It appears that President Bola Tinubu seeks a new beginning for the Nigerian National Petroleum Company Limited. The impression comes after he recently dissolved the NNPC and appointed a new chief executive officer for the company.
Tinubu ousted all the members of the old board led by Mele Kyari. The new non-executive chairman of the board is Musa Kida. The Borno State-born engineer, who was a deputy managing director at Deep Water Services of Total Nigeria, replaced Pius Akinyelure.
The new CEO, Bayo Ojulari, was a managing director of Shell Nigeria Petroleum Exploration Company, the subsidiary overseeing its Nigerian deep-water investment and a vice president of Renaissance Africa Energy Company Limited, which recently acquired Shell’s onshore operations in Nigeria.
The new board includes an oil and gas expert, David Ige; a former NNPC executive director, Austin Avuru; a former MD of Seplat Petroleum; and Babs Omotowa, a former MD of Nigeria LNG Limited.
First, the new board members understand the industry, including its strengths and deficiencies, making them well-equipped to take the company to the next level.
Established on April 1, 1977, the NNPC is 48 years old. To many Nigerians, the company has underperformed and has not been able to compete with its global peers.
For three decades, its four refineries, with a 445,000-bpd nameplate capacity, did not operate. So, Nigeria resorted to importing petroleum products. This cost Nigeria dearly. The refineries are currently conducting minimal operations.
In comparison, Petronas of Malaysia, Petrobras of Brazil, and Aramco of Saudi Arabia have moved from being just national oil companies to big players in the oil business globally.
Petrobras is a publicly traded corporation. It operates in an integrated and specialised manner in the oil, natural gas, and energy industry. It owns 11 refineries in Brazil, with a total crude refining capacity of 1.85 million bpd.
There have been questions hanging over the level of transparency in NNPC operations and allegations of corruption surrounding the company.
There has been tremendous government interference in the company’s operations since its establishment to the detriment of Nigeria and the company itself. Thus, the operations of the company have been shrouded in opacity and appointments in the company have been heavily politicised.
The NNPC is punching far below its weight, and it is a glorified oil and gas trader and the caretaker of the Federal Government’s investments in the oil industry.
Instead of declaring billions of dollars in profits quarterly like its peers, it has incurred debt on behalf of the government, which it currently uses some share of Nigeria’s crude oil to pay.
Thus, the first task before Ojulari and the board is to work hard at turning the company around from a loss-making, debt-incurring government company to a dividend-declaring company.
To achieve this, the new board and management need to quickly get the company listed on the Nigerian Stock Exchange. Such a move will enhance transparency and shield it from undue interference by government officials.
The new board and management should get a reputable multinational audit firm to investigate the company’s books.
Another task is for the new management to decide on the four refineries. The refineries should be sold.
The NNPC currently has a workforce of 7,000. The board should examine this vast workforce that gets paid over half a trillion naira yearly.
The NNPC should drive more indigenous participation in the industry, especially in the deep-water play.
As the global oil industry shifts towards green energy, the company should have a clear-cut plan to transition to a green energy provider in the future.
The new board and management are expected to execute a plan through which the NNPC can become a global player like its peers.
