Page 5 - AfrOil Week 36 2022

AfrOil COMMENTARY AfrOil

We could be witnessing a new era in Nigeria: A accounts for the first time in 43 years, but until
strong national oil company, free from the influ- now, there was no reason to be confident that
ence of politics, could be the change that finally it would continue making that information
moves Nigeria’s vast petroleum resources from available.
unfulfilled promise to a real agent of good for On the other hand, there is some cause for
everyday people. concern. As I mentioned, NNPC Ltd is still
wholly owned by the government, meaning that
A less-than-ideal history avoiding government influence could be a chal-
When NNPC was founded in 1977, the state- lenge. Also, in compliance with the PIA, the for-
owned and controlled corporation’s primary mer NNPC’s employees have automatically been
role was to oversee Nigeria’s oil industry. Beyond transferred to the new company with no vetting.
that, it was intended to develop the country’s That leaves the door open for old practices and
upstream and downstream industries. inefficiencies to remain entrenched.
Unfortunately, NNPC has yet to help Nige- Further, the PIA requires Nigeria’s president
ria reap the full benefits a thriving oil industry to appoint an NNPC Ltd. board, which will
should deliver. It has not achieved energy secu- include “six (6) non-executive members with at
rity for Nigeria — or maximised Nigeria’s oil least 15 years post-qualification cognate experi-
and gas revenues. The company has struggled ence in petroleum or any other relevant sector of
for years with poor management, failure to profit the economy, one from each geopolitical zone.”
and multiple allegations of corruption. As my company, Centurion Law Group, has
Nigeria’s oil refining capacity also suffered written, this approach politicises the appoint-
under NNPC’s watch. Between 2015 and 2020, ment of these individuals instead of ensuring
the country’s three state-owned refineries oper- appointments based on merit.
ated at an average capacity utilisation of only So will NNPC be getting its act together? I
7.87%, according to Nigerian newspaper The don’t know. We certainly have more reason to
Whistler. As a result, Nigeria imports 90-95% believe it will than we’ve had up to now. I’m
of its refined petroleum products for domestic encouraged by recent statements from NNPC
use, despite being the sixth largest oil producer Ltd’s Group Managing Director Mele Kyari
in the world with 36.9bn barrels of proven oil about the company’s plans to expand Nigeria’s
reserves. And while each of the refineries is cur- natural gas reserves, tackle flaring and create Ultimately,
rently being rehabilitated, which is good news, more opportunities for Nigeria’s growing pop-
none are operational right now. ulation of young adults. helping Nigerians
NNPC has not been able to address energy What’s more, I’m encouraged by the compa-
poverty, either: About half of Nigeria’s popula- ny’s successful PSC renegotiations. thrive is exactly
tion lacks reliable electricity. The country has I agree with what Energy Economics Profes- what NNPC Ltd
ample natural gas reserves – 202 trillion cubic sor Adeola Adenikinju of University of Ibadan
feet (5.72 trillion cubic metres) of untapped recently told a non-profit Nigerian news agency, can and should
proven reserves – which should have been used the International Centre for Investigative
to help meet domestic needs and power elec- Reporting. “What affected the old NNPC was be accomplishing
tricity generation on a larger scale. But instead, government interference and ethical consider-
flaring has been far more prevalent than gas ations in the operations and appointments and
monetisation and gas-to-power programmes. performance of the organization,” Adenikinju
Nigeria was able to cut flaring in half between said. “What I hope the new NNPC Ltd would do
the late 1970s and early 2000s, but later efforts to is remove government control, which has made
reduce flaring have faltered. And while NNPC the government see NNPC as a cash cow.”
Ltd cannot solve these problems without the “Hopefully, if the government were to follow
support of other government entities and oil the guidelines of the PIA, they would be able to
and gas companies, it does carry at least some market the NNPC and operate as they should,
responsibility for better utilising the country’s and it would help Nigerians to benefit from the
natural gas. commercialisation,” he said.
It’s safe to say that transforming NNPC into Absolutely. Ultimately, helping Nigerians
a transparent, effective, profitable company is a thrive is exactly what NNPC Ltd. can and should
tall order. But I truly believe it’s not necessarily be accomplishing.
an impossible one. I will be hosting NNPC Ltd and its leadership
at African Energy Week in Cape Town South
NNPC, the sequel Africa and will push other African national oil
As a commercial venture, NNPC Ltd. is meant companies (NOCs) to follow their lead. We
to operate with minimal government funding must be honest in understanding the challenges
or control. The company will be governed by NNPC Ltd faces. There is a lot of pressure on it
Nigeria’s corporate laws under the Companies to cut costs and keep margins up while meeting
and Allied Matters Act (CAMA). NNPC Ltd. is obligations to its shareholders. I hope the com-
now required to declare dividends to sharehold- pany seizes this opportunity to do so. Africa is
ers and dedicate 20% of its profits to growing its watching to see how this works.
business. What’s more, the company must now
make annual financial disclosures. NJ Ayuk is the executive chairman of the Afri-
That last requirement alone is a big deal. In can Energy Chamber (AEC). Article reprinted
2020, NNPC published its audited financial courtesy of AEC. ™

Week 36 08•September•2022 www. NEWSBASE .com P5