New NNPC Must Be Run Effeciently To Succeed – Stakeholders
Company opening new vintages for partnerships – FG
Sequel to the successful transition of the Nigeria National Petroleum Corporation (NNPC) to a limited liability company yesterday, some stakeholders in the petroleum industry said for the new company to thrive it must be run efficiently.
According to them, the new company, strictly guidstill ed by extant CAMA regulations, will now translate into a more efficient, slimmer and national oil firm, which is able to take independent decisions.
Economist, writer, and public affairs analyst, Dr. Tope Fasua said, “I believe that the idea of NNPC Ltd is transitional. The final destination may be to go fully public as a Plc and allow Nigerians to buy shares. I don’t see how the mere change of name will cause the needed kind of change except there is an immediate plan to allow the company to work as a truly private entity. This will require staff rationalisations and proper corporatisation.
“No private company sets out to run at a loss and every staff must justify their pay. If the turnover is not enough to carry the staff size and emoluments what they need to do is to let people go. If they intend to run the private company like they’ve always run the old entity the entire experiment will fail woefully,” he said.
As expected, the new NNPCL will serve as a holding company for all its subsidiaries, over a dozen of them, in the post-PIA era, rightly placing staff towards proper productivity
They argued that the NNPC is still tied to the apron strings of the federal government. They said most of the employees are workers of the Nigerian government, citing that as a commercial entity, it should be possible for the company to source its own expertise, consultants and staff from anywhere without the Nigerian government imposing the constraints of ethnicity and federal character, a situation they fear will remain
the status quo for the unforeseeable future.
Chief executive officer, Anthill Concepts Limited, and member of the Board of Economists, NATIONAL ECONOMY, Dr. Emeka Oengwu said the NNPC is still in the state of the old order because being a public quoted company, some shares should have been sold to the public so that people can begin to buy into the new structure and, based on that, the nation would begin to have a proper CAMA-operated company hinged on director-shareholding arrangement, which is not the case at the moment.
He called attention to the fact that some states had gone to court because their interests were not captured in the new NNPC share structure. He said he sees a company still being owned largely by the government. He cited that he thought the price of fuel would have been driven by market forces, as opposed to the newly-introduced price of N179.00, since a limited liability company is basically dealing with investors’ funds.
An energy expert, Henry Adigun, expressed concern that the company is currently keeping thousands of redundant staff, especially those in the refineries. He stated that though the company is transiting, months of transition mode did not address the loss making entities in the company.
Also, economist, Prof. Segun Ajibola, said it is now important for the NNPC to take courage to imbibe the culture and ethos of a private sector-led business, focusing on the primary objective of profit.
The executive director of Order Paper Nigeria, Oke Epia, said, “I’d like to see how the new company deals with the moribund refineries on which taxpayers’ monies are expended in billions of naira. I’d also like to see how it commits and abides by environmental, social and corporate governance (ESG) principles and global best practices relating to energy transition.”
He expressed anxiety over how the company would deal with a board that is perceived to be politically heavy in composition and inclination.
In an article, public affairs analyst, Dr. Reuben Abati noted that in a deregulated regime, the state has no control over price. It can only regulate quality. Under a privatisation regime, the state can regulate, but the entity is controlled by its shareholders.
“The fundamental thing is that a private entity is after the maximisation of profit and minimal cost. What has happened to the NNPC is commercialisation, not privatisation. But don’t get it twisted: NNPC still remains in the public sector. That is why it is still called Nigerian National… The only difference is that as a commercial entity, it will now have to pay more attention to its profit and cost centres.
“The NNPC of old ran a Nigerian-factor regime where some characters thought access to political power and influence granted them automatic control over the resource management company. Such a system would not be acceptable under the new model of doing business. That has to change forthwith, to send the strong signal that it is indeed no longer business as usual.
“Secondly, NNPC shareholders are the Ministry of Finance Incorporated (MoFI) and the Nigerian Treasury, which are both government entities. NNPC says it will send debit and credit notes for services rendered to demonstrate its own accountability and commitment to EITI principles. MoFI can claim that it represents the Nigerian people. What will NNPC Ltd do if the government fails to pay – this same government that does not pay electricity bills or ASUU salaries?
