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NNPC, FG criticizes over $1.5 billion loan

By on January 10, 2013
Andrew Yakubu, NNPC GMD

Andrew Yakubu, NNPC GMD

The Nigerian National Petroleum Corporation’s (NNPC) plan to obtain a syndicated loan of $1.5b has been condemned by economic experts and analysts.

Former World Bank Vice President, Dr. Oby Ezekwesili has also condemned the development, saying it was unnecessary and not transparent.

Ezekwesili aired her view on twitter yesterday, backing the Senate, which was also against the move, saying it was not aware of the decision.

A Lagos based practitioner, Femi Falana (SAN) called on the National Assembly to probe NNPC.

The report was originally reported by Reuters, while the NNPC spokesperson Mrs. Tumini Green, said they have finalised all arrangement but the loan has not been collected yet.

It was however gathered that President Goodluck Jonathan sanctioned the move.

The NNPC spokesperson said, “The loan has not been obtained yet. It is still being worked on. This is a clear business transaction and it is done in good faith. If you owe somebody, you have to look for how to pay. So we are looking for money to pay our debts.”

Ms Green said the loan was important if the NNPC was going to stay in business, adding that the cooperation needed to earn the trust of its business partners.

“Why would anybody not want us to pay off our debts, especially when it is done legitimately? I don’t think it is right,” she added.

Sections 6 (1)(c) and 8 (1)(2) of the NNPC Act states, “The corporation, in fulfilment of its duties, can enter into contracts or partnerships with any company, firm or person, which in the opinion of the corporation will facilitate the discharge of the said duties under this Act.

“Subject to the other provisions of this section, the corporation may from time to time borrow by overdraft or otherwise howsoever such sums as it may require in the exercise of its functions under this Act and the corporation shall not, without the approval of the National Council of Ministers, borrow any sum of money whereby the amount in aggregate outstanding on any loan or loans at any time exceeds such amount as is for the time being specified by the National Council of Ministers.”

Managing Director, Financial Derivatives Company (FDC), Mr Bismark Rewane, also said the move was acceptable. He defended NNPC’s borrowing, saying, “If the NNPC does not borrow and pay its foreign creditors, our (Nigeria’s) credit rating will go down and this is not good for our financial institutions and the country,” he said.

However, the Chairman of Senate Committee on Media and Public Affairs, Senator Enyinnaya Abaribe, said, “Under the law, no government agency can borrow money without the approval of the National Assembly.”

Senate Committee chairperson on Petroleum (Downstream Sector), Magnus Abe, said no record of such was brought before the National assembly.

Dr. Ezekwesili, a former Minister of Education said the development in the NNPC was wrong and the lack of transparency and financial recklessness was overbearing now and needed to be checked urgently.

“What?” she exclaimed. “Counter Trade in 2013 to pay commodity traders opaque debt?

“This level of elite parasitism that has been the hallmark of our oil sector is fatal. It’s unsustainable.”

Dr. Ezekwesili, pioneer head of the Budget Monitoring and Price Intelligence Unit, known as Due Process Unit as well ridiculed the Federal Government for permitting what she described as the “Federal Republic of NNPC,” wondering: “Why this administration allows the idea of a “Federal Republic of NNPC in a Democratic Nigeria in 2013?”