Lagos – The Nigeria Natural Resource Charter (NNRC), a non-profit policy institute, committed to effective natural resource governance in Nigeria has called for complete overhaul of the oil and gas sector in the country.
In a press release sent to SweetcrudeReports, the non profit organization urged the government to use the opportunity provided by the prevailing socio-economic situation nationally and globally to embark on complete overhaul of the country’s oil and gas sector, in particular the National Oil Company (NOC) in order to make it both competitive and productive in line with international best practices.
‘’Over the years, NNPC has consistently underperformed against the NNRC’s global best practice benchmark for optimal national oil company performance which prescribes that national oil companies be accountable to their citizens and government, with well defined mandates and an objective of commercial efficiency’’
‘’However, we commend NNPC for its commitment to its TAPE agenda and its recent efforts by publishing the 2018 audited reports of its subsidiaries, still there remains a need for greater transparency and accountability’’ they stated.
NNRC averred that, it is expected that these practices will survive the present administration and going forward become part of the corporate culture, as holistic improvements across the NOC will require clear and appropriate decisions, regarding how it is financed and also corporate governance systems that limit political interference and allow for efficient oversight, and a commitment to transparency and accountability.
NNRC said, comparing Norway’s Equinor and NNPC performance records show that Equinor’s three refineries averaged 92.8% capacity utilisation in 2018 while NNPC’s three refineries recorded 11.21%, as 2015 comparison of average refinery capacity utilisation in the United States of 90.98% and Nigeria of 4.88% is even worse, they added that ’’unless NNPC’s refineries can operate at minimum 90% capacity they will continue to lose money’’
The Charter stated that, in the area of revenues accruing to government, NNPC’s performance compared to Petrobras of Brazil or Petronas of Malaysia shows gross inefficiency, even when
bench marked with similar national oil companies in Africa such as Sonatrach of Algeria and Sonagol of Angola, the NNPC still falls short on different counts.
They lamented on the issue of corporate governance, which is noteworthy that peer group companies that are wholly government owned like the NNPC do have strong governing boards constituted by competent professionals, instead of preference for political representation.
NNRC revealed that, NNPC is the only NOC with a serving government minister on its board, as this brings unintended political baggage which impacts negatively on the smooth running of the organization.
According to NNRC ‘’ reforming the Corporation requires new thinking and new strategies, which starts with the recognition that NNPC is not and was never designed from the beginning to be a commercially driven enterprise. Had it been so, it would have been
capitalised, granted more operational autonomy and burdened with fewer regulatory functions as in the NNPC Act’’
‘’No doubt the Petroleum Industry Bill will be a good platform to remedy the deficiencies in particular as it goes to greater lengths to separate commercial entities from regulatory authorities, leaving the national oil company to focus on finding, producing and commercializing petroleum resources’’ they said.