FG to split NNPC into 30 firms next week

The Federal Government will next week announce a major overhaul of the Nigerian National Petroleum Corporation as well as the firm’s unbundling into 30 different companies, the Minister of State for Petroleum Resources and Group Managing Director of the NNPC, Dr. Ibe Kachikwu, has said.

According to him, the government has started resolving the governance issues in the oil and gas sector, adding that an overhaul had not happened at the corporation in the past 20 years.

Kachikwu, who disclosed this at the Society of Petroleum Engineers’ Oloibiri Lecture Series in Abuja on Thursday, also stated that the latest financial report of the NNPC for the month of January showed that the corporation’s losses had reduced from the over N160bn of some six months ago to about N3bn.

Explaining the restructuring by the Federal Government in the oil sector, the minister said, “We are starting first with simple governance issues; those that are not contentious, that are very rapid and that deal a lot with the transformation of the national oil company.

“For the national oil company, a lot of work is going on; I am sure some of you have seen the effects; but within the next one week, we are going to be announcing some real major overhaul of the system, one that hasn’t been done in over 20 years.”

Kachikwu added, “The effect of that will be to quite frankly unbundle the huge company into four to five main operational zones – the upstream, downstream, midstream, refining, and of course, every other company that is trending to the venture group.”

“But what is more important is that at the same time, we are also unbundling the subsets of these companies to close to about 30 independent companies with their own managing directors; and so, titles like the group executive directors, which you have been used to in the last 30 years, will disappear; and in place of those, you are going to have chief executive officers.”

This, he said, would make people take responsibility for their titles, as the positions must mean something and not administrative roles.

The minister said, “So, at the end of the day, a CEO of an upstream company must deliver upstream results, and we are very focused on that and along those chains. We are doing very dramatic things within the sector to bring the change and I am happy that we are gaining the cooperation of people within the industry; that is the only way we can guarantee sustainable career path for those in the industry.

“We are potentially moving in a direction where quite frankly for the first time in about 15 years, this company will be profitable; but that is a tip of the iceberg, because by the time these 30 companies are unbundled with their managing directors setting programmes, you are going to meet us in the active work space, we are going to be competing and we are going to make these things work.”

On the slump in global crude oil prices, Kachikwu said the government had been meeting with other oil exporting countries, and expressed the hope that the price of the commodity would soon rise to around $50 per barrel.

He said, “I don’t need to tell you about the price of oil, despite the shuttle diplomacy here and there. It is still very challenging but at least we are inching up, and for the first time, we are beginning to have both the Saudis and the Russians come back on the table.

“Hopefully, if the meeting that we are scheduling to happen in Russia between the OPEC and non-OPEC members happen around the 20th of March, we should see some dramatic movements. We are not likely going to see the prices of many years ago, but I think we are very humble today to accept that if we hit the price of $50, we will be celebrating and that is the target that we have.”

The minister further stated that focusing on gas policies was a key element for him, adding, “The target that I am setting for myself is a 12-month type agenda to try and arrive at some of these conclusions: some working with the (National) Assembly, and some working with policymakers and the industry.”

Kachikwu said he had been involved in so many conversations with oil companies and that the essence was to define stipulated contractual terms in the industry.