How Mele Kyari Brought NNPC Out Of Opacity To Transparency

By Kehinde Adewole

As Africa’s largest producer of crude oil, Nigeria churns out over 1.48million barrels per day. However, several factors obscure the true state of full production Capacity – these include illegal refineries, pipeline leakages and a lack of transparency in the award of exploration licenses, crude oil exports, and sales contracts between oil companies and the Nigerian National Petroleum Corporation (NNPC).

Playing the dual role of regulator and operator (as a joint venture partner with some oil companies), the NNPC can be considered both victim and perpetrator of institutional opacity. It has a backlog of unremitted oil revenue to the government, as outlined by the Nigeria Extractive Industries Transparency Initiative (NEITI) in a recent policy brief.

Since his appointment as the 19th GMD of NNPC, each time you listen to Mele Kolo Kyari, you get the inkling of a man who wants to be different. A man determined to take the path less travelled. Like walking alone, being partially deaf to the mob.

Mele Kolo Kyari obviously came to his new beat with state of mind. As an NNPC insider and industry person for over 30 years, he knew there was something miserably about the public image of NNPC. Public perception was horrible; A nest of corruption; a place of easy money; the epicenter of unpleasantness and sludge funds.

Previous leaderships of NNPC didn’t help matters. It is either they were caught garbled in the web of corruption or their sweltering story flourished after office. Whichever way, their stories stink! And so does that of the NNPC.

Opaque contracts entered into by NNPC, in the past, cost Nigeria several billions of dollars. One such case involves Dan Etete, Nigeria’s former Petroleum Minister. Etete awarded one of the country’s most valuable oil block (OPL 245) to his own firm, Malabu Oil & Gas. The block was later transferred to international oil companies, Shell and Eni under controversial circumstances. Only about 18 percent of the cost was paid to NNPC, while the rest was shared among government officials. 

The infamous “Malabu scandal” led to investigations in Nigeria, the United Kingdom, the Netherlands and Italy. These incidences of secrecy surrounding contract awards are rampant in Nigeria’s extractive sector and make a case for the country’s full commitment to the tenets of the Open Government Partnership (OGP).

A major purpose of Nigeria joining Open Government Partnership is to bring transparency, participation and accountability to the entire value chain of the corruption-prone oil and gas sector. Though disclosures alone are insufficient, if this Open Government Partnership commitment had been adhered to before, it would have contributed to the creation of an environment where oil swap transactions, which siphoned USD1.7billion from NNPC (and by extension the government and citizens), would have been harder to achieve.

The reality is that this amount laundered by just three individuals is equivalent to one-seventh of Nigeria’s USD7.7billion budget deficit.

NNPC has the capacity to collate and report the required full sales-level data and other financial and operational data, as seen from its monthly and quarterly reports. Also, NEITI’s audit of the extractive sector is frequently highlighted as an example of best practice by the EITI International Secretariat and NEITI continues to pilot a slew of initiatives, including a Fiscal Allocation and Statutory Disbursement Audit 2007–2011, which audited “utilization of revenue from the Federation Account to Federal, State and Local Governments.”

The publication of the NNPC’s financial and operational data seems to have been implemented outside of the Open Government Partnership process, but little has been done since to fully implement the OGP commitment.

The Transparency, Accountability and Performance Excellence (TAPE) initiative of Mal Mele Kolo Kyari earned the NNPC the Swift Reporters 2020 Most Accountable and Transparent Government Agency Award.

According to the Management of Swift Reporters, the Transparency, Accountability and Performance Excellence (TAPE) initiative of the GMD is to ensure all embrace the sweeping call for accountability in the use of resources entrusted to the top management of NNPC, under his leadership and so far, some of the successes recorded under the TAPE agenda include the publication of the 2018 and 2019 NNPC Audited Financial Statements (AFS).

On assumption of office, Mallam Mele Kyari pledged to open the NNPC financial books to the public as part of his management’s commitment to openness, transparency, and accountability in line with the global EITI principles.

Kyari published the audited accounts of NNPC for 2018 and 2019. Now, that is abnormal in an environment where being normal is to do the opposite: Don’t audit, don’t publish. Keep our secret to ourselves. It is almost crazy, insane. But Kyari is not crazy; never insane.

I recall that Nigeria Extractive Industries Transparency Initiative has been in the vanguard of the sustained demand for the NNPC to make public the financial statement of its operations and those of its subsidiaries.

Was he merely showing off? Why would he take the lid off what many people perceive as a furious pot of corruption? He explains why. Nigerian National Petroleum Corporation is owned by Nigerians, meaning that over 200 million Nigerians are the shareholders. This means he and his team at NNPC are employed by Nigerians to help manage the industry upon which the National Budget is benchmarked.

Therefore, the same shareholders have a right to know how their business is being managed; to establish whether the enterprise is running at a loss or profitably. Keeping the books open will place a great deal of responsibility on the shoulders of the managers.

Kyari is not afraid of responsibility and accountability and the records are there to show it. In 2020, Nigerian National Petroleum Corporation published the 2018 audited account. The result showed a loss of N803billion.

This got the management adopting smarter strategies to run lean and mean; to cut cost and turn the corner. It worked. By the time it released the 2019 audited financial statement, it had achieved 99.7% reduction in its loss status, cutting loss from N803bn in 2018 to N1.7bn in 2019.

This would never have been possible if Mal. Mele Kolo Kyari had not summoned the courage to go public with the 2018 financial statement.

The huge loss in 2018 made them to stop leakages, improve on forethought and introduce cost-saving measures.

Kyari says there is a rebranded Nigerian National Petroleum Corporation with a fresh panorama and obligation to transparency and accountability in consonance with the global principles of the Extractive Industries Transparency Initiative (EITI).

He has kicked a fresh breath of openness into the Nigerian National Petroleum Corporation. He has refused to follow the crowd. He has decided to do things differently; to account to his employers, Nigerians.

Kyari’s insistence to depart from the path of past GMD’s of the Corporation who kept the books sealed has already set him apart from the crowd.

And it sure would take him to places none of his predecessors has ever seen or been before. Kyari’s insistence to open the books to Nigerians is itself a constitutional fulfillment.

It takes courage to do this. As the Nigerian National Petroleum Corporation marks its 44th Years of existence, I commend Mal. Mele Kolo Kyari and his entire Management Team for taking the NNPC out of Opacity to Transparency.

Adewole Kehinde is the Publisher of Swift Reporters and can be reached via 0816624084, 08123608662.