NNRC calls for overhaul of NNPC

The Nigeria Natural Resource Charter has called on the Federal Government to use the opportunity provided by the prevailing socio-economic situation to embark on an overhaul of the country’s oil and gas sector, in particular the Nigerian National Petroleum Company to make it competitive in line with international best practices.

According to NNRC, a non-profit policy institute committed to effective natural resource governance in Nigeria, NNPC has consistently underperformed.

The NNRCs global best practice benchmark for optimal National Oil Company performance prescribes that national oil companies be accountable to their citizens and government, with well-defined mandates and an objective of commercial efficiency.

However, the NNRC commended NNPC for its commitment to its TAPE agenda and recent publishing of 2018 audited reports of its subsidiaries.

Comparing Norways Equinor and NNPC, performance records show that Equinor’s three refineries averaged 92.8 per cent capacity utilisation in 2018 while NNPC’s three refineries recorded 11.21 per cent.

A 2015 comparison of average refinery capacity utilisation in the United States of 90.98 per cent and Nigeria of 4.88 per cent is even worse.

In the area of revenues accruing to the government, NNPC’s performance compared to Petrobras (of Brazil), or Petronas (of Malaysia) shows “gross inefficiency.”

Even when benchmarked with similar national oil companies in Africa such as Sonatrach of Algeria and Sonagol of Angola, the NNPC still falls short on different counts.

Another area highlighted by the NNRC as a big challenge to the growth of the NNPC is the issue of corporate governance. The NNPC is the only NOC with a serving government minister on its board.

Compared to other NOCs, the NNPC has had far more executive turnover. Unlike Petronas where the average tenure of a chief executive officer is six years, and nine years in Saudi Aramco, NNPC by contrast has had 20 group managing directors in 42 years, an average tenure of two years per chief executive.

Reforming the corporation, according to NNRC requires new thinking and new strategies, starting with the recognition that NNPC was not designed to be a commercially-driven enterprise. Had it been so, it would have been capitalised, granted more operational autonomy and burdened with fewer regulatory functions as in the NNPC Act.

Its governing board would reflect that of a commercial enterprise, even if government owned like Saudi Aramco, with fewer political appointees.

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