“Nonetheless, the NNPC as a commercial entity can only sucunveiling ceed as much as the federal government wants it to. As long as the NNPC is government-linked, there will be issues. For the NNPC to succeed, it needs to function under a government that understands the meaning and implications of profit and loss. There is a need for deep reform, for the people’s overall benefit. The meaning of the new dispensation is that NNPC would have no option but to send debit notes to the federal government because the company won’t be able to hide the gaps in its balance sheet.
“The Buhari government does not have this profit and loss orientation mindset that is required to birth a new NNPC. The responsibility for that would have to be taken up perhaps by a new government. We can only hope that the would-be next president of Nigeria, whoever he turns out to be, is thinking of this, from both an economic and national security perspective.
“A food for thought is the position that in the long run, the NNPC must be privatised. Its board must not be a political board; it must be a commerce-oriented board. The experts must be allowed to do their job, not politicians, seeking rent. NNPC shares must be sold directly to the public as a company under the Companies and Allied Matters Act (CAMA),” he said.
However, the chairman/CEO of the International Energy Services Limited (IESL), Dr. Diran Fawibe, noted that the new development remained a positive step. According to him, himself and those who saw the creation of the national oil company would be delighted to see the company perform at its best.
Meanwhile the federal government has described the new Nigerian National Petroleum Company Ltd (NNPC Ltd.) as a new dawn in the quest for growth and development of Nigerian oil and gas industry.
Chief Timipre Sylva, Minister of State for Petroleum Resources, made this known on Tuesday at the unveiling of NNPC Limited to the world at Presidential Banquet Hall, Abuja.
President Muhammadu Buhari unveiled the new NNPC Ltd, while Sen. Margerey Okadigbo, NNPC Board Chairman, decorated him with the new lapel of NNPC logo.
The NNPC Ltd will operate as a profitable commercial entity and declare dividends to its shareholders.
The company will demonstrate higher level of performance and accountability to continue to win the hearts of its over 200 million shareholders.
The unveiling of NNPC Ltd. is a new dawn in the quest for the growth and development of the Nigerian Oil and gas industry, opening new vintages for partnerships.
Sylva, in a remark said a new dawn was ushered into Nigeria’s oil and gas industry on August 2021 when the president signed the Petroleum Industry Bill into law, making it the historic Petroleum Industry Act 2021 (PIA2021), after two decades of dashed hopes.
“One of the magnanimous provisions of the PIA, is the transition of the NNPC into a fully commercial entity, which will be a Limited Liability Company incorporated under the Companies and Allied Matters Act (CAMA), to be known as the Nigerian National Petroleum Company Ltd,” he said.
The minister, however, saluted the president for his unparalleled leadership, steadfastness and unalloyed support toward ensuring that the country’s oil and gas industry was on a sound footing to meeting the energy needs of a fast-changing world.
Speaking on the high expectations and optimisms with the of the NNPC Ltd, he said no doubt that the leadership of the brand new company was super-charged to meet the high expectations.
He recalled that while the country was waiting for the PIA, Nigeria’s oil and gas industry lost about $50 billion worth of investments.
He said between 2015 and 2019, KPMG states that “only four per cent of the $70 billion investment inflows into Africa’s oil and gas industry came to Nigeria even though the country was the continent’s biggest producer and the largest reserves.”
He assured Nigerians that with the PIA assuring international and local oil companies of adequate protection for their investments, the nation’s petroleum industry was no longer rudderless.
“The PIA avails us the golden opportunity to strengthen our institutions, improve our regulatory and fiscal frameworks and attract the much-needed investments,” he said.
He commended the president for demonstrating unshakeable commitment of emplacing the entire Nigerian oil and gas industry on the path of growth, profitability and prosperity.
Chief executive officer of the NNPC Ltd, Malam Mele Kyari, in his welcome address said the company was striving to be among the world’s leading energy company.
“This is a new day, a new era and a new opportunity to upscale our relevance in the global energy community as Africa’s largest energy company, endowed with the best human resources found anywhere in the world.
“NNPC Ltd is positioned to lead Africa’s gradual transition to renewable energy by deepening natural gas production to create low carbon alternatives and possibly change of energy at home and around the world.
“Our drive for organisational sustainability is hinged on our renewed commitments to partnerships that delivers to all; we aim to be the global energy company of choice,” he said.
Kyari further said the new NNPC plan to have no fewer that 1,500 outlets from the existing 547.
“We have taken a strategic mandate to achieve energy security for our country by running an expansion plan to grow our fuel retail presence from 547 to over 1500 outlets within the next six months,” he added.