FG RESTRUCTURES NNPC

FG RESTRUCTURES NNPC
• Corporation gets seven divisions, 20 subsidiaries
• Owes JV partners $5bn
The Federal Government has unbundled the Nigerian National Petroleum Corporation into seven divisions comprising 20 subsidiaries, the Minister of State for Petroleum Resources and Group Managing Director of the corporation, Dr. Ibe Kachikwu, has said.
Kachikwu, who spoke to journalists in Abuja on Tuesday, also stated that the subsidy regime on petrol and kerosene had not been terminated by the Federal Government. He, however, noted that what the government had done was to modulate the prices of the commodities based on the fall in crude oil prices internationally.
The minister, who spoke in details on plans and actions undertaken by the government, both in the oil sector and at the national oil firm, said, "The President has approved the final phase of restructuring of the NNPC.
"Under that phase, we have five business-focused divisions – the upstream, which you used to call E&P (exploration and production); the downstream; the gas power marketing, which is a pull-out from the E&P; the refineries group, which is basically for all the three refineries; and then of course the ventures for every other little company that is here and there, thrown all over the place that doesn't seem to have a sense of direction.
"So, the ventures will to act like the incubation centre where you nurture these companies through management, get them very efficient and then decide whether you want to spin them off to be on their own independently, or whether you want to throw them to the stock exchange. So, when I hear unbundling into 30 companies, that is not correct."
He added, "If you look at the companies that will come underneath these divisions, we have a total of 20 firms on the whole. We had about 15 before, so only about four or five are new introductions. These subsidiaries are already there, we only added a few. Among those earlier divisions that I've given you, we also have finance and services, and that brings it to seven divisions. But five are business-focused, while the others provide services.
"Why are we doing this? It is because quite frankly, the NNPC is very over-staffed. So, we have to create work in order to ensure that everybody who is in the system will be busy and earn money. And as we began to do that, we realised suddenly that we had adequate staff and we are not really as over-staffed as we thought initially. So, the principle of our restructuring, which was approved by the President, is that nobody losses their work."
The minister disclosed that chief executive officers had been appointed for the key business divisions of the corporation. They are: Bello Rabiu, Upstream division; Henry Ikem-Obih, Downstream; Anobor Kraga, Refineries; Saidu Mohammed, Gas and Power; and Babatunde Adeniran, Ventures.
Mr. Isiaka Abdulrazaq was appointed Group Executive Director, Finance and Accounts, while Isa Inuwa was named as the Executive Head, Corporate Services, NNPC.
Kachikwu said all the CEOs would report to him, being the GMD.
He declared that the NNPC had so much property that at times it was difficult to account for some of the corporation's assets.
He said, "We have so much property in Nigeria that sometimes we don't even know where they are. In some cases, we found out that some property had been encumbered and nobody followed up on them. This was because it wasn't a business, it was just an allocation to do an office, which didn't happen and so it was just there.
"Shell, for example, recently passed back to us a huge complex in Warri, which used to be their headquarters. And then, you have that and you have an entity, for example, the NPDC saying they want to build a head office."
The minister noted that the workers' unions had issues with the restructuring exercise, but noted that for now, the corporation was working with consultants and would meet the unions when the time was right.
On why the country was still experiencing fuel queues, Kachikwu said, "The reasons are really obvious. The NNPC was set up to bring in an average of about 50 per cent of the national consumption (of petrol); but as of today, we are doing literally about 100 per cent coverage.
"And this is because the major and some independent companies are unable to bring in products; some due to foreign exchange challenges, and some due to cash flow challenges. But we've given out the allocations to them to try and import as much as they can."
On the refineries, the minister said the government had started pumping crude oil to the facility in Port Harcourt, adding that the plant had commenced operations.
"The Port Harcourt refinery resumed operations just a few days ago," he said, adding that the Warri refinery was still getting crude oil through the use of vessels, which was too expensive and should be stopped once the pipelines were fixed.
"We hope that before the end of the month, the three refineries would have got crude and will begin to work. So, hopefully, that will soften the pressure," Kachikwu added.
He, however, noted that based on the configuration of the refineries, even if they all operated at 100 per cent capacity, they would only be able to produce less than 20 million litres of petrol in contrast to the estimated 40 million litres daily consumption in the country.
The minister said the government had expressed willingness to collocate with interested companies in developing refineries in Nigeria to meet the country's daily demand for petroleum products.
"On the whole, we must target a time frame of between 12 and 18 months to get out of importation. For it is not good for the country, it leads to loss of income to the government and create a huge amount of emotional backlash," he said.
Kachikwu stated that funding was a major challenge for the national oil firm's upstream sub-sector, adding that the country was owing about $5.1bn as cash-call arrears to International Oil Companies.
The minister said the government had a target of producing 2.4 million barrels of crude oil per day, up from the about 2.2 million barrels being currently produced.
He called for the replacement of some pipelines across the country, stressing that many of them were weak, which was why vandals found it easy to rupture them and steal petroleum products occasionally.
Kachikwu pleaded for the buy-ins of host communities in the protection of the pipelines, and noted that a lot of consultation was going on with those involved.
According to him, oil companies operating in the country now hold monthly meetings on issues affecting the sector, particularly on how to protect the pipelines and oil installations.
According to him, the government is working with the National Assembly on the Petroleum Industry Bill, and noted that some segments of the PIB would be passed in the next one year.
Responding to a question on whether the government had finally ended the subsidy regime, Kachikwu said, "The simple and honest answer is that we have not removed subsidy. We have not. What we have done is to use the price modulation to ensure that we don't have a subsidy cost, and I'm being frank here.
"We are doing price modulation and through efficiency, we've been able to knock out the subsidy component; and today, we have come to a point we are able to recover money instead of paying subsidy. So, we've gone from a subsidy obligation to a subsidy gain.
"Now, we intervene once in every three months; and so, by the first week of April, the next intervention will be due; and at that point, we may be tempted to reduce the price of petrol. And the essence of the modulation is that if the prices of crude increase, we will have what can be used to cushion the effect."
When asked if he would keep his post as a minister and the GMD of the NNPC, Kachikwu said the prerogative was that of the President, adding that when Buhari deemed it right to split the offices, it would happen.
-Punch

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