liftings and sales of Nigeria’s crude oil over the period.
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NNPC yet to remit $22bn, N481bn, says NEITI.
The Nigeria Extractive Industry Transparency Initiative says the Nigerian National Petroleum Corporation and other stakeholders in the industry have yet to remit 22.06 billion dollars and N481.75 billion to the Federation Account.
NEITI made this known in its audit report released at the National Conference on Remedial Issues in Abuja on Monday.
It named the other stakeholders to include oil companies in the oil and gas sector and the Nigerian Petroleum Development Company.
The report noted that the unremitted fund was part of the remedial issues contained in the 2010 to 2015 audit reports yet to be resolved.
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