Professor Wumi Iledare
It is a new beginning for Nigeria oil and gas industry in many ways, congratulation to Nigeria National Petroleum Company Limited (NNPC). A little history will help as this is not the first time, the Federal Government (FG) attempts to rebrand, rekindle and restructure the institution. Everything started from Petroleum Inspectorate in the 60s, then NNOC came out of it in the early 1970. The institution came to being 1977 with NNPC Act and by PIA 2021 NNPC Limited emerges in 2022. That the immediate past NNPC played too much of agency role than NNOC is an understatement, hence the commercialisation intent of PIA 2022 by the framers, which started in earnest in 2000 with the OGIC.
The new dawn in the oil and gas space in Nigeria and the NNPC Limited in particular, comes with challenges and opportunities in Petroleum Industry Act (PIA) 2021 Era.
First, NNPC Limited is a commercial entity now with mission and vision to maximise stakeholders’ economic value, just as Shell, Total and Chevron do. Unlike the old NNPC, which basically tends to maximise public policy in-kind value, PIA 2021 expects less agency roles for NNPC Limited if not even zero agency roles.
To a large extent, NNPC has been the “cash cow” for the Nigeria Central Government in particular and the Federation in general, collecting oil and gas rent, spending on behalf of the federation, and offering other in-kind services to the FG with inappropriate payment for services. The post PIA NNPC cannot legally do that without consequences.
There are KPIs to justify investor’s continuous investment and in-kind services without payment, are not part of the KPIs. Yes, the federation currently owns all the shares at the moment but only for a while. Thus, the Federal Executive can no longer get involved in the structure and philosophy of NNPC. No interference in manpower development and deployment, is henceforth legal!
There are also other challenges ahead including the public perception of NNPC Limited as “a new wine in an old wine bottle.” I said it somewhere it is less likely than not that NNPC Limited can change this perception without a complete overhaul of the current governance structure! Professional competence devoid of political expediency is required to maximise stakeholders’ value!
The other challenge is how NNPC Limited will consciously come to terms with the fact that the agency role can no longer be in its radar. In that case, NNPC Limited needs a new manpower development and deployment strategy that is completely different from the old practice to achieve stakeholders’ expectations.
Anything that is out of alignment with PIA 2021 provisions is an illegality! NNPC Limited must be aware that the expectations of stakeholders now is obedient to the laws of Nigeria as Shell, Total, Mobil and Energia do to maximise value!
The opportunities are huge in terms of creating value for stakeholders with the amount of gas resources and oil resources at its disposal. The human resources are huge as well but governance mentality has to change to harvest these resources effectively, efficiently, equitably with optimal professional ethics. The implementation of PIA 2021 provisions on NNPC limited cannot be selective and neither will business as usual approach creates the type of value to attract investments as envisaged in the PIA.
My prayers are with the management and I am hopeful that the PIA provisions will be adhere to for posterity.
God bless the Federation called Nigeria!
Wumi Iledare, PhD, Fellow NAEE
Professor Emeritus in Petroleum Economics and Executive Director, Emmanuel Egbogah Foundation