NNPC Limited: It is a New beginning

It is a new beginning  for Nigeria oil and gas industry for Nigeria in many ways. Congratulation to NNPC Limited. It is gratying to see the PIA provisions at wit.

This is not the first time, the FG has attempted to reform rebrand, rekindle and restructure the NNPC. It started from Petroleum Inspectorate in the 1960s, which metamorphosed into Ministry of Petrleum created and NNOC in the 1970s. In 1977 the NNPC as we know it before August 21 2022 came into into existence by the NNPC Act 1977. By PIA 2021, NNPC Limited emerges finally in July 2022, nearly a year after the Act.

That the immediate past NNPC played too much of agency role than NNOC is an understatement, hence the commercialisation intent of PIA 2022 by its framers. The process actually started in earnest in 2000 with the OGIC. But for some resistance by the NNPC itself. So what 9ja is celebrating in 2022 should have happened in 2008. But it is better late than never and is certainly worthy of celwberation.

Certainty, the dawn of a new oil and gas space in Nigeria has emerged again and the operationalusation NNPC Limited, in particular, comes with challenges and opportunities in this PIA 2021 Era.

First, NNPC Limited is now a commercial entity indeed. The primary mission is to maximise stakeholders’ economic value, just as Shell, Total and Chevron do. Unlike the old NNPC, which basically tends to maximise public policy in-kind value, PIA 2021 expects less agency roles for NNPC Limited, if not even zero agency roles.

To a large extent, NNPC has been the “cash cow” for the Nigeria Central Government in particular and the Federation in general, over the years, collecting oil and gas rents, spending on behalf of the federation, and offering other in-kind services to the FG with inappropriate payment for such services. The post PIA NNPC cannot legally do these agency roles without consequences under PIA 2021.

There are KPIs to justify investor’s continous investment and in-kind services without payment, are not part of the KPIs. Yes, the federation currentlly owns all the shares at the moment but only for a while. PIA demands selling shares to the public. Thus, the Federal Executive can no longer get involved in the structure and philosophy of NNPC Limited. No interference in manpower development and deployment, is henceforth not tolerable!

There are also other challenges ahead, including the disabusing public perception of NNPC Limited as “a new wine in an old wine bottle.” It is less likely than not that NNPC Limited can change this perception without a complete overhaul of the current governance structure beginning with its Board of Directors as currently constituted! Professional competence and not political expediency is required to maximise stakeholders value. This also calls for instituting senior and upper management team devoid of prebendalism.

The other challenge is how NNPC LIMITED will consciously come to terms with the fact that the agency role can no longer be in its radar. In that case, including having anything contact with FAAC going forward. Neither can it fail to pay royalty, taxes and levies on time. Thus, NNPC Limited needs a strategic rethinking of its manpower development and deployment strategy. Bysiness as usual approach must practice of old is incapable of achieving stakeholders’ expectations.

Further, anything that is out of alignment with PIA 2021 provisions is an illegality! NNPC Limited must be aware that the expectations of stakeholders now is obedient to the laws of Nigeria just as Shell, Total, Mobil and Energia do to maximise value for their stakeholders!

Finalky, the opportunities are huge in terms of creating value for stakeholders with the amount of gas resources and oil resources at its disposal. Patnership wit IOC and IPPG can now go more smoothy without political interference.

The human resources are huge as well but governance mentality has to change to harvest these resources effectively, efficiently, equitablly with optimal professional ethics. The implementation of PIA 2021 provisions on NNPC limited cannot be selective and neither will business as usual approach creates the type of value to attract investments as envisaged in the PIA.

My prayers are with the upper management of NNPC limited and I am hopeful that the PIA provisions would be adhere to for prosterity.

God bless the Federation called Nigeria!

Wumi Iledare, PhD, Fellow NAEE
Professor Emeritus in Petroleum Economics and Executive Director, Emmanuel Egbogah Foundation for Petroleum Polucy Advocacy!

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