A one-day meeting of the Group Managing Director of the NNPC, Dr. Maikanti Kacalla Baru and the former GMDs of the Corporation including the immediate past GMD and the current Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, was held on Saturday 3rd September, 2016 at the Transcorp Hilton Abuja.
During the meeting, the GMD presented the status of the Corporation and the Oil & Gas Industry. He also presented his 12 Business Focus Areas towards putting the Corporation on the path of growth and profitability.
The GMD and the former GMDs jointly reviewed the current state of Nigeria’s Oil & Gas Industry, deliberated on ways to resolve issues militating against the progress of the sector and recommended measures to move the sector forward.
During the brainstorming session, they expressed serious concerns on the declining production level and its attendant consequences on the environment and the nation’s revenue.
They further agreed that if the current situation remains unchecked, it could lead to the crippling of the Corporation and the nation’s Oil & Gas Sector, the mainstay of the Nigerian economy.
Following their deliberations, the former GMDs identified the following key challenges and advised as follows:
Insecurity is threatening production and damaging the Niger Delta environment. There is the urgent need for government and security agencies to refocus as well as engage the various host communities as well as established social and traditional structures to develop an actionable partnership framework toward finding a lasting solution to the present unrest.
2) NNPC’s CORPORATE REPUTATION:
The former GMDs are concerned about the increasing negative perception of the Corporation by Nigerians especially in terms of opaqueness and accountability. They therefore called on the Corporation to educate Nigerians on NNPC activities as a commercial entity managing the nation’s assets in trust.
3) STATE OF THE REFINERIES:
The former GMDs advised that the refineries be rejuvenated using the Original Equipment Manufacturers (OEMs). Also, the refineries must be restructured to operate as an Incorporated Joint venture (IJV) similar to the Nigerian Liquefied Natural Gas (NLNG) model with credible partners having requisite technical and financial capabilities.
4) PETROLEUM PRODUCTS SUPPLY:
The former GMDs commended NNPC for resolving the fuel supply crisis and urged the Corporation to emplace measures that will ensure sustenance of seamless supply of petroleum products nationwide. They however noted that the PMS price cap of N145/litre is not congruent with the liberalization policy especially with the Foreign Exchange rate and other price determining components such as crude cost, Nigerian Ports Authority (NPA) charges etc remaining uncapped.
5) FUNDING OF JOINT VENTURE OPERATIONS:
The former GMDs advised that funding of JV Operations should be the first line charge to oil revenue to ensure sustainable production and reserve growth.
6) FRONTIER EXPLORATION SERVICES (FES)
The former GMDs endorsed Mr. President’s steer for sustaining exploration activities in the frontier basins particularly the ongoing efforts in Chad Basin and the Benue Trough. They therefore advised the GMD to pay priority attention to the Chad Basin where promising prospects are recorded.
7a) NATIONAL PETROLEUM INVESTMENT & MANAGEMENT SERVICES (NAPIMS):
The former GMDs noted that for effective functioning of any National Oil company (NOC), the technical components of the country’s Exploration & Production (E & P) must be integrated as part of the country’s NOC. They therefore posited that NAPIMS being the technical component of Nigeria’s E & P, and not just an investment vehicle, must remain with and managed by NNPC. Taking NAPIMS out will make NNPC an ineffective NOC.
7b) The current Petroleum Industry Bill (PIB) which proposed the incorporation of NAPIMS and taking it out of the NNPC will inhibit the effective functioning of the NNPC as a National Oil Company (NOC). This will make NNPC to operate at a different level compared to its peers in other OPEC Member Countries. While the former GMDs have no issues with incorporation, they strongly advise against taking NAPIMS out of NNPC.
8) RELATIONSHIP WITH STAKEHOLDERS:
The former GMDs encouraged NNPC to improve its relationship with its key stakeholders such as the Federal Government, the National Assembly, Host Communities and especially its International Joint Venture Partners.
9) NNPC REVENUE BASE:
The former GMDs expressed serious concerns about the continued dwindling of NNPC revenue and advised that the Corporation should pay particular attention to its revenue-generating entities such as the Nigerian Petroleum Development Company (NPDC), Retail and the Refineries to return the Corporation to high performance, growth and profitability.
The former GMDs were worried about the level of NNPC’s debt profile. They advised that as a matter of urgency, NNPC should establish the true state of its current financial status and immediately decide on the most appropriate capitalization model.
The former GMDs also reviewed the state of NNPC Pensions. They advised that NNPC should explore avenues to close the pension funding gap including the restructuring of the current model.