Without prejudice to the possibility of any good that was intended in the decision of the Federal Government to make the Central Bank of Nigeria (CBN) take over the responsibility for crude oil sales proceeds from the Nigerian National Petroleum Company Limited (NNPCL), it must be clearly stated that the action is not legal in its application.
Although, as usual, of the current administration, little has been communicated to the public about explaining details of the decision.
According to what is publicly available, the President has issued a directive that henceforth, the NNPCL would submit receipts for crude oil sales to CBN for vetting and documentation.
Whatever may be the merit of the new arrangement, the presidential directive is a violation of the legal status of the NNPCL.
It is an arbitrary order capable of undermining the operational independence of the NNPCL.
By this order, Mr. President has wrested control of the finances of the NNPCL and donated the same to the Federal Ministry of Finance and the Central Bank of Nigeria.
This is an unprecedented act, without any legal or ethical basis. It is also a violation of the principle of due process in public administration.
State-owned enterprises are not subject to such arbitrary orders and have full control over their finances within the confines of their respective establishment laws.
The NNPCL is a creation of the Petroleum Industry Act 2021 (PIA), which was signed into law by the President of the Federal Republic of Nigeria on 16 August 2021.
The PIA makes extensive provisions for the formation, structure, governance, and operation of the NNPCL as an independent limited liability company in Sections 53 to 65 of the Act.
The government must, therefore, respect the provisions of the law and allow the NNPCL to run as an independent company based on sound commercial objectives and in line with international best practices and standard principles of corporate governance.
Only then would the new NNPCL grow into a formidable institution with track records, requisite technical and financial capacity, and readiness to operate in public space.
Any attempt to undermine the operational independence of the NNPCL will be a hindrance to any chances of attracting investments and attaining global relevance in the Petroleum Industry.
Let it also be stated that the Central Bank Act 2007 does not confer on the Central Bank of Nigeria, any responsibility for vetting the transactions of, or formulating and maintaining the internal controls and internal audits in state-owned enterprises, public or private.
The CBN should be allowed to perform its core functions as provided in the extant law.
To enhance transparency and accountability in the operation of the NNPCL, its bank accounts for crude sales proceeds (for example at Morgan Stanley) and the entire crude sales conversion circle can be trailed by Nigeria Extractive Industry Transparency Initiative (NEITI) and CBN.
Amongst other supportive measures to enhance transparency, the NNPCL board members can be better selected and reconstituted to include, if desired, representatives of the CBN and NEITI.
