A Review of the Nigerian Energy Industry

Purging NNPC of dead wood

18 August 2015, Lagos – In furtherance of the ongoing restructuring by the Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Emmanuel Ibe Kachikwu, the new helmsman should purge the corporation of dead wood and those employed through the back door.  Ejiofor Alike reports

Dr. Ibe-Kachikwu
Dr. Ibe Kachikwu, GMD, NNPC

Since Dr. Emmanuel Ibe Kachikwu took over as the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), he has left no one in doubt that he is determined to reposition the corruption-ridden state-run company into “a lean, efficient, and business-focused organisation” for greater efficiency and accountability.

Shortly after assumption of office two weeks ago, Kachikwu commence the restructuring of the corporation with the retirement of all eight Group Executive Directors (GED), in a sweeping move that has since affected more senior executives within the last one week.

The affected GEDs, who were the first to go, include Mr. Bernard Otti, GED Finance and Accounts; Dr. Timothy Okon, acting GED Exploration and Production, who also doubled as Coordinator Corporate Planning and Strategy of NNPC; Mr. Adebayo Ibirogba, GED Engineering and Technology; and Dr. David Ige, GED Gas and Power.

Others are Ms. Aisha Abdurrahman, GED Commercial and Investment; Dr. Dan Efebo, GED Corporate Services; Mr. Ian Udoh, GED Refining and Petrochemicals; and Dr. Attahiru Yusuf, GED Business Development.

Few days after the removal of the GEDs, Kachikwu slashed the number of directorates in the corporation from eight to four and retired 38 top management
staff, reducing the number of top management staff from 122 to 83.
Of the 58 senior management staff that were appointed/promoted, 12 were recruited or poached from the private sector, a tradition that was initiated by Kupolokun based on the recommendation of the World Bank, which had identified dearth of competent manpower as the bane of the corporation.

Kupolokun had embarked on the recruitment of NNPC staff from the international oil companies (IOCs) but he could not recruit the number required under the World Bank recommendation before he was fired by the late President Yar’Adua.
Kachikuwu, however, said his latest actions were in line with the Federal Government’s aspiration to transform the Corporation into a lean, efficient, business-focused, transparent and accountable national oil company in keeping with international best practices.

The appointments include Dr. Maikanti Baru, Group Executive Director, Exploration & Production; Isiaka Abdulrazaq, Group Executive Director, Finance & Services; Mr. Dennis Nnamdi Ajulu, Group Executive Director, Refining & Technology; and Dr. Babatunde Victor Adeniran, Group Executive Director, Commercial & Investment.

In the same vein, new Company Secretary/Legal Adviser and Managing Directors were also appointed for the Strategic Business Units. They are: Chidi Momah, Group General Manager, Company Secretary & Legal Adviser; Esther Nnamdi Ogbue, Managing Director, Pipelines and Products Marketing Company (PPMC); Engr. Chinedu Ezeribe, Managing Director, Warri Refinning & Petrochemicals Company (WRPC).

Others are Babatunde Bakare, Managing Director, Nigerian Gas Company (NGC); Inuwa Ibrahim Waya, Managing Director, Hyson; Abubakar Mai-Bornu, Managing Director, Nigerian Petroleum Development Company (NPDC); and Ladipo Fagbola, Managing Director, NNPC Retail.

Others include Rowland Ewubare, Managing Director, Integrated Data Services Ltd (IDSL); Modupe Bammeke, Managing Director, NNPC Properties; Abdulkadir Saidu, Managing Director, Duke Oil; and Dafe Sejebor, Group General Manager, Nigerian Petroleum Investment Management Services (NAPIMS).

Kachikwu has since consolidated on his ongoing task of restructuring the NNPC with a recent retirement of 38 senior managers.

The downsizing, which saw the exit of all senior managers who were billed to retire between now and December 2016 is also a cost-saving measure, according to a statement by the spokesman of the corporation, Mr. Ohi Alegbe.

To inject fresh blood into the corporation, Kachikwu, with the approval of President Muhammadu Buhari, went further to appoint new Group General Managers (GGMs) to man some of its Divisions.

