- By Bassey Udo
Aside from the balancing act of the politics of his reappointment, the real reasons Mele Kolo Kyari was retained as the Group Chief Executive Officer in the recently reconstituted Board and Management of the Nigerian National Petroleum Company Limited (NNPC Ltd) are more than one. Walk with me.
On assumption of office on July 8, 2019, Kyari, who, previously served as the Group Managing Director of the NNPC, before transiting to the current position, made a number of promises to Nigerians. He is yet to realise most of those promises. He has tried his best to do so, in the face of compelling realities. Some have been realised fully, others partially and on course, while others are still on the drawing board, or failed to materialise. As much as nobody is indispensable, removing him now would not only have jeopardised some of those initiatives and programmes, but others would have suffered setbacks or derailed permanently, therefore denying him the opportunity to realise most of those promises.
In the reconstituted Board and management, which took effect from December 1, 2023, Kyari’s mandate to drive the transformation process in the new NNPC was renewed, against the wishes of his detractors who wanted him removed from office.
The Chairman of the new Board is a one-time top executive of ExxonMobil in Nigeria, Pius Akinyelure, who would be performing his role in a Non-Executive capacity, along with seven others as members, the two Permanent Secretaries in the Federal Ministries of Finance and of Petroleum Resources, and a Chief Financial Officer.
However, in the euphoria of his reappointment, Kyari, perhaps overwhelmed by the outpouring of enthusiasm from his supporters and well-wishers in and outside the oil and gas industry, issued a disclaimer through his media team, to restrain any further issuance of goodwill and congratulations messages.
In the disclaimer, although observers described his reappointment as “a demonstration of the confidence reposed in him by the present administration,” Kyari, in his characteristic modesty, saw it with a different lens.
He said his reappointment was a renewed challenge pursuant to a commitment to stabilising the oil industry and enhancing service delivery for increased revenue for the country.
“The GCEO humbly appeals to stakeholders in the oil and gas sector and fellow Nigerians to support the company under his leadership to ensure the success of its mandate. The GCEO kindly requests all parties concerned to refrain from issuing congratulatory messages on his reappointment. He also emphasised the necessity for all stakeholders’ commitment to drive revenue growth and fortify resilience for the naira and the economy,” his Chief Corporate Communications Officer, Femi Soneye, said in a statement.
Sustaining the reforms in NNPC Ltd.
Shortly on his appointment in 2019, Kyari promised to institutionalise wide reforms in NNPC through the Transparency, Accountability and Performance Excellence (TAPE) agenda towards attaining efficiency and global excellence in the company’s operational processes in line with international best practices.
He said TAPE would open up the NNPC’s financial and operational systems to public scrutiny and develop the governance structures for its strategic business units to realise its goals and performance standards and corporate goals.
Pursuant to that agenda, Kyari published NNPC’s 2018 Audited Financial Statement. It was the first of such publication in 43 years. Although it showed a negative performance with a net loss of over N803.9 billion, it was a courageous starting point for both Kyari and NNPC.
In 2020, Kyari ensured the NNPC recorded another landmark, by publishing the company’s 2019 Audited Financial Statement. The report was a remarkable progress, with a significant loss reduction to just N2.3 billion, after declaring a Profit After Tax (PAT) for the year of N287 billion. The 2020 figures showed profit after tax of about N674.1 billion and profit growth of about N387 billion, or 134.8 percent, from previous year’s report.
Unconfirmed reports say there are glimmers of even better performance as the NNPC Ltd. prepares to publish another bumper Audited Financial Account for 2021 financial year, which would be used to satisfy one of the key requirements for approval of the enlistment in the capital market – achieving stability in NNPC’s leadership and ensuring continued profitable operations consistently for at least three consecutive years. Not retaining Kyari at this critical moment, the source said, would have thwarted that process.
Unfinished business of finding oil in the North
On assumption of office, part of Kyari’s promises was to see oil finally produced in the northern part of the country after several years of toil, sweat and search and multi-billion investments.
Kyari’s strength of conviction was, perhaps, anchored on the fact that it was geologically impossible not to find and produce oil from a region bordering the oil-rich Chad basin endowed with practically a similar sedimentary rock characteristics and have been prodicing oil in commercial volumes for years.
