Why the House of Reps should rise above the energy sector drama, By Musa Eleojo

Reps Speaker, Abbas Tajudeen

The Honourable Speaker of the Lower House, Tajudeen Abbas, PhD. should rein in this unfortunate deviance. Apart from being the Speaker, he is well educated and knowledgeable. He is expected to provide the house with a leadership that is pristine, robust and honourable. The Speaker should not allow uninformed members to drag the reputation of the House in the mud.

On the surface, the recent tiff between Aliko Dangote, founding president/CEO, Dangote Group, and Engineer Farouk Ahmed, the CEO, Nigerian Midstream, Downstream Petroleum Regulatory Authority (NMDPRA) would appear to be the trigger that drew in the House of Representatives to open what it calls an investigation into factors working against the petroleum sector.

Dangote had alleged that NMDPRA was licensing product importers who bring in substandard, dirty diesel into Nigeria. To put such allegation in the public space, which could smear the reputation of one of the nation’s critical regulatory bodies, was tantamount to a declaration of war. Even Dangote appeared to have forgotten that after the deregulation of AGO years ago, NNPC Ltd does not import diesel.

Even more curiously, Dangote had also alleged that NNPC Ltd was trying to stifle competition in the refining sector. Ahmed had appropriately dismissed the allegation as unfounded or, at best, ridiculous. As he said: “How can NNPC Ltd stifle any competitor in the refining business (or any other sector) when it is the major advocate for the revamp of local (refineries and) refining? While NNPC Ltd was rehabilitating its refineries in Port Harcourt, Warri, and Kaduna, it made a deliberate commercial decision to invest in the Dangote Refinery.”

Apparently as a consequence of these allegations, the House of Representatives (HoR) invited itself into the energy sector arena to provide what many consider as questionable “oversight.”

Subsequently, the HoR’s Special Joint Committee set sail to investigate “factors working against the petroleum sector.” Most importantly, last Wednesday (31 July), it directed the Nigerian National Petroleum Company Limited (NNPCL) to halt what it called the “mortgage of Nigeria’s future crude oil” until its assignment is concluded.

The committee’s directive followed reports that NNPCL is planning to borrow an additional $2 billion in crude oil-backed loans from international creditors to boost its financial inflow.

The Group Chief Executive Officer (GCEO) of the NNPCL, Mele Kyari, according to the panel, reportedly stated that the national oil company is in discussions with international creditors to raise an oil-backed credit facility. Is this the hand of Esau and voice of Jacob scenario being replayed?

It could be recalled that the HoR’s committee chaired by the lawmaker representing Ideato South/Ideato North Federal Constituency, Imo State, Ikenga Ugochinyere, had last week commenced probe of what it called “shady deals” in the sector.

In a statement issued by Ugochinyere on Wednesday, 31 July, the committee urged the NNPCL not to undermine the forensic investigation by the House of Representatives with another fresh loan. Could this be a contrived legislative drama obviously instigated by a hidden hand?

The Reps even cleverly drew from President Tinubu’s proactive intervention in the midstream sector, which insisted on crude supply to local refineries in naira, to clothe its surprisingly uninformed agenda by claiming that it “received intel of plans to mortgage future crude revenue and oil for another loan at a time the nation is struggling.”

One of the key dimensions to progressive legislative interventions is knowledge. A country’s legislature must navigate with knowledge to effectively aid the development journey in an increasingly disruptive global milieu.

First, the NNPC is a CAMA company and no longer a government corporation. The Companies and Allied Matters Act, 2020 (CAMA 2020) is a Nigerian federal law that governs the establishment and management of companies in Nigeria. It supersedes and replaces the Companies and Allied Matters Act, 2004, which was itself an update of the Companies Act of 1968.

Because of its new CAMA status, the NNPCL does not get budgetary subventions from the government. Companies of the nature of NNPCL across the globe run on loans, which are paid back upon negotiated repayment plans. NNPCL and its contemporaries have a number of high-net-worth investments and expansion projects to deliver in the critical oil sector. These require huge financial outlays and investments. Since resources at its disposal are not limitless, NNPCL must necessarily prospect for funding options to keep afloat as a going concern. For instance, the NNPCL obtained a loan of $1billion to fund its equity stake in Dangote Refinery, which helped it (Dangote Refinery) to take off financial pressure at a point when it needed to deal with some operational difficulties.

The members of the House of Representatives in the investigative committee should always try to understand issues and proceed from a position of knowledge before making public proclamation on issues.

The Honourable Speaker of the Lower House, Tajudeen Abbas, PhD. should rein in this unfortunate deviance. Apart from being the Speaker, he is well educated and knowledgeable. He is expected to provide the house with a leadership that is pristine, robust and honourable. The Speaker should not allow uninformed members to drag the reputation of the House in the mud.

Nigerians would recall that the same folks who criticised NNPCL’s decision at the time are now supporting Dangote. These House of Reps folks have suggested that the national oil company should suspend the crude-for-loan deal, which has come in handy as one of its strategic funding options. It is either they are simply uninformed about how the company works or they are just being outright mischievous.

We should consider again the intervention of Engineer Farouk Ahmed, the CEO, Nigerian Midstream, Downstream Petroleum Regulatory Authority (NMDPRA) when the narrative was almost twisted against the NNPC: “the NNPC Ltd borrowed $1 billion (which was) paid directly to Dangote Refinery. We can reliably confirm that NNPC has allocated over 35 cargoes of crude to the Dangote Refinery.”

Illuminating the facts even more, the NMDPRA boss had disclosed that indeed Dangote had received about 23 cargoes, rejected two based on pricing, and was currently negotiating pricing on at least nine cargoes. “The Dangote refinery has received a discount of close to $1 per barrel, saving up to $30 million in discounts,” he said. This makes many wonder what else he wants, particularly if he not selling cheaper fuels to Nigerians? Could it be that he wants to underprice the crude and overprice the product?

It is unconscionable and, indeed, sad, that the committee members are dragging the House into this murky, high-octane, cloak and dagger energy sector game. They have either unwittingly or deliberately inserted themselves into it through the quirky cover of legislative oversight. The dangers are obvious in a country sorely challenged by several existential threats, including the threat of foisting a monopoly on the oil and refinery business at the detriment of energy security in Nigeria.

The House of Representatives should certainly rise above the high-octane drama in the energy sector, as many other crucial constitutional issues are begging for attention.

Musa Eleojo, writes in from Warri, Delta State.