President Approves NNPC’s Restructuring into Seven Units, 20 Companies

Dr. Ibe Kachikwu

• Nigeria to stop importing petrol in 18 months, says Kachikwu
• House opposes new structure, minister clarifies state oil firm has not been unbundled

President Muhammadu Buhari has approved the restructuring of the Nigerian National Petroleum Corporation (NNPC) into seven new divisions, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, announced on Tuesday at a press briefing in Abuja.

He explained that under the new structure, NNPC will have five core new divisions comprising the upstream, downstream, refining group, gas and power, as well as the ventures’ groups. The other two, he said, are finance and services groups.

He said the restructuring was the only opportunity available to the NNPC to become productive again, adding that employees of the corporation would have to work to earn their wages going forward.

Kachikwu pointed out that nothing much had changed with the unbundling except for the distribution of subsidiary companies of the corporation that would further be restructured into direct management of the new divisions.

He named some of the heads of the new divisions to include Mr. Bello Rabiu who would take charge as the head of the upstream company; Mr. Henry Ikem-Obi who would head the downstream company; Mr. Anibor Kragho as the head of refining group; Mr. Saidu Mohammed as head of gas and power market; and Babatunde Adeniran as head of the ventures’ groups.

Isiaka Abdul Rasaq is the chief financial officer, while the deputy managing director of the Nigeria Liquefied Natural Gas (NLNG), Mr. Isa Inuwa is now to head the corporate services unit of NNPC.

He listed some of the subsidiaries under the divisions to include Upstream: the Nigerian Petroleum development Company (NPDC) and Integrated Data Services Limited (IDSL); Downstream Retail: Nigerian Product Marketing Company (NPMC), which was formerly PPMC, (NPSC); Gas and Power: Nigerian Gas Pipeline and Transportation Company (NGPTC), Nigerian Gas Marketing Company (NGMC), and gas and power investment; and the Refineries: Warri Refining and Petrochemical Company (WRPC), Kaduna Refining and Petrochemical Company (KRPC), and Port Harcourt Refining and Petrochemical Company (PHRC).
The ventures’ company includes medicals, property, pensions, shipping, and wheel insurance.

Kachikwu said: “The president has approved the final phase of the restructuring of the NNPC, under that phase it is not so much different from what we have now but we have restructured ourselves into four key business components: the upstream, which is what you used to call the Exploration and Production (E&P), the downstream, which is what you called the Commercial and Investment (C&I), the gas power market, which is basically a pullout from the E&P, the refinery group, which is basically the three refineries, and of course the ventures, which is every other small company here and there that did not have a sense of direction.

“Underneath these companies, we have a collective of 20 companies on the whole, where we had about 16 before, so only about four are new introductions. So it is not so much the size and we have not split NNPC into 30 companies, but there are four major divisional groups.

“Four or five are business focused, while others provide services. Beneath these five that are business-geared are the companies that are there. For example, with PPMC, we have taken the pipeline and depots unit and put them into a different company so that somebody focuses on that, while PPMC deals with the marketing of products.”

According to him, all the analysis done to date in terms of the number of staff is that we are overstaffed and the only way we can do this is to create work so that everybody who is in the system has something that they are doing and so that they get busy and earn money.

On the restructuring, he explained that “this took months of work with consultants to flesh that out”, adding, “The principle of our restructuring is that nobody loses work because the environment is just too testy for now to throw people out of work.
So nobody is losing his/her job, but people are going to get busy in the respective business units and it is a chance for anybody who wants to progress in his career and prove himself to rise up and get what he/she wants.

“It is a five business focused unbundling and they all report to the GMD and the whole idea is to focus everybody that it is no longer an administrative but business role. The group is going to become more nimble.”

Similarly, the minister who disclosed that Nigeria was working to end importation of petrol in the next 18 months, said it would cost about $500 million to get the country’s refineries back to full capacity.

Kachikwu said that the plan would be supported by his ongoing discussions with new joint venture partners to build refineries alongside the country’s four existing refineries in Kaduna, Warri and Port Harcourt.

He said it was a shame that the country imports most of its domestic petrol needs, and that by the time the plan comes to fruition, the country should be able to attain self-sufficiency in providing for its domestic fuel needs.

“The policy on the whole is that we must target a time frame or 12 and 18 months to get out of importation. It is not good for the country, it is not a good image, it does not create jobs and we lose tax when it comes to the government and creates a huge amount of, quite frankly, emotional backlash when people have to queue looking for fuel.

“We are working feverishly, trying to work with joint venture partners who can come in and work with us. We have advertised recently for co-located refineries and asking people to come and co-locate new refineries into our refinery premises so that they can share pipelines, tankages, and we are working hard to see that we can complete whatever refinery upgrade we are trying to do within the next 12 to 18 months.

“Obviously, for the co-located refineries which are the new ones, we are targeting to see that we are able to finish within two to three years and if we do that, we will have excess capacity of refined products and bear in mind that Dangote is also bringing on-stream his own refinery.”

Speaking to THISDAY on the rationale for the restructuring of NNPC, especially the creation of the 20 new companies or new business units (NBUs), Kachikwu said it was done to prepare them for private sector participation.

“As you know, we intend to concession or enter into joint ventures in respect to injecting new capital and the operations of some of these firms; so they had to be unbundled so the right sort of investors can come in with capital and expertise to turn them around.

“Also the rationale for the restructuring of the corporation stemmed from the fact that it had become unwieldy, so the aim is to create smaller units with deliverable targets that are easier to manage,” he said.

However, before Kachikwu’s announcement on the president’s approval of NNPC’s restructuring, the House of Representatives yesterday cautioned against restructuring it without an amendment to the Act which established the state run-oil firm.

The House recalled that the NNPC was established through the Nigerian National Petroleum Corporation, CAP N123, Laws of the Federation, 2004, adding that its structure could therefore only be altered, changed or otherwise amended only by an Act of the National Assembly.

Following a resolution sponsored as matter of urgent importance by the Hon. Jarigbe Agom Jarigbe (Cross River PDP), the House urged Buhari, who is also the Minister for Petroleum Resources, to urgently transmit an executive bill to the National Assembly, if he intends to unbundle NNPC or execute fundamental restructuring or reforms in the oil sector.

Jarigbe noted that since petroleum and natural gas are included in the Exclusive Legislative List (Item 39) in the Nigerian Constitution, “not even a presidential fiat can restructure it”.

He called for the condemnation of what he termed an executive legislation by Kachikwu to “unbundle NNPC into 30 different entities without legislative approval”.
“The minister’s pronouncement preempts the provisions of the proposed Petroleum Industry Bill (PIB), which has not been introduced in the Eighth National Assembly,” he added.

The matter was referred to the House Committees on Petroleum Upstream, Petroleum Downstream, Gas and Local Content and Legislative Compliance.

However, Kachikwu, in his defence, told THISDAY that NNPC has not been broken up or unbundled as erroneously reported, explaining that what the president approved was the restructuring of the corporation and there was nothing wrong with it as long as it was done within the confines of the law.

“NNPC has not be unbundled or broken up. It remains the same entity but with different units internally for enhanced efficiency and profitability. Besides, the NNPC Act allows for the restructuring of NNPC.

“It is the PIB that provides for the unbundling or break up of NNPC into separate units and that has not happened with what we have done,” he said.