Buhari's War Against Corruption And NNPC's Wasteful Spending On Charter Flights

The recent media report that the frivolous practice of hiring jets for billions of naira by top executives of the Nigeria National Petroleum Corporation (NNPC) for routine trips is still continuing after it was frowned at by lawmakers is an act of impunity that should not be allowed to continue.

During the 7th session of the National Assembly, the matter caused a national uproar when on March 21, 2015 a member revealed during a House of Representatives session that the then Minister of Petroleum Resources Mrs. Diezani Allison-Madueke had spent N10bn to charter and maintain a jet for her personal use within two years. The House then ordered an investigation in to the matter. The minister failed to attend the committee hearing and instead filed a court action seeking to stop the investigation.

Six months later, the NNPC signed another contract for €6, 8000,000 (N1.6bn) for an executive jet hire for its top management staff and other VIPs. This contract which was approved by the Group Executive Committee (GEC) on October 15, 2014 also authorized the establishment of a fully funded escrow account to provide payment security to the contractor.

Media reports revealed that Salma-Forte Limited, a Nigerian registered aviation company and an affiliate of VistaJet Group of Austria, has been engaged to provide executive jet charter services with a challenger 850 aircraft. However, prior to the deal with Salma-Forte, Aero Contractors had managed the Corporation’s owned jets and helicopters.

Report of the forensic audit conducted by PricewaterhouseCoopers Limited (PWC) over the alleged ‘missing’ $20 billion from the accounts of the Nigerian National Petroleum Corporation (NNPC) between January 2012 and July 2013, shows that the corporation spends 46 per cent of proceeds of domestic crude oil revenues on overhead costs and subsidies.

The report, released by the Presidency on Monday, also warned that the NNPC operates an unsustainable model, warning that if this is not checked, “the corporation may have to exhaust all the proceeds of domestic crude oil sales, and may still require third party liabilities to meet costs of operations and subsidies, and may not be able to make any remittances to FAAC.”

This according to the report, shows that the corporation is technically broke, adding that the corporation was unable to sustain monthly remittances to the Federation Account Allocation Committee (FAAC), and also meet its operational costs entirely from the proceeds of domestic crude oil revenues.

While advocating a major restructuring, PWC recommended that the NNPC model of operation must be urgently reviewed and restructured, as the current model it has operated since its creation is unsustainable.

The auditors emphasized the need to review the NNPC Act, especially as it contradicts the requirement for the group to run as a commercially viable entity, especially as the Act appears to have given the corporation a “blank” cheque to spend money without limit.