There is increasing demand to split the Nigerian National Petroleum Corporation (NNPC) into smaller, compact and profitable business units that can compete favourably with existing National Oil Companies (NOCs) and International Oil Companies (OICs). The consensus appears to be that the corporation, as currently constituted, is unwieldy.
It is in this regard that the recently announced plan to unbundle the NNPC is a welcome development. According to the Group Managing Director of the oil agency, Mr. Andrew Yakubu, the plan is part of the long-term strategy to prepare the corporation for optimal performance and competitiveness, in line with global trends. This is in addition to repositioning NNPC to be able to consolidate the gains of the expected transformation of the oil sector when the Petroleum Industry Bill (PIB) is eventually passed into law.
The unique challenges in global oil markets, especially the tremendous changes occasioned by the development of shale oil and gas resources in countries such as the United States of America, with attendant decline in oil imports from Nigeria, make new strategic thinking imperative. Even in Africa, threats of competition have become more real, with traditional oil producers like Angola ramping up production. Added competitive threats are coming from new oil producers such as Ghana, Mozambique, Tanzania, Kenya, Uganda and Ethiopia.
In this situation, we support any move that will make NNPC transparent, accountable and profitable. The agency needs to move away from its present status of an organisation that is constantly at the centre of controversies and scandals. It will be heartening if the planned unbundling of the agency will lead to the emergence of vibrant new exploration and production ventures.
If NNPC’s vision of becoming a world class oil and gas corporation is to be realised, the planned unbundling option, with a strong focus on business development capability, must receive top priority. We believe it is long overdue for NNPC to be split into compact, independent and more efficiently run outfits that should be strengthened to leverage on existing platforms. This is what is done in many member states of the Organisation of Petroleum Exporting Countries (OPEC) like Saudia Arabia, Indonesia, Iran and Libya.
It is necessary, therefore, for NNPC to re-orientate its staff, in particular, those in its Business Development Directorate, for the task ahead. But, the challenges ahead may not be easy without the passage of the PIB, which has been with the National Assembly for some years now. Among the numerous benefits of the PIB are the creation of a National Oil company with all assets and liabilities currently held by NNPC on behalf of the Federal Government, excluding the interests of NNPC in existing unincorporated joint ventures, transferred to it.
Oil producing communities would also benefit through the Host Community Fund, to which the PIB mandates all upstream petroleum firms in Nigeria to remit, on a monthly basis, 10 percent of their net profit.
Besides, the PIB is fashioned to create an efficient and effective regulatory entity, and promote transparency and Nigerian local content in the petroleum industry.
From these desirable objectives of the PIB, the planned unbundling of the NNPC is likely to lead to increased operational efficiency of its smaller and more independent successor units. Let all the issues delaying the passage of the PIB be resolved as quickly as possible so that the repositioning and unbundling of NNPC can begin as soon as possible.