Some of the new GGMs include Mr. Mele Kyari, Crude Oil Marketing Division (COMD); Mr. Ahmadu Sambo, NNPC Oilfield Services; Dr. Surajdeen Bola Afolabi, ITD/SAP; Mr. Zubair Aliyu, NNPC Capital; Mr. Dafe Sejebor, Nigerian Petroleum Investment Management Services (NAPIMS); Mrs. Kemi Akitoye, Human Resources Division; Mr. Godwin C. Okonkwo, Finance; Mr. Bello Rabiu, Corporate Planning Division; Mr. Anibo Kragha, Treasury; and Mr. Dalhatu Makama, Shipping (Nidas & Nikorma).

Others appointed are: Mr. Samuel Ndukwe, GGM, Power; Mr. Mike Balami, GGM, Accounts; Mr. Yusuf Matashi, GGM, LNG; Mr. Rabiu Suleiman, GGM, Engineering & Technology; and Dr. Olubunmi Oyetunde; GGM, Medical.
More heads to roll
As part of activities aimed at restructuring the corporation for better performance and accountability, Kachikwu has stated that more purges were on the way.
Speaking shortly after a recent meeting with President Buhari behind closed doors at the Presidential Villa, Abuja, Kachikwu said the restructuring would affect all levels of the corporation with the new GEDs and managing directors taking the exercise to the lower cadres.

“Things have been done wrongly and things need to be done differently. We are doing a lot of work in terms of repositioning, restructuring, getting the right personnel in key places and setting a culture of accountability and service delivery so that the new NNPC that you are going to see will be a different institution altogether,” he said.

He revealed that after the personnel aspect must have been done with, he would
order for a proper forensic audit covering 2014 and 2015.

According to him, the whole process would lead to a new look NNPC within five to six months.

“The restructuring will be complete. I have done the first three layers, from the GEDs to the GGMs and general managers. You are going to have a lot more now. The GEDs and the GGMs will take it to the next layer, which is the lower layer. The whole idea is to go back to being able to look at your appraisals; and how well have you done in the job? If you have done very well, how do we elevate you to a position where you can offer more service? If you have not done well enough, we can retrain you and if you have not done well enough and there is no possibility of retraining you, we will let you go.

“The NNPC is not a public service. It is a corporation and we run like a company generating money for the people of Nigeria. And so, that whole concept of ‘anything goes’ should stop. And this is the first stage of that whole process.”

Three-pronged restructuring
Kachikwu has also revealed that pursuing what he called a three-pronged process in the restructuring of the corporation.

“It is three-pronged process that I am pursuing. There is a people aspect, which we are dealing with now. There is a process aspect. And after placing the people at the right places, you are going to get a forensic audit done, that will be able to say to you, ‘this is the state of the company.’

“We are going to put processes and control in place. We are going to do retraining and repositioning and then, we are going to re-engage our majors and minors, all those who are active in the sector, for us to work as a team to take Nigeria forward. It is going to be the process stage.

“The final stage will be the business stage, which will be looking at all the existing contracts. Are they good? Are they okay? Do they need to be re-kitted and redone?
“We will look at the Production Sharing Contracts (PSCs). What should we do, going forward? We will look at the challenges posed by reduced balance sheet as a result of $40 or $50 per barrel oil. What do we do to energise recovery and income growth so that government will have money to work with?

“It is a very intensive work; very calibrated work. A lot of us are not spending time
sleeping but over the next five to six months, you will begin to see a new NNPC. A new process of oil administration in the country and obviously, giving fillip to Mr. President’s dream of taking the oil industry back to where it should be.”

The dead wood
As Kachikwu continues to restructure personnel, stakeholders said he should purge the corporation of all the dead wood and redundant workforce, as well as those who used their political contacts to secure permanent employment through the back door.

Workers that do not have job schedule should be shown the way out in this ongoing restructuring.

All appointments and promotions that did not follow due process should be reversed to boost staff morale and promote professionalism and integrity.
NNPC currently has at least four categories of staff – permanent; contract; temporary and support staff.

