• Fri. Mar 31st, 2023

    From NNPC to NNPC Limited: Matters Arising

    ByBassey Udo

    Jul 21, 2022


    In a typical Nigerian manner, the Nigerian National Petroleum Corporation (NNPC) threw a big party in Abuja last Tuesday to announce its transformation from a state-owned enterprise to state-owned commercial enterprise, that is changing from Nigerian National Petroleum Corporation (NNPC) to the Nigerian National Petroleum Company (NNPC) Limited.

    To many Nigerians, it is just a mere name change; just like when the Post & Telecommunications (P&T) changed to the Nigerian External Telecommunications (Net), that later changed to the Nigerian Telecommunications Limited (NITEL), same as when Electricity Company of Nigeria (ECN) changed to the National Electric Power Authority (NEPA), and later Power Holding Company of Nigeria (PHCN) PLC, both without making any meaningful impact in the lives of the citizens.

    Nigerians have witnessed too many of these unimpactful christening and re-christening ceremonies to be impressed. But to President Muhammadu Buhari and the executives in the oil company, NNPC Limited would focus on becoming ‘’a new, dynamic, global energy company of choice to deliver energy for the future’’.

    In other words, NNPC Limited would now be run like the international oil companies that are state-owned, like Saudi Aramco, owned partly by the Kingdom of Saudi Arabia and American oil investors (ARAMCO actually stands for Arab-American Oil Company) and PETRONAS Global, owned by Malaysia (Yes. That same Malaysia that reportedly borrowed palm fruits from Nigeria in the 1960s, and are now the world’s largest producer of palm oil).

    President Buhari was there at the Tuesday event, and noted the striking coincidence that played out about his role in the birth of NNPC and the latest transformation.

    Forty-five years ago, he, as Federal Commissioner in charge of Petroleum Resources portfolio, facilitated the establishment of NNPC under the military régime of General Olusegun Obasanjo.

    Now, here he was, an elected President, witnessing its conversion to ‘’an independent commercially-driven national oil company that will operate without relying on government funding and free from institutional regulation…’’. The ceremony was typically replete with pomp and glee. There were dances, singing and good speeches. A typical government function, full of promise and expectations.

    But I have my reservations about the new NNPC, and I do not, in all sincerity, believe that it would achieve much; not close to its well-run international peers, unless there is a radical departure from the usual. For as long as the Board, management and employees of NNPC Limited are the same as those that have been managing (or is it mismanaging) the NNPC, the organizational culture would remain unchanged, and so, this so-called transformation would become an effort in futility. There are so many deeply-rooted and entrenched interests in every section of the NNPC, and they have been there for so many years that they have become as ossified as Zuma Rock. The culture is anti-business, or at best civil-service like, with no orientation for profitability, as the organizational or individual goals. Any surprise that none of NNPC’s four refineries at Port Harcourt, Warri and Kaduna has been working at installed capacity in at least the last two decades. Yet, their workers are earning salaries every month and getting promoted every year.

    Most of the management staff of the NNPC are from a particular section of the country and they owe their positions to their religious and ethnic affiliations, rather than technical expertise and competence. A good number of the employees got their appointments, not through a competitive recruitment process, but because they were recommended by emirs, senators, governors or other influential military and government officials. Members of the Board of Directors are mostly senior politicians who represent either a geopolitical zone or a political interest. An appointment into the NNPC Board is a reward for your role in the political process. With all due respect to Senator (Mrs) Marjorie Okadigbo, she is the Chairman of the NNPC Board today because her late husband, Chuba Okadigbo, was Buhari’s running mate in the 2003 election! President Buhari does not forget a favour. I do not begrudge her benefaction. But suffice it to say that neither Aramco nor PETRONAS would be so generous in filling their Board positions.

    So, what should the company do differently this time? First, let me commend the Group CEO of NNPC, Mele Kyari, for dreaming big and aiming high; by spearheading this change. It is rare for long-serving staffers like Kyari to be transformational in mind and outlook. But right from his first day on the job three years ago, he’s been trying to make a difference. I therefore recommend that for NNPC Limited to succeed, Kyari and his management team should serve as interim management of the company for the next two years, during which a comprehensive overhaul of the place would be carried out, to be led by an international consulting firm. All of the senior and junior management staff should be replaced in the next two years with Nigerians headhunted and recruited from international oil companies like Shell, Chevron, Saudi Aramco (Yes. Many Nigerians are working there); Agip and the rest.

    Of course, the federal character of the nation should be maintained as much as possible, but without compromising competence, quality and standards.

    One of the reasons the IOCs thrive is because of their high-quality business ethics, principles, practices and processes.
    Take the Nigeria LNG for example. Shell is the operator of NLNG Limited, owned 51% by the federal government through NNPC. Although Shell is a minority shareholder, it provides the chief executive and most of the management staff.

    Initially, the CEOs were foreigners, but in the last 10 years or so, Nigerians, seconded from Shell, have been running the place. Hence, Shell’s business principles and practices prevail there. It is the reason NLNG is so successful that it earns over $100 billion in revenue and paid about $20 billion to the government as dividend and $9 billion tax last year.

    Take SEPLAT Energy, and First E&P as another example. These are the two most successful Nigerian-owned oil exploration and production companies at the moment. It is no coincidence that both are managed by former Shell executives who, of course, are using Shell business principles, modand processes. I know Shell a bit because I once served as its Media Consultant in the mid-1990s. NNPC Limited cannot or should not re-invent the wheel. The company should take the first correct step and replace its current staff with carefully selected competent Nigerians hired from the IOCs, both within and outside the country. It would be their lot to begin to build a high-achieving culture that rewards success and punishes failure.

    That’s when the real transformation would begin! But if the status quo is maintained, and business continues as usual, this transition would achieve nothing for the country.

    Etim, a media/PR consultant, lives in Abuja.

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