In his second year in office, Kyari mobilised the Nigerian Petroleum Development Company (NPDC), the upstream exploration and exploration subsidiary of the then NNPC, to re-evaluate and explore deeper into the oil wells drilled and abandoned by some of multinational joint venture oil companies, especially Shell Nigeria Exploration and Production Company (SNEPCo), in the Upper Benue Trough and the Gongola Basin in the country’s North Eastern flank, particularly the Kolmani River fields operated jointly by NPDC and Kolmani integrated oil field development project located in Alkaleri local government area of Bauchi State bordering Gombe State. The field is reputed to hold proven reserves of crude oil of about one billion barrels.
To drive the vision, Kyari, a geologist himself, led the NPDC drilling party, along with its joint venture partners, Sterling Global Oil, and New Nigeria Development Commission (NNDC) owned by the 19 States of Northern Nigeria, in the drilling operations from Kolmani Oil Prospecting Licenses (OPLs) 809 and 810.
On November 22, 2022, to Kyari’s credit, former President Muhammadu Buhari unveiled the first oil well in the North-East region.
Buhari’s unveiling of Kolmani Oil wells was one of Kyari’s promises kept, as part of his other promise to raise Nigeria’s oil output and national reserve to 3 million barrels per day and 40 billion barrels respectively by 2025.
Kyari is not resting on his oars with the unveiling of the Kolmani field development. Since then, he is promoting more frontier exploration activities across Niger, Nasarawa, Sokoto, Borno, Yobe, Adamawa, Bauchi and Gombe states, to expand the oil discoveries in more of the northern parts of the country.
Prior to the Kolmani milestone, the Petroleum Industry Act (PIA) 2021 was enacted in August 2022. The new law, which Kyari also played a major role in bringing it about, established a new set of legal, governance, regulatory, and fiscal frameworks for the oil and gas industry. The major fall out from the PIA was the transition of the NNPC into NNPC Ltd., a public liability company regulated under the provisions of the Companies and Allied Matters Act (CAMA).
With the new status, Kyari made another promise – to see the NNPC Ltd. listed in the Nigerian capital market as a quoted company. This newspaper understands this ongoing process is expected to finally materialise about the second quarter of 2024 after a shift from the previous 2023 deadline. Those familiar with plan say this was, perhaps, one of the strongest reasons the government considered Kyari was still needed to be around to pursue that plan to its logical conclusion.
Pushing Nigeria’s net-zero emission agenda
Another of Kyari’s promises was to mobilise the industry to ensure Nigeria attained global net-zero carbon emissions agenda by 2060. Nigeria is still on course on this, as Kyari is leading the NNPC Ltd. to vigorously pursuit the agenda.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) data puts Nigeria’s proven gas reserve base at over 208.62 trillion cubic feet (TCF).
Kyari promised to lead Nigeria to increase its gas reserves to 220 TCF in less than 10 years and 250 TCF thereafter.
Achieving the net-zero emission agenda was another important reason the government thought Kyari has to stick around. The agenda is anchored on global energy transition from fossil fuels to alternative renewable energy. But Kyari, through the NNPC Ltd and it’s allies, is driving Nigeria’s aspiration to develop the gas resources and create value to grow the country’s economy.
The focus is not only on developing the gas sector, but to diversify the country’s economic base, by executing a number of gas projects to realise the energy transition agenda.
To Kyari’s credit, the Nigeria LNG Train 7 project, which was on the drawing Board for more than 10 years finally kicked off with the final investment decision (FID) at a most difficult period.
Apart from leading its joint venture partners to take the FID at the peak moment of the COVID-19 crisis when the world was on lockdown, Kyari led the process for the Engineering, Procurement and Construction (EPC) contract to be signed with the SCD JV Consortium and affiliates – Saipem, Chiyoda and Daewoo, for the detailed design and construction phase of the multi-billion dollar project.
Also, Kyari is involved in the initiation of various turn-key gas projects to mobilise the country’s gas resources for supply within several domestic and international markets in Europe and America currently in dire need of alternative energy supply sources as a result of the ongoing conflict between Russia and Ukraine.
Some of these projects include the 614 kilometres Ajaokuta-Kaduna-Kano (AKK) pipeline system designed to bridge the economic divide between Nigeria’s North and South regions. The pipeline was conceived as a facility to convey over eight billion standard cubic feet (SCF) of gas produced from the oil fields in the Niger Delta for supply to industries in Kano and the adjourning states in the north.
