Business & Finance

Ex GMD: NNPC Can Only Grow If Detached From Govt


Chief Chambers Oyibo, is the former Managing Director of the Nigerian National Petroleum Corporation (NNPC. In this interview, he shares his thoughts on the recent unbundling in the corporation and other issues in the nation’s oil and gas sectors.

What is your take on the purported unbundling of the NNPC by the federal government?
I have not seen the details. We only read from the papers about the Upstream, Downstream,  Finance, Gas and Power, Services sectors and other smaller companies. I have not seen the radical change except in nomenclature, with each of them having what they call chief executive. And NNPC is one company that has subsidiaries registered with the Corporate Affairs Commission. So, I don’t know the details. It is difficult to comment when one doesn’t have details. In fact, a lot of us, the retired people, who have played a big role in the life of the NNPC are very anxious to see the details so that we can interact with the management and find out why these changes and the advantages of these changes over the previous structure apart from the nomenclature of chief executives. So, I can’t make any comments until   after seeing the details.

Does the unbundling aligns with your ideas and suggestions on how best to move the NNPC forward?
Well, as I said before I have not seen details. But what I was expecting were areas where the NNPC has been empowered to act as a commercial organisation. Can they use oil assets under their management as collateral to borrow money to operate? Can they use oil assets, the reserves, as collateral to raise funds for running the company and for new projects? Are they allowed to just pay royalty and then at the end of the year pay taxes based on profits? Or, are they still going to be run like  government company where every day, every week, the general manager is in the Presidency or in a minister’s office taking instructions? Those are the areas I was expecting to hear about but as I said, I’ve not seen details. Whether those things are in a bigger document, we don’t know.
The labour  unions  and other stakeholders protested not being consulted by the federal government over the decision.  What’s your take on that?
Government is not  bound  to consult people like us. However, we are all stakeholders in the NNPC and those of us who have spent all our lives in the oil industry, which in my own case is 50 years, would like to still contribute because we will like the country to have an effective structure for the NNPC. No single human being is all-knowing. So others also want to contribute.
As for labour, I think they are right to want to be consulted because they are the operators of  the company and the progress of the company should be in their own interest. Although, the minister of state has said there  would be no sack of staff, that is not the only thing needed to grow the corporation.
Last year, the NNPC sacked some people under the guise of reforms. There were fears that the action may have eroded some of the best hands in the corporation. Would that have any impact on the oil company?
There were no major reforms last year; they only reduced the number  of directorates which is alright. We’ve run that kind of structure before  when  we had  only two GDs,  and they were increased to six.
As the company was expanding, the headquarters was creating new directorates to look into different aspects. So if the government decides to bring these back, as long as they’ve thought about it, I personally don’t have any objections, knowing that the only thing constant in life is change. But we just hope that whatever the government  is  doing is well thought through and capable of bringing about progress.
The government has said it will not privatize the nation’s  refineries despite public outcry to sell the assets off. How do you think our refineries can be run in order to stop the importation of petroleum products into the country?
First, Nigerians should know that even if those refineries are operating at 100 per cent capacity, they will not meet more than 50 per cent of our requirements, especially Premium Motors Spirit (PMS). So, we will either continue to import certain products or build enough refineries. The reasons more refineries have not been built over the years is because of the way the government controls it. Government determines the price of the product. That’s why none of the international majors has agreed to build a refinery in Nigeria.
The price fixing should be left for the industry and not the government. After all, it is not the government that tells us how much to pay for our telecommunication  services and phone calls. But where there is competition, those prices would surely come down.
Besides, the refineries are not working not because of the ineffectiveness of the staff but mostly because of the security situation. The pipelines supplying crude oil to the refineries are always being attacked. So, even if these refineries are privatised, and vandalisation of the pipelines continues, they cannot operate well.
So, either we are  able to police the pipelines more effectively or we go the expensive way of redoing all those pipelines and bury them deep. Production would continue to be interrupted. If NNPC is to be an integrated oil and gas company, it should own the refineries but run them effectively and government should now take care of all the security issues.
What do you have to say on petroleum subsidy?
Well, I believe government still wants to remove subsidy and it wants to deregulate which, I know, would be very good for the country. But they are also afraid of what happened in the past. In 2012, when the previous government attempted to deregulate, lots of strikes and actions were organised. I believe the current government is trying to avoid  the same situation. I think this is the time for them to say OK, we have deregulated but without increasing the price and let the  oil companies and marketers adjust their prices up and down as need be. If that is done, more refineries can be built, products would be brought into the country and people would know that they are not going to lose the money or depend on government for subsidy.
What is your take on the fact that the  current Minister of State for Petroleum is also the GMD of NNPC?
It is not good for the NNPC; the problem of NNPC in the past was too much government interference. It is wrong to make one man Minister of State for Petroleum and CEO of NNPC, which he is supposed to supervise.
A former minister of Petroleum Resources was recently invited  by the  Senate to  explain certain anomalies surrounding crude oil swap  among others.

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Do you think it is right to institute probes in the oil and gas industry in Nigeria giving the volatile nature of the sector?
If government wants to know more about certain things, I think it should because the NNPC is a government company and it is meant to work for the Nigerian people. So, they can call for explanation. However, there are enough people presently working with the NNPC who can give explanation to what happened there in the past. If they want the former minister to come, it should be a matter between the court and her doctor. We’ve heard that she is not well; we’ve even seen her photos trending so, I think her life should be more important than the probe. If the doctor says she must travel then so be it. She is an adult and can take her own decisions. But constant probes or always accusing those who operate it are not good for the image of the NNPC. It’s not good for our image before our business partners.
 The international price of crude is still falling, leaving Nigeria’s economy in a pitiable condition. How do you think we can survive the shock created by the downward slide in the price of crude oil?
We depend on crude oil proceeds to run this country. So, when the prices go down, it is bound to affect our economy because the price is not under our control, it’s international. I think the government is taking steps through the OPEC on bilateral basis, talking to OPEC and non-OPEC producers such as Russia to reduce the production rate but there is a clause: this is a commodity that  is over produced.
But that’s the only thing the government can do and this is not the only time oil price would go down and it may never be the last.  What lessons are we learning from this? Our economy needs to be built from other sectors like  agriculture, manufacturing and so on. We depend on foreign raw materials  whereas manufacturing should be based on raw materials obtainable from the country.
The oil industry does not employ many people. It is capital intensive but not labour intensive. So government should do things that would get our  people employed; things such as agriculture and manufacturing. Mining is also another area but it is not well organised, there are lots of illegal mining going on in the country.

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