11 March 2016, Abuja – The two chambers of the National Assembly have disagreed with the Minister of State for Petroleum Resources, Ibe Kachikwu, over the restructuring of the Nigerian National Petroleum Corporation.
While the Senate has backed the reforms, saying the minister’s action did not contravene any known law, the House of Representatives insists that the restructuring of the national oil firm is illegal.
Kachikwu appeared before the Senate Joint Committees on Petroleum Resources (Upstream, Downstream and Gas) in Abuja on Thursday to explain the reasons for the restructuring.
Before going into a closed session with the senators that lasted about one hour, the minister explained that his action was in the best interest of the country, but regretted not holding necessary consultations with the National Assembly before announcing the restructuring.
He explained that the exercise was necessary in order to make the NNPC a real revenue generating organisation so that it would be able to offset the $5.2bn it currently owed major oil companies as well as reduce its current N30bn monthly losses as much as possible.
Kachikwu also said the restructuring of the NNPC subsidiaries was aimed at making them more effective and efficient, but that they would still be under the corporation and would be controlled by a single board.
He said, “I must apologise that we didn’t take some of the Senate leadership along the path of this restructuring, but if you look at the draft of the Petroleum Industry Bill sent to us for our input, you will discover that the restructuring was within the suggestion we made.
“Having said that, I must take responsibility for not carrying out the necessary consultation as we should have done.”
A member of the committee, Senator Sola Adeyeye, said that the minister would have run afoul of the law if he had stuck to the use of the word ‘unbundling’ in the restructuring exercise, because his action would have contravened Cap. 23 (6) 1D of the Act that established the corporation.
He argued that although the minister, in his capacity as the group managing director of the NNPC, was given a free hand to operate, it would be illegal for him to create autonomous firms separate from the NNPC.
Briefing journalists after the session, the Chairman, Senate Committee on Petroleum Resources (Upstream), Senator Tayo Alasoadura, described the interactive session with the minster as highly rewarding and useful.
He said Kachikwu had been able to convince members of the three committees mandated to carry out oversight functions on the petroleum sector that his action was legal and one that would boost the sector, generate more revenue and ensure stable supply of products.
Alasoadura said, “We have a very useful discussion with the minister. He clarified the issue that he was not unbundling the NNPC, because it is an entity created by an Act of the National Assembly and nobody can touch it unless he comes back to the National Assembly for amendment.
“Having looked at what he did and the presentation he made to us, and having considered the welfare of the staff of the NNPC and those working in the subsidiaries that were affected by the reorganisation that he has done in the sector, we found out that the staff would not be short-changed, nor deprived of their employment.
“We also found out that he has not contravened the law because we were worried that he might be acting against the law; but having looked at the law with him, we found out that he did not contravene the law.
“We also told him that he ought to have done more consultation with the National Assembly for which he apologised and he said that henceforth, more consultation would be done. We feel that he is working in the best interest of Nigeria.
“We want all Nigerians to support him so that we can get out of the mess in which we have found ourselves in this country today. One good thing today is that the price of fuel is going up and if we don’t do the reorganisation when we are in trouble, it may be more difficult for us to do anything when the price goes up.
“We will continue to pray that the price of oil will be going up and Nigeria will be better. What the minister has done is the internal reorganisation of NNPC. From the figure given to us by the NNPC, the organization is making about N30bn loss every month, if we continue like that, there is no time we are going to get out of the hole which we found ourselves.”
The senator added, “With the gradual reorganisation that the minister has been doing before, the loss of the NNPC as of last month was only N3bn. He is already assuring us that by July, we would have got to a level that the NNPC will not be making loss any longer.
“The only way to do it is to put all hands on the plough. Let everybody work for his pay. Let there be no fat cow that will just suck without contributing anything.”
In his contribution, acting Chairman, Senate Committee on Petroleum Resources (Downstream) Senator Jibrin Barau, said the most important thing was that the Senate was convinced that no law was contravened.
However, the House of Representatives reiterated its opposition to the restructuring at the NNPC, insisting that the action remained illegal so long as the law setting up the corporation was not amended to reflect the changes.
It noted that a key solution was the PIB, which the House said President Muhammadu Buhari had yet to present to the National Assembly.
The Chairman, House Committee on Media and Public Affairs, Mr. Abdulrazak Namdas, said the House had so far made three requests to Buhari to present the bill but that the President had not responded.
According to him, it was the Speaker, Mr. Yakubu Dogara, who made the requests on behalf of the House.
Namdas said, “Mr. Speaker has called Mr. President three times to at least bring an executive PIB. We have not received the bill or his response, only to hear that the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has unbundled the NNPC into seven units.
“What he has done is not in line with our laws.”
However, the minister re-stated his earlier statement that he was merely carrying out a reorganisation at the NNPC and not unbundling the corporation.
A lawmaker, who attended a meeting between Kachikwu and the joint House Committees on Petroleum (Upstream and Downstream), told one of our correspondents that the minister explained that his actions were misconstrued.
“He took some time to explain that he was reorganising the operations of the corporation internally and not unbundling it as had been earlier interpreted. He came with officials of the NNPC,” the source added.
Speaking on the need to amend the NNPC Act, Namdas noted that the extant law provided for a Petroleum Inspectorate Directorate, which was not among the seven just created by Kachikwu.
He explained that the House recognised the powers of the executive to introduce reforms, but said such would achieve limited results without following “the due process of law.”
Meanwhile, at its plenary, urged Buhari to constitute the National Council on Public Procurement in line with the provisions of Section 1 of the Public Procurement Act.
In its resolution, the House observed that eight years after the enactment of the Act, successive administrations had failed to constitute the council.