As the GCEO, Kyari is also leading the NNPC Ltd. in the execution of some strategic regional integration and economic diversification projects, like the West African Gas Pipeline (WAGP) in collaboration with Togo, Benin and Ghana, to deepen gas supplies and utilisation within the Economic Community of West African States (ECOWAS) sub-region.The construction of the West African Gas Pipeline Expansion Project (WAGPEP) initiated by the ECOWAS) Commission, will extend the development of the Nigeria-Morocco Gas Pipeline (NMGP) for synergy between the two projects. The 681 kilometre long multi-billion dollar project was conceived in 2003 as a regional initiative to convey natural gas resources from Nigeria’s Niger Delta region through the Escravos-Lagos gas pipeline, for supply at off-take points at Cotonou, Lome and Takoradi in Benin, Togo and Ghana respectively, for power generation and industrialization.
In addition, Kyari is involved in the execution of the 474 million standard cubic feet of gas per day trans-regional pipeline system, which is an extension of the existing WAGP conceived as a new regional onshore and offshore gas system to deliver Nigeria’s natural gas resources to at least 15 countries in the West and North Africa. Construction of the 5,660 kilometres long NMGP starting from Nigeria, will traverse Benin, Togo, Ghana, Cote d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea-Bissau, Gambia, Senegal, and Mauritania, to end at Tangiers, a Moroccan port on the Strait of Gibraltar, with a spur to link the existing Europe gas pipeline through Spain.
The construction of the 4,128 kilometres long Trans-Saharan gas pipeline is also being spearheaded by the NNPC Ltd under Kyari along with its Algerian and Nigerien counterparts as a strategic investment to transport about 30 billion cubic meters of gas per year to the European market.
Originally, construction of the pipeline was to commence from Warri, Delta State in Nigeria and run about 1,037 kilometres to the northern part of Nigeria, through about 841 kilometres in Niger Republic, and 2,310 kilometres to Hassi R’Mel in Algeria. The ultimate destination of the pipeline will be a link point on the existing Trans-Mediterranean, Maghreb–Europe, Medgaz and Galsi pipelines, currently supplying Europe from the gas transmission hubs crossing the Sahel region at El Kala and Beni Saf on Algeria’s Mediterranean coast.
Imagine the disaster the country would be facing if the captain of a ship that is anchoring all these strategic projects were to have been tossed off the vessel midstream. Not retaining Kyari would have derailed, or seriously constrained the pursuit of these projects.
Fixing refineries; ending fuel subsidy
Some of Kyari’s promises that have not yet been realised exactly according to his initial timelines at his inception include repairing Nigeria’s four refineries and
removing subsidy in Nigeria’s petroleum products pricing template.
At his inception, Kyari promised to fully rehabilitate the nation’s four refineries in Port Harcourt, Warri and Kaduna by 2022; encourage more private sector involvement in domestic refining of petroleum products to facilitate Nigeria’s transformation from a net importer of refined petroleum products into net exporter of the commodity.
Although the plan is said to be ongoing, the deadline for the refineries rehabilitation and commencement of operations have suffered more than a couple shifts and postponements, leaving the country still dependent on massive imports to meet national demand.
A similar experience has been the case with the private sector involvement in the process. Although one or two of the private investors are reported to have commenced refining of petroleum products, the major one – the 650,000 barrels per day capacity Dangote Refinery – that offered so much hope, has delayed its scheduled commencement of operations till some time in 2025.
The subsidy removal issue has become a huge debacle that Kyari has to stay around to resolve.
Although full deregulation of the petroleum products market appears to have been established with the enactment of the PIA, subsidy is far from gone, despite pronouncements in official circles.
On May 29,2023, the retail price of premium motor spirit (PMS), otherwise called petrol, was about N187 per litre. But following the declaration by Tinubu in his presidential inaugural speech, the price of the commodity has climbed to the current price of between N640 and N680, contrary to what Kyari promised. But for the government face-saving decision to cap the price at the prevailing level, and freeze the growing subsidy component till further notice, Nigerians would have been paying for a litre of petrol at over N1000.
Most Nigerians say one of major reasons Kyari was retained may have been to allow him to still stick around a little long to sort out this messy issue.