18 November 2012

Nigeria: Ribadu Oil Report Wanted Oil Thieves Prosecuted - Task Force Member

Photo: Vanguard
Mallam Nuhu Ribadu


Lagos — Human rights activist and maritime lawyer, Dr Olisa Agbakoba, was a member of the Nuhu Ribadu Petroleum Revenue Special Task Force (PRSTF). In this interview, he revealed what transpired among members during their sittings and how the team uncovered monumental mess in the nation's oil and gas sector. Excerpts:

What are the difficulties faced in collating and reconciling the data?

There was no difficulty faced in collating and reconciling the data of the report. I think the media just focused on the wrong aspect of the report. We were, at least, a 20-member committee. We were given six terms of reference. Also, when you have committee of diverse backgrounds, the approach would be a little bit different. Our task was not to probe figures of who is stealing what, as wrongly speculated in the media. Our broad task was to understand the oil and gas industry and discover whether there were better ways to manage Nigeria's hydrocarbon, and to what extent we could we enhance the revenue by blocking the leakages.

In doing that, we understood that there are lot of inefficiency and lack of capacity in the way government manages the oil and gas industry. So our broad recommendation was to shake up the Nigerian National Petroleum Corporation; free it from government's control, privatize it, put it on the Nigerian Stock Exchange, like the Petrobas and Petronas, and make it a really viable private sector-driven industry. Once we do this, all the issue of corruption in the sector would go.

Our broad strategy was to ask what caused the inefficiency of the industry. Why don't we have the local refineries working? Who is causing this? Is government control necessary? We said whoever is the Petroleum Minister should have nothing to do with the operational control of our oil and gas industry and that we needed to have a strong regulator, not what we have at present in the Department of Petroleum Resources.

We recommended three key things: Minister should focus on policy; private sector should drive the oil and gas and that we should have a strong regulator. For instance, in Nigeria's oil and gas industry, you will be surprised that in our filling stations we still use deep stick (ruler) to check volume output, whereas it should be metre. In this age, it is terribly shocking!

We also found that the DPR did not have the capacity to check the multinational oil companies because the oil companies have advanced and well-trained people, as against the basic level of the officials of DPR. There is no way the officials of the DPR can monitor them. When they tell oil multinational what we are producing, we felt that there is a lot of loss and we didn't believe them because we rely on the Shell of this world to tell us what we are producing. We noted that at the end of the day, the oil multinational will tell us here is your change. That was terrible. You can see that the reconciliation of figures was the final output.

It is unfortunate that this small problem would overshadow the report. There were two camps. Nuhu Ribadu on one hand, a substantial number of the committee members on the other hand. We all agreed that there was a lot of money owed to the government. Nuhu's approach was immediate action because he is an investigator. We can see that these people have stolen. But I am a lawyer; I believe in Rule of Law. I say, look why don't we finish our report and then we can say these are the people we have found liable. Nuhu's response was, 'who have we ever caught?! We keep doing Rule of Law and people who stole keep walking free.' He is right. Our position is also right. And it didn't cause quarrel, although there was disagreement. We agreed that when Ribadu goes to present the report he will refer to those issues, but he didn't. Steve Oronsanye now brought them up. But I had wished that didn't play out because that aspect coloured what very good findings.

I'm not happy that Doyin Okupe tends to politicize the issue. The correct approach to the issue is very easy. Whatever the approach the two have should be presented to the Presidency. That is mature enough so that we can reconcile everybody. Steve and Nuhu are not saying that the report is not authentic. It is just a slight disagreement.

How cordial did the task force function?

We all worked in harmony. I was there all through.

How true is it that many members didn't participate?

It was well attended. Oronsanye attended about four times because of other national assignments. Except for the little disagreement among the members over differences in approach, I didn't stop interacting with members. I played jokes.

What is the cause of the disagreement?

The disagreement was as a result of different private approach. We all agreed that there was a lot of outstanding revenue and that many people were not paying what they ought to be paying. We discovered that many oil traders were duping NNPC because they were getting direct allocation to sell our crude oil. But they do not have the qualification because they were middlemen and there is no way they should sell our crude because we needed to sell direct to the refineries. The issue was, how do we deal with them? Nuhu Ribadu's approach was that we should deal with them immediately. My approach was let's make our findings and that these are the people owing the government and then go against them. It wasn't a personal disagreement but a positive one.

