Business - Business & Economy - News - Oil & Gas - October 1, 2021

Why NNPC Ltd may not achieve set targets, objectives in 5 years – experts

MEDIATRACNET

Oil and gas industry experts have expressed serious doubts about the newly established Nigerian National Petroleum Corporation Limited (NNPC Ltd) meeting set targets and objectives in the next five years.

One of the experts, Henry Adigun, who is also the Team Lead for the former Facility for Oil Sector Transformarion and Reform (FOSTER), criticised the recent composition of the new Board of the company.

The composition of the new Board, he noted, was more in favour of politicians than real technocrats and professionals who have a good knowledge and understanding of the intricate problems of the industry and technical knowhow on how to solve them.

“I am particularly concerned about the quality of the appointments into the Board of the company. I am very concerned that the board is more political at this point in time that it should ordinarily be, in view of the urgency to turn things around and the industry work for Nigerians.

“What should have mattered to thkse who made the appointments should have been to look out for people with the requisite understanding, experience and capability to attract quality level of good customer governance for NNPC to survive the next five years, because, for me, NNPC’s survival is vey critical for all of Nigerians,” Adigun said.

The NNPC Limited is a key creation of the recently enacted Petroleum Industry Act (PIA) 2021, signed into law by President Muhammadu Buhari.

Under the new petroleum industry law, the existing NNPC would transform into a limited liability company with a basic orientation of operating as an independent commercial business entity away from the government, driven by a mindset of profit-making.

But Adigun said the NNPC may not be able to realize these targets and objectives as envisaged by the Act if the right decisions are not taken by those who understand the issues and how to grapple with them.

The oil and gas industry analyst stated these in his presentation titled: ‘General Overview of the PIA 2021’ at a roundtable meeting to clarify the provisions of the PIA organized by the Centre for Transparency Advocacy in Abuja on Wednesday.

Adigun said key among the implementation decisions the NNPC Board would be expected to take to drive the operations of the company would be to avoid political sentiments and ensure transparency and accountability.

Adigun making his presentation at the event

Adigun who faulted the composition  said from an expert point of view The composition of the board as appointed by President Muhammadu Buhari may not be able to drive the company towards achieving set national objectives.

Part of these national objectives are raising the country’s daily crude oil production capacity from the current 2.3 million barrels about 3million barrels by 2022; increase the country’s crude oil reserve to about 40 billion barrels, as well as boost the capacity to derive more economic value from the country’s gas reserves than oil.

“I am not certain about NNPC’s future in the next five years, unless there are radical changes in the ways decisions are taken concerning its priorities.

“Looking at their profit and loss accounts published recently, looking at the current structure of the PIA, it is a difficult challenge to know where the company is going,” he added.

The NNPC as a company, he said, is not the problem itself, in terms of capacity and capability, rather its problem is its governance structure, bordering on transparency and accountability.

In an attempt to clarify the NNPC Limited’s mandate in the PIA 2021,  the Group Managing Director of the NNPC, Mele Kyari, said the main focus was to grow the base of all enablers to support a holistic economic development of the country.

Kyari who was represented by Lawal Musa, said a viable Mid and Downstream sectors would create jobs and ensure value addition from the extractive industry.

“When the value chains don’t connect, the entire economy is disconnected, because all key drivers of the economy rely on energy to thrive.

“If we get the operations of the industry  right, the royalty the country would have been waiting for will be the tax from one oil company. So, for us, this is about creating value to allied industries to thrive.

“If we can’t make concrete decisions between now and the next 20 years, Nigeria would have missed the opportunity to use oil to get out of oil dependence,” Kyari said.

The PIA, he said, would allow for a voluntary migration of the NNPC into an international joint venture (IJV), where both parties can sit on a table and make decisions.

“This is a major shift in how the hydrocarbon industry will be managed going forward,” he said.

The Executive Secretary of the Nigerian Extractive Industries Transparency Initiative (NEITI), Orji Ogbonnaya Orji, said the agency was happy with the passage of the PIA after so many years, saying the provisions separating policy from regulatory, administrative, and commercial roles was commendable.

Orji said the requirements for the disclosure of contracts and beneficial owners would enthrone a culture of fair, transparent and competitive bidding process, just as the provisions would support the implementation of key emerging policy issues in the EITI Standard.

Also, Orji said the provisions on energy transition, gas development, environmental standards and host community issues not only support EITI new policy objectives, but would enhance revenue and economic growth for Nigeria and directly transfer benefits to oil producing communities.

The NEITI boss however advised that the Gas Infrastructure Fund, Environmental Remediation Fund, Host Community Fund and Frontier Exploration Fund must be transparently utilized to achieve socio-economic and sustainable development in the industry.

The Executive Director of CTA, Faith Nwadishi, in her remarks said the roundtable was an opportunity to clarify the provisions of the PIA for the benefit of Nigerians, the media, and civil society organizations seeking information  to strengthen their advocacy campaigns and  engagement with the government, particularly on the implementation of the new law

She said special attention must be paid to Sections 83, 104, 105 and 108 which specifically provided for contract transparency, gas flaring penalties and natural gas flare elimination plan respectively.

Some participants at the roundtable

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