When former Group Managing Directors of the Nigerian National Petroleum Corporation (NNPC) met at a one-day meeting with the current Group Managing Director of the Corporation, Dr Maikanti Kacalla Baru, and the current Minister of State for Petroleum Resources, Dr Emmanuel Ibe Kachikwu, one thing was on their mind; that the rots in the Corporation have become a major source of concern, which they want the government to act fast on.
Held on Saturday September 3, 2016 at the Transcorp Hilton Abuja, Dr Baru during the meeting presented the status of the Corporation and the oil and gas industry, while also presenting his 12 Business Focus Areas towards putting the Corporation on the path of growth and profitability.
The GMD and the former GMDs jointly reviewed the current state of Nigeria’s Oil & Gas Industry, deliberated on ways to resolve issues militating against the progress of the sector and recommended measures to move the sector forward.
During the brainstorming session, they expressed serious concerns on the declining production level and its attendant consequences on the environment and the nation’s revenue.
They further agreed that if the current situation remains unchecked, it could lead to the crippling of the Corporation and the nation’s oil and gas sector, which is the mainstay of the Nigerian economy.
Following their deliberations, the former GMDs identified some key challenges including insecurity, reputation of the NNPC, state of the refineries, products supply, joint venture funding, frontier exploration services, pension, revenue base and the Corporation’s debt profile.
It was agreed that insecurity is threatening production and damaging the Niger Delta environment. They argued that there is the urgent need for government and security agencies to refocus as well as engage the various host communities as well as established social and traditional structures to develop an actionable partnership framework toward finding a lasting solution to the present unrest.
They expressed concerned about the increasing negative perception of the Corporation by Nigerians, especially in terms of opaqueness and accountability. They therefore called on the Corporation to educate Nigerians on NNPC activities as a commercial entity managing the nation’s assets in trust.
The former GMDs advised that the refineries should be rejuvenated using the Original Equipment Manufacturers (OEMs). Also, the refineries must be restructured to operate as an Incorporated Joint venture (IJV) similar to the Nigerian Liquefied Natural Gas (NLNG) model with credible partners having requisite technical and financial capabilities.
They, however, commended the NNPC for resolving the fuel supply crisis and urged the Corporation to emplace measures that would ensure sustenance of seamless supply of petroleum products nationwide. They also noted that the PMS price cap of N145/litre is not congruent with the liberalisation policy especially with the Foreign Exchange rate and other price determining components such as crude cost, Nigerian Ports Authority (NPA) charges etc, remaining uncapped.
The former GMDs also advised that funding of JV Operations should be the first line charge to oil revenue to ensure sustainable production and reserve growth. They endorsed President Muhammadu Buhari’s steer for sustaining exploration activities in the frontier basins particularly the ongoing efforts in Chad Basin and the Benue Trough. They therefore advised the GMD to pay priority attention to the Chad Basin where promising prospects are recorded.
They also noted that for effective functioning of any National Oil company (NOC), the technical components of the country’s Exploration & Production (E & P) must be integrated as part of the country’s NOC. They therefore posited that NAPIMS being the technical component of Nigeria’s E & P, and not just an investment vehicle, must remain with and managed by NNPC. Taking NAPIMS out will make NNPC an ineffective NOC.
On the current Petroleum Industry Bill (PIB) which proposed the incorporation of NAPIMS and taking it out of the NNPC, they jointly posited that such action will inhibit the effective functioning of the NNPC as a National Oil Company (NOC). This will make NNPC to operate at a different level compared to its peers in other OPEC Member Countries. While the former GMDs have no issues with incorporation, they strongly advise against taking NAPIMS out of NNPC.