By

Luke Onyekakeyah

If there is any landmark achievement recorded under the incumbent Muhammadu Buhari administration, the unveiling of the new Nigerian National Petroleum Company Limited (NNPCL) passes as one. This is a historic and long awaited reform that Nigerians had craved for over the years. The unveiling, according to the Group Managing Director and CEO of NNPCL, Mele Kyari, would be performed by President Muhammadu Buari in Abuja.

Presented as the largest corporate entity in Africa, the NNPCL will replace the hitherto all encompassing non-performing behemoth the Nigerian National Petroleum Corporation (NNPC). Unlike its counterparts elsewhere such as the state-owned Brazilian multinational corporation in the petroleum industry PETROBRAS and the Saudi ARAMCO, the NNPC remained a major cash-cow for corruption. Rather than help build a strong virile economy by propelling development, Nigerians gained nothing as the economy nosedived, which explains the calls for a reform.

Created under the new Petroleum Industry Act 2021 (PIA), the defunct Nigerian National Petroleum Corporation has transited to a new corporate firm that was incorporated by the Corporate Affairs Commission (CAC) in September 2021 as a fully fledged business enterprise. While the management under Mele Kyari was retained, a new board to run the company was set up led by the board Chairman Senator Margery Okadigbo.

The Petroleum Industry Act, 2021 (PIA), which was signed into law in August 2021 introduced significant changes to the legal and governance framework, administrative processes, regulatory and fiscal terms, and host community engagements in the oil and gas industry.

Despite being a major source of revenue, Nigeria’s oil sector, sadly, lags behind other sectors in terms of GDP contribution to the detriment of the economy. Over the years, Nigeria’s economic performance had been unimpressive and had not matched other major oil producing OPEC countries. Nigeria, unfortunately, may be the lone poor country within the OPEC cartel. If implemented diligently, the PIA will help facilitate Nigeria’s economic development by attracting and creating investment opportunities for local and international investors.

Thus, under the new dispensation, NNPCL will no longer be under government control. The new oil company will henceforth operate like other business concerns in the oil industry such as Shell, Chevron, Seplat and others, with the sole aim of making profit. There would be no funding from government anymore; instead, the company is expected to make profit to benefit Nigerians represented by the Ministry of Finance and Ministry of Petroleum Resources. The new company is owned by Nigerians by virtue of the PIA and the profit is expected to leverage Nigerians.

At the centre of corruption in Nigeria is oil and at the centre of oil in Nigeria is the old NNPC. The pervasive corruption in the organization explains why Nigerians benefitted nothing from oil. If corruption must stop in Nigeria, it has to do with a reformed NNPCL and the way it is managed. The way oil is managed has to do with the structure and management of the NNPCL. Over the years, the NNPC had served the interest of the Federal Government and its cronies. But this has got to stop under the reformed NNPCL that would henceforth be accountable to the people. The other private oil companies in Nigeria are not deep in corruption like the NNPC.

By operating under the Companies and Allied Matters Act, 2020 (CAMA), the new company cannot afford to be reckless without being sanctioned appropriately. This is unlike the old NNPC that could commit all manner of infractions without sanction or punishment. All the people who stole billions in the NNPC virtually went scot free. The new NNPCL cannot operate like that anymore.

The new NNPCL is expected to be a very active player in the industry. Like other oil companies, it would be actively involved in oil exploration, exploitation, refining and marketing activities. Moreover, it is expected to play a leading role in producing the needed technical manpower for the country’s oil industry. There are other peripheral functions like pollution control and abatement it would engage in which the old NNPC was not doing but which NNPCL would now be engaged in. The old NNPC failed to do all this because it was originally established as a rent collector without getting involved as a principal stakeholder in the Nigeria oil industry.

The NNPC lacked technical capacity needed in the oil industry. It goes to suggest that if the joint venture partners were to hands off, the corporation would be crippled, and yet, little or nothing was done to remedy the situation. The economy would suffer irredeemably since oil is the backbone, providing about 90 per cent of the of the country’s foreign revenue. As it were, the NNPC would serve no useful purpose if the JV partners were to cease operation and there was no other royalty to collect.

Now that the new NNPCL has birthed on the path of reform and commercial framework, there is need to revisit the outcome of the Crude Oil Sales Tribunal of 1980, which included a series of reforms meant to instill more commercial approach into its operations. Thus, in 1988, the corporation was split into several subsidiaries that constituted the operational structure. The subsidiaries are: National Petroleum Investment Services (NAPIMS), Nigerian Petroleum Development Company (NPDC), Nigerian Gas Company (NGC), The Products and Pipelines Marketing Company (PPMC), Integrated Data Services Limited (IDSL), Nigerian LNG Limited (NLNG), National Engineering and Technical Company Limited (NETCO)

Hydrocarbon Services Nigeria Limited (HYSON), Warri Refinery and Petrochemical Co. Limited (WRPC), Kaduna Refinery and Petrochemical Co. Limited (KRPC), Port Harcourt Refining Co. Limited (PHRC), Eleme Petrochemicals Co. Limited (EPCL.)

It is noteworthy that some of these companies are not wholly owned by the NNPC but operate as JV concerns like the NLNG. There was move to privatize the refineries which has not materialized before the new dispensation. There are hardly any of the companies managed under the old NNPC that operates optimally as a profit-making venture.

At this point, the new NNPCL should consider adopting global best practices to make its operations and services beneficial to Nigerians. The following recommendations should be considered for adoption:

The Federal Government should re-define ownership of the country’s oil and gas resources given Nigeria’s gross underdevelopment and mass poverty. At present, Nigerians have no share in the oil and gas benefits. Foreigners and their Nigerian collaborators in government and political offices share the oil proceeds.

Once the ownership is redefined under the new law to include Nigerians, there is need to enact a new law similar to the indigenization Decree of 1979, to increase the equity holding of Nigerians up to at least 70 – 80 per cent. Out of this, Nigerians should be given half while the Federal Government retains half.

With Nigerians owning up to 50 per cent equity share, the NNPCL’s operations would be fully a commercial business concern and no more as a government-owned company that is a liability.

The new NNPCL should be quoted and traded on the floor of the Nigerian stock exchange. That way, the company would be required by law to operate transparently like other publicly quoted companies. Its books of account should be audited and made public. Lack of transparency and accountability had been the bane of the NNPC.

Finally, the NNPCL should engage in core oil and gas operations. It should involve in all aspects of petroleum industry including exploration, production, refining, marketing transportation and distribution as contained in the original mandate of corporation. Under the new law, NNPCL should divest itself from being a passive non-performing royalty collector to a full-scale business concern to leverage Nigerians and propel national development.