The incorporation of the Nigeria National Petroleum Company (NNPC) will bring about the desired openness and accountability in the running of the nation’s oil and gas industry and speed up efforts to reactivate the redundant refineries.
These, among others, were the views expressed Tuesday by some analysts who spoke to Blueprint in Abuja.
Buhari’s power under PIA
Last Sunday, President Muhammadu Buhari directed the incorporation of the NNPC Limited as provided in the Petroleum Industry Act (PIA) 2021.
The president’s directive was in line with Section 53(1) of the PIA, which requires him as the minister of petroleum resources to cause for the incorporation of the NNPC Limited within six months of commencement of the Act in consultation with the finance minister on the nominal shares of the company.
Buhari, therefore, directed Mele Kyari, the group managing director of the NNPC, to take necessary steps to ensure the incorporation of the NNPC Limited is consistent with the provisions of the PIA 2021.
Similarly, President Buhari appointed Ifeanyi Ararume as NNPC board chairman while Kyari and Umar I. Ajiya are chief executive officer and chief financial officer respectively.
Under Section 59(2), the PIA also gives the president the power to approve the appointment of the Board and Management of the NNPC Limited, with effect from the date of incorporation of the company.
Commenting on the new status of the NNPC, a political economist and development researcher, Mr Olamilekan Adefolarin, commended the President saying incorporating the Nigeria National Petroleum Corporation (NNPC) would make for greater transparency and accountability in the running of the Corporation.
Adefolarin told Blueprint that with the signing of the PIA by the president and incorporation of the NNPC, relative harmony would be brought to the oil and gas sector of the Nigerian economy.
He also said this would put an end to all the political and economic scheming, intriguing and compromises.
The analyst expressed confidence that the move would drive competitiveness and bring the much needed dividend to the country.
He said: “It would help in revamping the obsolete refineries. This, we hope could come from focused investment and opportunity from anticipated investors.
“Over the years, the corporation has been accused of not being ambitious. However, with the reality of its incorporation, the NNPC is now set for optimal performance. Furthermore, with the Corporation incorporated, Nigerians should expect a paradigm shift from many years of management decadence of the state-controlled oil and gas sector, just as it would also open the sector for quality FDI. It would bequeath a worthwhile heritage to future generations.”
However, he said the incorporation of the NNPC would not in itself be a magic bullet that would cure decades of wanton corruption and mismanagement, warning that the corporation must avoid unviable transaction and crude exploration deals.
“Significantly, debt incurrence could be another pitfall of the corporation. In this case, with high expectations and drive to expand its investment stock, borrowing and revenue not equal to debt could hamper the corporation’s dividend.
“Essentially, it must build a broad national business consensus of understanding the problems in the international oil arena in order to be able to deploy appropriate policy actions. We hope the corporation would canvas for critical attention for crude oil refinery business in Nigeria vigorously,” he said.
Also speaking to one our correspondents, an economist, Mr Friday Efih, said it is better late than never.
According to him, the opaque nature of affairs in the Corporation would gradually be laid to rest.
“It’s a good directive by the president. We should put everything in place in order to attract investments into the sector. It shows the authorities have finally realised that the country can get more from its oil and gas sector.
In his view, a legal practitioner, Charles Edo, said incorporation of the NNPC is an indication that the administration is committed to the implementation of the PIA.
“It is a good step in the right direction towards the implementation of the petroleum Industry Act,” Edo told Blueprint.
Amendments to PIA
Meanwhile, President Buhari has written the National Assembly on proposed Administrative Structure Amendments to the PIA 2021.
In the letter to President of the Senate Ahmad Ibrahim Lawan, the president said: “Having carefully reviewed the administrative structure of both the Commission and the Authority, I would like to propose the following amendments: A. Appointment of Non-Executive Board Members; B. Removal of the Ministries of Petroleum and Finance from the Board of the two institutions; C. Appointment of Executive Directors.”
He also said the PIA 2021 provided for the appointment of two non-executive members for the board of the two regulatory institutions, stressing that the membership limitation had not addressed the principle of balanced geopolitical representation of the country.
“I, therefore, pray for the intervention of the 9th Assembly to correct this oversight in the interest of our national unity,” he added.
If approved, “it will increase the number of the non-executive members from two to six: one person from each of the geopolitical zones of the country,” he said.
Buhari also said the proposed amendment would increase the membership of the board from nine to 13, and strengthen the institutions and guarantee national spread, and also achieve the expected policy contributions.
He said the Ministry of Petroleum Resources and the Ministry of Finance, Budget and National Planning already have supervision or inter-governmental relations, and can continue to perform such roles without being in the board.
On the appointment of executive directors, President Buhari stressed the need to exempt serving public officers from the established confirmation process for political appointments.
He said this would ensure effective management of the regulatory institutions through uniform implementation of public service rules for employees of the Downstream Petroleum Regulatory Authority .
He said the proposed amendments to the PIA 2021 is strictly about the structure and aimed at ensuring smooth take-off and consequent growth of the two institutions.
“The proposed amendment will increase the membership of the board from nine to 13, that is, representing 44 per cent expansion on both sides. This competition will strengthen the institutions and also achieve the expected policy contributions.
“The two ministries already have constitutional responsibilities of either supervision or intergovernmental relations that will continue to perform such roles without being in the board. It is also important to note that administratively, the representatives of the ministries in the board will be directors in the same rank in the institutions
“(c) Appointment of executive directors. The Act has made provisions for seven departmental heads in the authority to be known as executive directors. The appointment will also be subject to Senate’s confirmation.
“The Senate is invited to note the need to exempt serving public officers from the established confirmation process for political appointments.
“This will ensure effective management of the revenue generating institutions through uniform implementation of public service roles for employees in the authority.
“The proposed amendments to the PIA which is aimed at laying safe administrative structures governed by simple operational laws that will ensure smooth take-off and consequent growth of the two institutions and also in line with this administration’s commitment to carry out petroleum reforms,” he wrote.
In yet another letter, President Buhari also sought the Senate’s confirmation of the Board of the Upstream Regulatory Commission.
In the letter dated September 16, 2021 and read during plenary by the Senate President, said the request sought for confirmation the Chairman, Chief Executive and Executive Directors for the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
This, he said, was in accordance with the provision of Section 34(3) of the PIA 2021.
The nominees for confirmation into the Nigerian Petroleum Regulatory Board are: Idaere Gogo Ogan (Chairman); Engr. Sarki Auwalu (Chief Executive); Abiodun A. Adeniji (Executive Director, Finance and Accounts); and Ogbugo Ukoha (Executive Director, Distributions Systems, Storage and Retail Infrastructure).
Also in another letter dated September 16, 2021, President Buhari while relying on the provision of Section 11(3) of the Act sought the lawmakers’ confirmation for his nominees for Chairman, Chief Executive and Executive Commissioners to the Board of the Upstream Regulatory Commission.
The nominees for confirmation are: Isa Ibrahim Modibo (Chairman); Engr. Gbenga Komolafe (Chief Executive); Hassan Gambo (Executive Commissioner, Finance and Accounts); and Ms Rose Ndong (Executive Commissioner, Exploration and Acreage Management).
According to the President, both requests for the confirmation of the board’s membership were made “in order to fast track the process for the establishment of the Commission.”