NNPC Reform: Communication is the place to start
If there is one place the reform of the Nigerian National Petroleum Corporation (NNPC) should start, it has to be in the communication.
Part of the reform objectives, according to Ibe Kachikwu, the minister of state for petroleum resources who also doubles as the Group Managing Director of NNPC, is to overhaul the sector to align with the government’s decision to resolve the governance issues in the oil and gas sector and the NNPC in addition to ensuring that the corporation starts making profit by year end.
However, one of the most critical balancing acts the current management needs to do while embarking on the reform is to communicate right as there is little margin for errors given that the gulf of distrust between Nigerians and the state-oil company has widened over the years. It will take a lot of work to win back the trust.
As has proven in the past and recent times, any slight error by the NNPC in its communication translates to a huge cost to Nigerians and the nation’s economy. Nigeria, at this time can ill-afford policy somersaults and rebuttals especially from the corporation that superintend over single resource that fuels its economy.
A fuel scarcity made worse
It only took few hours after Ibe Kachikwu said that the current queues at fuel stations would persist till late May for chaos to happen in virtually all the stations across the country. Part of his statement which went viral overnight was; “One of the trainings I did not receive is that of a magician” adding that with the prevailing circumstances, it was even a “magic” that the stations were still getting some volumes of products they dispense to the public.
Even though the corporation through its spokesman, Garbadeen Muhammed responded immediately with a statement saying that efforts are in full gear to eliminate all extraneous factors which have so far impeded the free flow of petrol across the country, especially the issue of foreign exchange for oil marketers. The assurance came a bit too late. The damage was done.
While apologizing to Nigerians for the recent hardship in assessing petroleum products, the NNPC assured of normalization of the fuel supply and distribution system in the weeks ahead. The apology did not come without the spokesman decrying what it termed “misinterpretation’’ of an otherwise benign and sincere assessment of the fuel supply scenario by Kachikwu.
Unbundling vs. reorganization
At the recent Oloibiri Lecture Series and Energy Forum, organized by Society of Petroleum Engineers, Nigeria Council, Kachikwu said the NNPC would be “unbundled” into 30 profit-making companies with separate managing directors.
Shortly after, 6 new Group Executive Director (GED)/Chief Operating Officer (COO) were announced which signaled the beginning of the unbundling exercise. The development, however, resulted in a nationwide strike by the NNPC branch of the key labour unions in the oil and gas sector, the National Union of Petroleum and Natural Gas workers (NUPENG), and the Petroleum and a Natural Gas Senior Staff Association of Nigeria (PENGASSAN).
Lumumba Okugbawa, PENGASSAN Acting General Secretary Lumumba Okugbawa in a statement from the union said that government did not take into consideration an existing law that established the NNPC before plans were in place to unbundle the corporation.
“There is an existing NNPC Act of 1977 that set up the NNPC. This Act has many provisions that deal with structure and operations of the corporation,” Okugbawa said.
“For the government to do anything with the current NNPC, the Act must either be repealed or amended to accommodate the planned restructuring. If not done, it will equal to lack of respect for the rule of law on the part of the government”.
It took the strike by NUPENG and PENGASSAN which shut down the operation of the entire NNPC for days leaving trails of fuel scarcity and huge loss to the economy for Kachikwu to state that government has not unbundled the NNPC yet rather it was a re-organisation.
“NNPC has not been unbundled in the sense of breaking up NNPC into distinct institutions”, Kachikwu said.
Realistic timelines
On assumption of office as the GMD of NNPC, Kachikwu came up with the privatization mantra for the refineries before veering to various timelines when the refineries will go into full blast operations. By September 2015, he issued a 90-day ultimatum to the management of Warri Refining and Petrochemicals Company to commence full production at the facility.
“The Warri refinery will be back by the end of the work we are doing. First week of November precisely, there are some components of the refinery that are running now but we are focusing on the area where the bread and butter is,” he said.
Same month, he also disclosed that Kaduna Refinery will resume the production of Premium Motor Spirit, PMS (petrol), “within the next three months” adding that the Fluid Catalytic Cracking Unit, FCCU, and the fuel section of the refinery would be brought back to life within this period to ensure that Nigerians continue to enjoy uninterrupted supply of petroleum products.
None of these has happened.
FRANK UZUEGBUNAM