NNPC-Towers1

Is NNPC Too Juicy for the Change Mantra to Handle?

…we all know that the importance of the Petroleum Industry Bill in an oil-dominated economy such as Nigeria cannot be over-emphasised. Petroleum accounts for more than 95 percent of Nigeria’s foreign earnings! And so any attempt to regulate this sector and make it more efficient should enjoy the participation of all. Precisely because the Bill is intended to liberate the sector from the stranglehold of corrupt stakeholders who have been the mega looters of our collective wealth, progress has been prevented and blocked.

Last week, Nigeria witnessed a lot of drama on the question of the reorganisation of the NNPC. First, we were all perplexed when told that over thirty independent companies would be created out of our favourite national behemoth. At the 25th Oloibiri Lecture Series and Energy Forum in Abuja with the theme, “Technological Advances in Hydrocarbon Exploration and Exploitation: Solutions to Global Oil Price Stability”, Dr. Ibe Kachikwu the Minister of State for Petroleum announced that: “For the first time, we are unbundling the subset of the NNPC to 30 independent companies with their own Managing Directors.” We all wondered why so many successor companies. When the formal announcement came, Dr. Ibe Kachikwu told the nation that NNPC had been unbundled into seven companies only, each with its management.

Within seconds, the two petroleum unions went on strike and the National Assembly screamed about the illegality of unbundling NNPC without passing a legislation to change the existing law. On Wednesday, the Minister made a big U-turn and clarified that no unbundling had occurred and meanings should not be read into his announcement. That the Federal Government had not unbundled the NNPC, and all that had been done was some supposedly ephemeral restructuring, and that the Nigerian National Petroleum Corporation (NNPC) remains what it was. Seconds later, the trade unions calmed down and went back to work while the National Assembly became happy once again. The one word that struck me watching the drama was sheer incompetence. The team had not done its homework; it was not ready and decided to move forward only to make a hasty retreat. Nigeria does not deserve this, especially as, on his appointment, Minister Kachikwu had announced his mission of a profound transformation, and the unbundling of NNPC as his most urgent agenda. What had he been doing?

President Buhari had headed the sector when there was still some decency in operations and therefore knows what should happen. I had expected the PIB to be submitted to the National Assembly within the first three months of his Administration, and I am at a loss why that had not happened and ad hoc reforms proposed without preparation and consultations are being presented in a very incompetent manner.

The drama reminded me about the only media chat the late President Yar’Adua had when he spoke about the great difficulty of restructuring the NNPC. President Yar’Adua had explained that the dossier of the Petroleum Industry Bill (PIB) had been on the president’s table for years and the most reluctant person to act would be the president himself who is the greatest beneficiary of the system as it operates. President Yar’Adua promised Nigerians that he would be the Nigerian leader to break the jinx, but unfortunately he did not survive to carry out his plan. The black box and cash cow that is the NNPC serves the interests of successive corrupt governments. It serves the interests of the strongest lobby in the country, the international oil corporations. It serves the interests of some of the richest Nigerians who have been looting Nigerian resources through the NNPC and it even serves the interest of the industry trade unions that benefit from crumbs falling off the NNPC dining table. The only group whose interests are not served are ordinary Nigerians.

Nigerians had voted President Buhari into office with the expectation that he would keep to his promise of combating corruption and restructuring the NNPC to serve the interests of Nigeria and Nigerians. President Buhari had headed the sector when there was still some decency in operations and therefore knows what should happen. I had expected the PIB to be submitted to the National Assembly within the first three months of his Administration, and I am at a loss why that had not happened and ad hoc reforms proposed without preparation and consultations are being presented in a very incompetent manner.

If the purpose of consultation is to maintain the level of rent by spreading it through a large number of successor companies, then we have simply multiplied rather than solved the problems. We need to prioritise the passage of a good PIB.

The oil workers, under the aegis of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) had argued through their president, Francis Johnson, that there were a series of problems that require wide consultations including – crude oil theft, pipeline vandalism, backlog of joint venture cash calls, poor state of refineries, corruption in the importation of petroleum products and subsidy payment to marketers, and abuse of Nigerian Content policy. What he did not add was the massive rent so many “stakeholders” were also benefitting from. If the purpose of consultation is to maintain the level of rent by spreading it through a large number of successor companies, then we have simply multiplied rather than solved the problems. We need to prioritise the passage of a good PIB.

The Petroleum Industrial Bill was first introduced by the Obasanjo Administration in April 2000 through the efforts of the Oil and Gas Implementation Committee (OGIC), which had the mandate to conduct a comprehensive reform of the oil and gas sector, for effective management, good governance, transparency and accountability. To this extent, the committee combined all the existing 16 different Nigerian petroleum laws into a single document, which has transparency as its thematic focus. Restructuring was key to the reform as improved transparency meant functions – regulatory, exploration, production, marketing, retailing and so own –had to be separated. Sixteen years later, there has still been no progress because so many of the stakeholders have been determined to do what it takes to ensure that reform does not happen. Yet, we all know that the importance of the Petroleum Industry Bill in an oil-dominated economy such as Nigeria cannot be over-emphasised. Petroleum accounts for more than 95 percent of Nigeria’s foreign earnings! And so any attempt to regulate this sector and make it more efficient should enjoy the participation of all. Precisely because the Bill is intended to liberate the sector from the stranglehold of corrupt stakeholders who have been the mega looters of our collective wealth, progress has been prevented and blocked.


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Jibrin Ibrahim

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