How did the task force resolve it?

We all agreed that we have done good work and that we needed to harmonize our positions. After about five hours, we agreed that we were not probing. We needed to tone down the language of our report. We all accepted. We shifted the language of the report so as to make it more readable, but still convey the essence of the report that we are very concerned that Nigeria's hydrocarbon assets was not thoroughly managed. We also agreed, as a result of the concern from some members, that it was safe to say some of the figures had not been verified because some of the operators invited didn't come.

Did the task force seek clarifications from NNPC?

In fairness to NNPC, they gave us lots of information. We found that NNPC was badly run, not because they didn't know what to do, but because the NNPC is the 'Central Bank' of the government. For instance, NNPC under the direction of former President Olusegun Obasanjo invested in Swaziland Sugar Company. The King of Swaziland then approached Obasanjo that he needed support.

You see, NNPC gets to fulfil any government extra-budgetary requirements. Therefore, NNPC has no resources because it is always being drained of cash.

The same NNPC that is cash cow is not enjoying the funding of the federal government. NNPC is always drawing up huge budget so it cannot fund its operation. NNPC, as we know, does not have any direct crude oil operation. It has a number of arrangements with multinational oil companies.

The most usual is called the Joint Venture Agreement (NNPC has 60 percent; the multinational oil companies have 40 percent). Because NNPC has no skill and does not know what the companies are producing, they just tell NNPC take your own. NNPC couldn't pay the cash call to fund the Joint Venture, so the multinational oil companies say since the NNPC couldn't pay, let us have the Modified Carry Arrangement. The oil company would fund the project 100percent.The NNPC was being short-changed because it does own the oil wells; it only manages them. The arrangement between the federal government and NNPC is terrible. Government has absolutely no skill. It is like a man who has houses and does not realize it.

So Nigerians oil revenue base is in tatters. We made all the findings and recommendations on how to review it and make NNPC be a real in cash cow as you have in Brazil, Saudi Arabia and Malaysia. That is why I am not happy that this report is not getting the correct attention. If NNPC is allowed to truly manage our oil, we will be making about N20 trillion a year. We are making about N5 trillion yearly now. For us to make money from the oil and gas industry, Nigerians must control it. We recommended that we should have a National Oil Company that understands how to manage oil.

How did you collate the report? Did you have any expert guide?

Yes, we had a consultant. The consultant worked to assist in highly technical areas. We broke into various sub-committees. The various backgrounds we have helped us to play our roles very well. For instance, I was the Chairman of Legal Sub-Committee because Oil and Gas Maritime is my field. Together with my members, I was able to understand what plays out in the sector in terms of law and order.

We recommended what I will call an EFCC for the oil industry because the graft therein was so huge that we are losing between 25 and 30 percent of our oil to theft, which cost us between $7 billion and $10 billion yearly. That is more than the national budget. In order to reduce the level of the theft, we said it was necessary to have a special agency that focus on the oil and gas industry. We had the Managing Director of Galaxy Backbone. His work was to look at the efficiency and coordination in the NNPC.

Do you know that the NNPC has no IT backbone? They don't know how much they generate because all the platforms are different. So, we recommended a uniform platform. The work was done by Gerald Ndukwe.

Revenue issue was done by the former Director of KPMG. Her work was ploughing the loopholes. NNPC brought all that we requested for and she had a full examination of their books and records. They went to DPR. We had people who understood the industry in the committee. We had an Accountant, like Pastor Ituah Ighodalo. We had CBN and Ministry of Finance directors; we had a director of MRS Oil and Gas among us. So all these findings were supported by government agencies.

How would you react to the allegations that your committee's work was shoddy?

Those saying that are talking rubbish. The fact that there was a disagreement between Nuhu Ribadu and Oronsaye does not mean that we didn't do our work well. The economy can grow from $5 trillion to over N20 trillion a year as a result of our report, and this shows that it was not shoddy. Let me underscore the fact that corruption is just one component of revenue loss. The first reason for loss is that we have illiterates in our oil and gas industry - people who have no capacity and ought not to be there, in the first place. Second is that we do not control our international oil and gas companies. Third is the inefficiency that lead to revenue loss. Fourth is corruption.

How do you want the report to be handled?

Implement it, that's all! Implement it!

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