NNPC: Unbundling or restructuring?
The Minister of State for Petroleum Resources, Ibe Kachikwu, during the Oloibiri Lecture in Abuja, this month, said that the Nigerian National Petroleum Corporation (NNPC) would be split into five regional corporations and 30 affiliate companies, as part of the ongoing restructuring at the national oil company. The minister was also quoted as saying that the positions of Group Executive Directors (GEDs) would be phased out under this new arrangement.
Within a week of the pronouncement, Kachikwu announced that President Muhammadu Buhari had approved the restructuring of the NNPC into seven new divisions. Under the new structure announced by the minister, NNPC will have five core new divisions comprising the upstream, downstream, refining, gas and power, and the ventures groups. Two other groups, finance and services were also created, while the number of NNPC’s subsidiaries was expanded from 16 to 20.
Workers of the Nigerian National Petroleum Corporation (NNPC) under the auspices of the two major unions, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), and the National Union of Petroleum and Natural Gas Workers (NUPENG), responded immediately with a nationwide strike; protesting against the Federal Government’s restructuring of the state-run oil firm. The branches of both unions initiated the action, which started with the total shutdown of operations at the corporate headquarters of NNPC. They said they decided to stoutly oppose the move because it was capable of sending a wrong signal to the investment world. As a result, the protest paralysed activities in the corporation.
The National Assembly also stoutly opposed the government’s unbundling of the NNPC. Both the National Assembly and the workers accused the Federal government of violating the law establishing the NNPC.
According to them, the corporation was established through the Nigerian National Petroleum Corporation, NNPC, Act of 1977. The NNPC Act specifically states that the Act or any part thereof can only be altered, changed or otherwise amended by the Act of the National Assembly. CAP N123, laws of the Federation, 2004 also states that the NNPC is a creature of legislature; the NNPC Act or any part thereof can only be altered, changed or otherwise amended by an Act of the National Assembly.
In a swift response, Kachikwu, stated that government has not unbundled the NNPC yet, adding that what the corporation did was re-organisation. According to Kachikwu, “we have five business entities focused on business: Upstream, Downstream, Refineries, Gas and Power that were there before. There were about 17 subsidiaries in the system. Some were active because they were in public space. The pipeline and depot aspect were drowning the business. The NNPC is still a whole. There is nothing new that has happened. NNPC has not been unbundled in the sense of breaking up NNPC into distinct institutions.”
The Petroleum Industry Bill (PIB) was meant to be the legal instrument for reforms of the oil and gas industry. Rather than introduce plans outside the bill, the government and the national assembly should expedite action on ensuring that the PIB, which is germane to the development of the nation’s oil and gas industry is passed without further delay.
The Minister, Petroleum Ministry and the federal government, need the support of Nigerians to solve the myriad of problems facing the country’s oil and gas industry for the best interest of Nigeria. Acting unilaterally or against the law is not the best way to go. The federal government must work with the National Assembly to pass the PIB, so that a comprehensive restructuring of the opaque oil company can be achieved.