The members of permanent staff constitute the regular and core pensionable workforce with the highest remuneration.

This category of staff also enjoys regular training programmes and promotions, based on the outcome of continuous performance appraisal, which is however subject to the discretion of the supervising manager and whether or not he or she loves the face of the subordinates.

The contract staff on the other hand is a tenured appointment with lower remuneration and without pension, allowances, promotion or performance appraisal.

No matter their qualification or competence, members of contract staff do not enjoy promotion or review of salary as the remuneration is fixed throughout the duration of the contract, which can be up to 25 years or more.
Once the contract expires, the appointment is terminated without any terminal benefits such as pension or gratuity.

However, in some cases, competent contract workers are given permanent employment under what is referred to as experienced hire.
The appointment into temporary staff is not based on experience or qualification as
all members of temporary staff are on a fixed, permanent stipend irrespective of their qualification.

Unlike members of contract staff, who are placed on different levels, depending on their qualifications and experience, the members of the temporary staff are not placed on any grade level as all of them enjoy the same fixed remuneration.
Temporary appointment is not a tenured appointment, unlike contract appointment, which has a fixed tenure.

The fourth category of staff at the NNPC is the support staff, who are basically IT students undergoing on-the-job training, after which they go back to school.
However, some support staff are staff of contractors that provide services to the corporation.

By the nature of its business, there are certain services required by the NNPC, which it cannot provide for itself.

The corporation hires third party service providers, whose staff constitute part of NNPC’s support staff.

As Kachikwu hires experienced staff from the private sector to boost the manpower capacity of the NNPC, he should also look inwards to regularise the sppointments of competent contract and temporary workers who have demonstrated sufficient capacity to deliver on their job schedules.

THISDAY gathered that despite their poor remuneration and most contract and temporary workers work late into the night and are more hard-working than the permanent NNPC workers, who stick to the normal civil service rules to close at 5pm daily.

Imperatives for reform
The current restructuring became imperative following the failure of the three previous presidents to have the PIB passed by their administrations to reposition the NNPC and reform the entire oil and gas industry.

The first bold attempt by President Buhari to make a difference was the appointment of Dr. Emmanuel Ibe Kachikwu, an outsider, as the new Group Managing Director of the corporation.

The appointment of an outsider instead of an insider was a strong indication that Buhari was determined to break away from the past and re-write the history of the corruption-ridden corporation.

Kachikwu, took over from Dr. Joseph Dawha, who was appointed in 2014 to replace Andrew Yakubu, who spent about two years in office. Yakubu, who was appointed July 1, 2012, was the fourth GMD of NNPC in the about five-year reign of Mrs. Diezani Alison-Madueke as Minister of Petroleum Resources.
Within five years (2010-2014) the NNPC had five GMDs, a development that sent panic to operators, particularly foreign operators that wanted to engage in long-term oil and gas business with Nigeria.

The five GMDs within the five year tenure of Alison-Madueke included Dr. Mohammed Barkindo (January 12, 2009-April 2010); Mr. Shehu Ladan (April – May 2010); Mr. Austen Oniwon (May, 2010-June 26, 2012); Mr. Andrew Yakubu (June, 2012-2014) and Mr. Joseph Dawha (August 2014-August 2015).
Even Mr. Lawal Abubakar Yar’Adua, who was the first GMD appointed by the late  President Yar’Adua, served for  less than two years before he was replaced with Barkindo, on the prompting of the then Minister of Petroleum Resources, the late Dr. Rilwanu Lukman.

Thus Kachikwu is the eight GMD since former President Olusegun Obasanjo handed over power on May 29, 2007 when Mr. Funsho Kupolokun was the GMD.
However, the most striking feature of Kachikwu’s appointment is that he is seen as an outsider, having been appointed from outside the NNPC.

Kachikwu, who was the Executive Vice-Chairman and General Counsel of Exxon-Mobil (Africa), is a First Class graduate of Law from the University of Nigeria, Nsukka and the Nigerian Law School, where he was the best graduating student and multiple awards winner in both institutions.

– This Day

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