The plan to unbundle NNPC – The Sun

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.