Oil and gas stakeholders differ with El-Rufai on NNPC

Yemie Adeoye 21 July 2015, Sweetcrude, Lagos – Oil and gas industry stakeholders have differed with Kaduna State Governor Mallam Nasir El-Rufai over his call on the federal government to scrap the Nigerian National Petroleum Corporation, NNPC.

NNPC Towers.

NNPC Towers, Abuja

Several stakeholders in the oil and gas sector, who spoke with SweetcrudeReports, though canvassed different views on the matter.

The Managing Director of a major oil servicing company, who spoke on the condition of anonymity, opined that the national oil company need not be scrapped as it is still strategic to the oil and sector operations, but rather needs to be restructured to meet current national and global economic realities.

According to him, there is urgent need for the private sector to come into the ownership structure through the instrumentality of the Nigerian Stock Exchange.

“I agree with Governor Nasir El-Rufai to the extent that NNPC has failed in its core mandate. The organisation has not lived up to the expectations for which it was set up about 38 years ago.

“The organisation currently runs like a parallel government and all the inefficiencies of government is embedded in there. If you take a deep look at Sonagol (the national oil company of Angola), you will discover that the NNPC is only scratching the surface as it concerns the supposed functions of a National Oil Company,” he said.

He said the reforms in the oil and gas sector should see the Department of Petroleum Resources, DPR, function as the only industry regulator while the government should privatise the NNPC and retain just about 20 percent, allowing private investors to own 80 percent of the corporation and also form the bulk of the new management.

The government should not be allowed to nominate the chairman or managing director of the reformed NNPC while DPR should be empowered and adequately funded and equipped to regulate the sector and wield the big stick if and when necessary, he said.

Other strategic business units of the NNPC like refining, gas, trading, engineering should all be unbundled, privatised and allowed to run independently, the source added.

“Culturally we are not as disciplined as the Brazilians, the Norwegians, Angolans, hence we need to strengthen the SBUs (strategic business units of NNPC) and allow them to compete effectively while the regulator (DPR) would also have been strengthened to act effectively as stipulated,” he stated.

Asked if the Petroleum Industry Bill, PIB, currently languishing in the National Assembly was not equipped to address this issue when passed into law, he noted that the fiscal regime as enshrined in the PIB was not investor-friendly and would chase out investment from Nigeria.

“The PIB was silent on the restructure of the NNPC.  The past government lost the opportunity of reforming the PIB and by extension the oil industry.

“Government really needs to hands-off oil business and sell off all its stake in the joint venture so it can concentrate on ensuring the flow of money back into the system while also concentrating on competitive taxes and royalties,’ he said.

In his own reaction the Group Chief Executive Officer of Oando, Plc Mr. Adewale Tinubu, while stated that the NNPC was too strategic to be scrapped, he said it needed to be capitalised so that it could raise its own funds.


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