PIB remains best option for Nigeria's oil sector – Ogbeifun

Cover of the PIB06 February 2014, Lagos – Former Deputy President General of the Trade Union Congress of Nigeria, TUC, Dr. Brown Ogbeifun, has said the Petroleum Industry Bill, PIB, remains the best option to move Nigeria’s Petroleum industry forward.

Ogbeifun, an ex-President of Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, argued that PIB would definitely add value to the country’s national hydrocarbons if passed and the sole beneficiaries would be Nigerians and Nigeria.

Speaking on whether the aborted planned sale of the public refineries was the best available option, in a chat with Sweetcrude, he said: “would have preferred other words in place of the word “sale” because that word means so many things to so many of the Stakeholders. First, the concept of Privatization is not a bad idea, but the modus of implementation in Nigeria runs fowl of all known positive virtues and values.

The harrowing experience of Nigeria Telecommunications Limited, NITEL, and Power Holding Company of Nigeria, PHCN, are the usual reference points by the Unions. This has left Oil and Gas Unions with mutual suspicion, cynicism and total loss of confidence in the privatization process. Secondly, privatization is not synonymous with job losses. But, what we find here is that once an enterprise is privatized, the motive of profit drives the primary instead of the secondary objectives. So we see excising of workers and contracting their jobs to labour contractors that the Unions refer to as pay masters. This further fuels the resistance of the Unions against government privatization process.

In all sincerity, government should blame itself for this very vicious and unending privatization spirals.”

“For whatever reason(s), government refused to implement the business model (Nigeria National Liquefied Natural Gas, NLNG, model) agreed with the unions for privatizing the refineries in 2004. This can be verified. This model runs like any other venture in partnership with technical, financial partners and the government.

Though government will have a stake in the venture, it does not have the overall controlling authority, which gives it authority and right to interfere in the internal affairs of the management of the holding company. The refineries under this model would have had a life of theirs and commercially managed. But government made a u-turn perhaps due to the advice of either its political strategic partners for purely selfish reasons or that of the interested buyers.

For instance, in the twilight of President Obasanjo’s second term, rather than implement the privatization process using the NLNG model canvassed by the unions to the investors, which would have at least kick- started a win-win option, the government decided to give away Kaduna Refinery and Petrol-Chemical Companies, KRPC, and Port Harcourt Refinery Company, PHRC, on wholesale. So the unions cried blue murder and fought hard to reverse the process. So, trusting government ever since has become impossible. Six years after, we are back to the starting block.”

According to him, “one can emphatically say that the unions were ready at a point to accede to a middle of the road option that will help remove the hands of government as the sole owner in running the affairs of the Nigeria National Petroleum Corporation, NNPC, and by extension that of the refineries. When NNPC was compared with other National Oil and Gas companies, it was discovered that unlike other commercialized oil and gas companies, the average turnover of Managing Directors in the International Oil Companies, IOCs were between three to five years. OANDO has had Mr. Wale Tinubu as its CEO for more than a decade. He has moved OANDO from a single window to multiple windows in the upstream, mid-stream and downstream. He was able to do this because of the continuity and the stability of his team.”

“But in the case of NNPC, the reshuffling of its top management is at will and almost on every other year by its sole owner (Government). This has had very serious negative impacts with some taking very many years to ameliorate. It has had not less than seven Group Managing Directors within a ten year period. The implications of this in terms of very high turnover of the top management that are the strategic planners at the Corporate level are dangerously enormous.

This also cascades to the Managing Directors and the Executive Directors of the refineries. Internally, it has very serious pension implications as those who would have been paying to the pension baskets are retired prematurely and the commencement of drawing pension well ahead of their retirements etc. Un-planned changes destroy succession planning, prevents talent management, causes policy sommersault, kills consistency in policy formulation and implementation; reduces investor confidence and breeds anxiety among staff as they do not know what to expect when once there are changes especially after every Presidential election.”

“Does it not worry us that the top management of NNPC virtually sleeps in the National Assembly week-in week-out with very grave consequences and implications for executive time management? What about the politics and intrigues as it was with the Central Bank of Nigeria, CBN’s, red flag on the $49bn theft it accused NNPC of? Do we truly appreciate what damage that did to the image of Nigeria, investor confidence and the NNPC?

All these continuously happen because NNPC is an agency of government and I do not think this is what the unions crave for. With this type of picture, privatization in whatever form will remove the bottlenecks and challenges, allow for stability in the internal dynamics of the refineries, expands the risk sharing among the financial, technical partners and government, the revitalization of the refineries to produce optimally thereby creating more employment opportunities and investments along the value chain.”

“The refineries currently operate under very difficult socio-economic environments with huge challenges, which majority of our people do not appreciate. Vandalism and tortuous long approval processes from above for major turnaround of the refineries are real challenges that cannot be wished away.

That is why the PIB is proposing the creation of a new National Oil Company with specific assets’ base. It also went on to make provisions for the deregulation of the downstream and further specified 30% divestment that will allow for accountability and full commercial orientation in refinery operations. This is almost in tandem with unions’ demands.”

The former TUC Deputy President-General is of the opinion that “though the multi-nationals have their fears about the PIB, such fears no matter how germane, should not stall the entire process. We can all find a common ground to smoothen the process of PIB passage. That is why it is in the National Assembly for Nigerians to look at and at the end fine-tuned by the law makers.

No country takes thirteen years to determine the end point of a reform of this magnitude and value. If our National Oil and Gas Company shall be a truly commercialized enterprise that should compete with the front runners in global Oil and Gas platform, then time has come for the National Assembly to move fast in passing the Bill. Without gainsaying, this Bill shall add value to our National hydrocarbons if passed and the sole beneficiaries are Nigerians and Nigeria.”

“The unions and Government on their part must now sit down and use the helicopter view in assessing and putting in place a strategy that will help this nation optimize its refining capacities. Maintaining the status quo, cannot be in the interest of this country and the workers themselves. The politicians that swore to make life better us would have failed us if their extraction and their colleagues in the National Assembly refuse to pass the PIB in this legislative year.”


– Vanguard

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