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Expert proffers ways to restructure NNPC, oil industry

By BusinessNews Staff on July 22, 2015

Following the recent proposal by Kaduna State Governor, Mallam Nasir El-Rufai that President Muhammadu Buhari should scrap and replace the Nigerian National Petroleum Corporation (NNPC) with brand new fit-for-purpose entities, an industry expert, Mr. Dan Kunle has offered what he considers a better approach to restructuring NNPC and Nigeria’s oil and gas industry.
Kunle who slightly disagreed with the suggestions of El-Rufai, explained that contrary to what the governor had enunciated, the president may not need to scrap NNPC as the case may be.

He noted that with expected opposition to attempts to scrap NNPC, which El-Rufai also alluded to in his speech at the 2015 Wole Soyinka Centre Annual Media Lecture last week in Abuja, Buhari on the other hand can adopt a holistic and methodical restructuring of the NNPC, breaking its control and affinity to its subsidiaries.

According to him, the government can with smart approaches wean NNPC’s subsidiaries which include the Pipeline and Products Marketing Company (PPMC), Nigerian Petroleum Development Company (NPDC), National Petroleum Investment Management Services (NAPIMS), Nigeria Gas Company (NGC), National Engineering and Technical Company Limited (NETCO) and Duke Oil amongst others from the controls of the corporation.

He noted that since all of the corporation’s subsidiaries are duly registered as corporate entities under the Nigerian Companies and Allied Matters Act (CAMA), and fit to conduct businesses on their own, the government can smartly activate their corporate philosophy and grant them operational independence to survive or sink in the global business environment.

El-Rufai had in his speech at the media summit declared that the operations and practices at NNPC which he alleged are substandard, were crippling Nigeria’s growth aspirations and that the state oil firm be scrapped and replaced with new entities.

He had declared: “We need a mix of fresh strategic thinking and a firm commitment to reform. We need to define exactly what we want the oil industry to be and to achieve, and then define the structure that can best deliver it.

An efficient and productive oil sector, able to create jobs, spur industrialisation and earn more revenues requires that we tackle the monster that the NNPC has become.”

“This country can no longer afford to maintain an NNPC that arrogantly, unlawfully and unconstitutionally spends an unhealthy proportion of national oil earnings on itself.

We should replace the NNPC with brand new organisations that are fit for purpose- among others-a commercialised and corporatised national oil company and new industry regulators.

This new national oil company should be capitalised once and for all, and then freed to fend for itself like other national oil companies do, seeking its financing independently from the financial markets and paying due taxes and royalties,” El-Rufai added.

But Kunle in his appraisal of the governor’s positions, stated: “The government cannot just scrap NNPC, it will in fact be too difficult for it to do.”
“The best approach, I think and which will be a methodical and smart approach will be for the government to separate the subsidiaries of NNPC which luckily are registered companies in Nigeria with lives of their own to operate.

These companies; NGC, NPDC, PPMC and others are set up as limited liability companies doing business in the country. The government should corporatise them individually, set up interim supervisory or transitory boards for them and allow them live their own lives and that is about the best option available to the government now” Kunle added.

He indicated that with this approach, the government can then begin to naturally wind down the NNPC with minimal resistance, using the parliament which created it and then its headquarter taken over by the ministry as a regulator to the sector. This he said will see the NNPC naturally die with less propaganda about the government’s actions.

[ThisDay]

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