Leading NNPC In Pandemic Era
By Bolade Nafisat
If there is a sector in storming water, it is the oil and gas where the pandemic wrought shocking havoc. Top officials throughout month of April and May must have lost the count of times they checked their BP. With storage tanks filled up worldwide and thousands of stranded ships on seas, leading an oil giant, the heartbeat of Nigeria, the Nigerian National Petroleum Corporation (NNPC), in COVID-19 era, tasks the ingenuity of oil chiefs. If there is an opportunity for performance review, no time is apt than when disruption struck without magic spells for escape.
While joining the oil sector to mourn the exit of Maikanti Baru (May His Soul Rest in Perfect Peace) , the generalismo who today’ oil sector leaders called their mentor and boss, it won’t be out of place to take liberty in assessing Nigeria’s response to the pandemic. First note that this is an extraordinary assault that hit the oil industry so deeply that oil majors which made $2.47trillion in 2019 faces a 40 percent decline from a pre-pandemic projection of $2.35 trillion to $1.47 trillion for 2020, according to a Bloomberg report. All over the world , the industry was brought to its knees.
Royal Dutch Shell Plc Chief Executive Officer Ben van Beurden said “There will be changes, and therefore we have to be ready for that. That means that we probably have to re-establish what is going to be our strategy.” Darrenn woods of Exon Mobil put it this way: “This is an unprecedented environment”. Mele Kyari , ( some called him Comrade) in his response repeated the line of unprecedentedness of the crisis. The NNPC Group Managing Director and the Petroleum minister, Timpreye Silva reaped from the duo’s early bonding which served the sector well during the height of the oil meltdown.
How appropriate is the pandemic era policy choices of the NNPC leadership? Beyond all those expert jargons from the sector, for the citizenry and the general stakeholders, can we honestly grant Comrade Kyari a pass mark? Let me list the basis of my opinion which I will give shortly. As a young lady,the past of the sector matters but her present and future are more critical to me and my generation. Beyond the rot of the past, I want to see corrective policy measures instituted to create a transparently managed and responsibly run oil sector. A friend who read this piece asked where I place the issue of trust in our leaders. My response is I judge them by what they do.
So let me judge the NNPC chiefs, from the head to the subsidiaries, by what they are doing. In time of crisis,panic mood may ignite wrong decisions. Let me put it on record that Kyari and his team made a strategically correct decision not to stop oil production at the peak of the crisis. At a time Nigerian oil tankers were stranded on international waters without buyers, the GMD said the cost of stopping and restarting production will be too much,hence the need to continue production. That was a first plus as the judgement is validated by gradual easing within a month at the international market.
The second side of the response was the most citizen centred . The NNPC is at this point responding to long held demands of Nigerians with respect to the oil sector. The pandemic presents a golden opportunity to introduce fundamental reforms which were unthinkable pre-pandemic. In recent weeks,policy pronouncements from the sector left many wondering what has changed. Is this the same NNPC we know of? I am not referring to the donation of eleven billion naira to the anti-coronavirus campaign by the NNPC and oil firms across the sector. Even here, support was in kind such as provision of medical consumables; deployment of logistics/in-patient support system and delivery of medical infrastructure , covering testing kits, medical protective suits and ambulances to the highly impacted areas. No cash to steal.
We all know the controversial fuel subsidy. It is now history . I agree it is long overdue but now ,we have it. According to the GMD, Nigeria would no longer be paying for under-recovery or subsidy on petrol, especially due to the current development in the global oil sector. Market forces will now be the driving force,freeing much needed resources for infrastructure,education,health among others. Now the Corporation should engage marketers on the new direction.
Relatedly,the high cost of oil production has taken the center stage. From the top of the corporation was an unambiguous admission that Nigeria has the highest production cost in the world. This must come down drastically. But how?. Powerful interests are opposed to such reforms. And because of our anger with past mismanagement ,we are failing to provide the neccesary support for Kyari and his team to push this reform through. This is a challenge to the civil society organisations. Let support the drive to bring down the cost. Powerful forces are bent on fleecing the country through unsustainable production cost. So beyond fuel subsidy well known to the public as corruption conduit pipe,there is now the production cost. Mallam Kyari pointedly explained this challenge in several interviews.
What other responses addressed the yearnings of the citizenry ? Let me list those I noticed too. The focus on gas development is receiving accellerated attention which is tied to the resolution of power supply crisis in the country. So new gas pipelines are underway like crossing the Rive Niger and eventually producing enough gas for the power plants while extending gas supply for domestic use. By the way, domestic gas availability is considered the best solution to kerosene shortage crisis in the country.
Equally noticeable is the new plan on the refineries. I am not referring to the Dangote mega-refinery. In the past, refinery maintenance contract is widely condemned by rights organisations as the nation has so far failed to revive the refineries and satisfy local PMS needs. A new model is now in place. Kyari has introduced an operate and maintain contract with private firms once ongoing rehabilitation are completed. This is a new approach. Will it work? I guess we should try something new since past model had failed us.
Then there is the vexed question of pipeline vandalisation and oil theft. This is still an intractable problems relating to law and order. Successes recorded are dwarfed by the increasing sophistication of the perpetrators. Some however think Kyari should be as hard on that theft cabal as he is on the oil production caucus. Others also think he should lean more on technology for pipeline monitoring. Those inside said a lot is being done in those areas. But we are Nigerians . And as our people say,seeing is beleiving.
The last area is oil exploration in the North. Honestly,I dont believe the exercise is a waste. Some discoveries have been made and I even condemned the failure of Nigeria to push the exploration long before now. The exercise should continue unabated. That will increase Nigerian oil reserve,reset how southerners see northerners and in the long run increase national wealth. Remmember oil will be with us for long despite our urge for climate control and mitigation.
So much for NNPC during pandemic . Let me drop some personal views. If so much is being commendably done on structural issues within the sector, the leadership should pay close attention to inclusiveness no matter how touchy the matter may be. Secondly, the management needs to handle the several cases of disputed marginal fields diplomatically. These two areas are imperative to match what my friend,Maxwell called “establishment revolution” under Kyari and Silva.
Somebody is still waiting for my judgement of the leadership response. Well , I am elated by happenings in that sector. The policy outings are encouraging. But let Comrade Kyari push harder. The trust deficit is still deep and let the citizenry supports the battle ongoing from within to make the NNPC a truly accountable and transperently run company.
-Bolade Nafisat, a staff of Abuja Chamber of Commerce and Industry, sent this piece from Abuja. She can be reached on firstname.lastname@example.org / +2348145072464