From Ike Abonyi and Stanley Nkwazema in Abuja, 08.25.2007

The Acting Group Managing Director of the NNPC, Mr Abubakar Lawal Yar’Adua, during a meeting with the media in Abuja explained that what the Chairman of RMAFC is raising as missing revenue arose from lack of understanding of the workings of the corporation.
He said that the misunderstanding between his corporation and RMAFC is surprising to him, but blamed it on a disagreement on the issue of subsidies.
On NNPC’s opposition to the sale of refineries, Yar Adua who said he had spent all of his post graduate life as a refiner, said NNPC opposed the sale of the plants as scrap because that was not the correct situation.
He promised that once the issue of vandalised pipelines is rectified the refineries in Port Harcourt, Warri and Kaduna will come on stream, pointing out that before the pipeline rupture, Port Harcourt was operating at 90%, Warri - 85% and Kaduna - 75%%. The GMD insisted NNPC is not afraid of privatisation but is against selling off public institutions as scrap.
Referring to the lack of transparency in the corporation’s operations in the past, Yar’Adua said, “there will be no more hiding. Whatever we are doing must be transparent under my tenure there will be nothing to hide. Anybody found to be involved in fraud must face the music.”
Declaring further how determined he is to tackle corruption in the organisation, Yar Adua stated, ‘I am for zero tolerance for corruption. It is time something started happening. Our conditions of service is one of the best in the country, so there is no room for fraudulent activity.”
Also giving some insight into RMAFC’s allegations of missing funds, the Group Executive Director in charge of Finance and Administration, Mr. Stanley Lawson said that prior to November 2003, in order to take care of the subsidy on petroleum, domestic crude was sold to NNPC at a discount both in terms of price and the exchange rate and it helped NNPC build up strategic financial reserves.
Mr Lawson said following the commencement of payment for domestic crude oil at international market prices from 22nd October 2003, it affected the reserves built up over the prior years as it was exhausted on funding the subsidy element.
According to him, as a result by mid 2005, NNPC was no longer able to fully meet crude cost payments due to the subsidy and by the end of 2005, the total amount unpaid by NNPC summed up to N249 billion and N355 billion due to NNPC by way of subsidies.
“In December 2005, former President Olusegun Obasanjo, the Ministry of Finance and NNPC met to resolve the discrepancies and it was then agreed to sequester (set aside) all outstanding amounts due to government from NNPC and the amount due to NNPC from government until such a time that the Federal Government is in a position to pay the amount due to the NNPC,” he disclosed.
While stressing the transparency of NNPC’s accounts, Lawson explained that by mid-2006 the Ministry of Finance appointed auditors to check NNPC’s subsidy claims during the year and their report aligned with that of the corporation showing that the total amount outstanding to the FAAC as follows: 2005 - N249 billion by NNPC: 2006 - N232billion by FMF; and first quarter of 2007 - N64 billion by FMF, with the summation of it being the figure that RMAFC continues to quote as missing money.
On why it is difficult for NNPC and RMAFC being agencies of the same government to resolve the differences, the GMD said that the two bodies always meet but surprisingly after the meetings they continue to raise issues.
Also explaining the issue of contract discrepancies, the Secretary of the NNPC board, Mrs Sena Anthony said that the tendering, processing, award and execution of contracts being referred to were done by the international oil companies (IOCS) in their capacity as operators of each of the joint venture (JV) programmes.
She said that NNPC’s role as a non-operator in all the contract cases is merely to consent with the operators, recommendations pointing out however that where the NNPC Board feels there is lack of clarity in an operator’s process for contract awards, NNPC can withhold its consent.
She mentioned in particular the Olokola LNG case and noted that NNPC does not award contracts on behalf of the company as all contracts were awarded by the Board of Directors of the company comprising representatives of the shareholders from, Shell, Chevron, British Gas and NNPC.
The GMD gave assurances that NNPC has remained one of the best professionally run government agencies, noting that those established along with it have all gone underground.