Wumi Iledare: NNPC Would Be Better Off With Professional Scepticism Rather Than Public Cynicism

Energy Expert and Petroleum Economist, Prof. Wumi Iledare, has urged the Nigerian National Petroleum Company Limited (NNPCL) to balance commerciality, energy security and its obligations to the federation, while welcoming the company’s audited financial report and calling for greater professional scrutiny.

Iledare, made the remarks in an interview with ARISE NEWS on Monday while reacting to questions surrounding NNPC’s reported profit, receivables from the Federal Government and the company’s energy security obligations.

He said the public must distinguish between professional scepticism and cynicism, arguing that NNPCL would benefit more from constructive scrutiny aimed at improving its operations.

“I want to look at the bigger picture, and your question is very legitimate. And even some of the professional scepticism is also okay. But we must always celebrate incremental performance, even though we may have to look at this audited report.

“We cannot lose sight of the commerciality, the public expectations, and the vision to the federation. But we must find a way to balance the three.

“Knowing fully well that commercialisation begins with good governance and accountability, I want to celebrate NNPC for at least making their books open and being also willing to listen to professional scepticism because of sustainability questions. So congratulations to them for doing the right thing as intended by the Petroleum Industry Act.”

Addressing concerns over the N11.2 trillion recorded as receivables from the Federal Government, Iledare said the figure should be examined within the broader context of energy security, profitability and sustainability rather than automatically being regarded as missing money.

“Energy security — what do we mean by energy security? You are talking in terms of the value derived from that N11.2 trillion. The magnitude must be questioned. And those are professional scepticism that NNPC is willing to look at.

“Accounts receivable is not necessarily missing money. Accounts receivable also can have implications with respect to profitability and sustainability.

“So the basic question then is, what did you derive from that N11.2 trillion? From a petroleum economic point of view, you could decide to spend money to produce an additional barrel or decide to spend money to make sure there is continuous flow of production from the asset that you have.

“The question you are going to ask yourself is, does that N11.2 trillion produce more value that wouldn’t have been produced if it was not spent?

“Yes, the sustainability of commerciality intent of NNPC Limited requires enough cash flow. But at the same time, there are security obligations that have to be funded.

“And this is where the government has to balance the funding of obligations that NNPC Limited alone can provide if the asset of government will generate the type of reward for the federation.

“Nobody is saying that you should not look at that number and ask the questions. And then you have to look at that account receivable within the context of the N7.2 trillion that is declared. This is very key if commercial sustainability of NNPC Limited is to be accomplished.

“So all of these questions are okay, but we cannot, in my opinion, be so cynical as not to see things from a bigger perspective.

“So I come here from an economic perspective, from the point of view of value maximisation and value optimisation, which will depend on operational efficiency and obligation to the federation that must be managed.

“Because if you don’t do that, then you’re going to lose a lot of value that would have been generated.”