Deal with subsidy, ailing refineries, experts tell new NNPC boss

The contentious fuel subsidy, ailing refineries, pipeline vandalism, and crude oil theft, among others, have been tabled by industry stakeholders as some of the elements threatening the nation’s economy.

Industry experts raised these as top concerns as the new Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, assumed office on Monday.

President Muhammadu Buhari on June 20, 2019, appointed Kyari to take over from Dr Maikanti Baru, who retired statutorily on July 7, 2019, at the age of 60.

Experts, who spoke with our correspondents in separate interviews, highlighted the need for the new NNPC boss to address the nation’s inadequate refining capacity, among other vital issues in the nation’s oil and gas industry.

A former Chairman, Petroleum Club, Lagos, Mr Godswill Ihetu, said the resuscitation of the nation’s ailing refineries should be the number-one item on the new GMD’s agenda.

He said, “We have four refineries that are all comatose, and in the meantime, the hottest topic in the industry is about subsidy. Some people say it must be removed because we are spending a lot yearly on subsidy — money that should have gone into education, agriculture, health and so on.

“As long as we keep importing petroleum products, and we are also keeping the subsidy, we are going to keep bleeding the country. But if the refineries are working, we might spend less on petrol imports.”

Ihetu urged the new NNPC boss to run the corporation with clear corporate plans and “ensure that the corporation is working.”

A former President, International Association for Energy Economics, Prof. Wumi Iledare, said Kyari could build on what Baru had done in terms of transparency and accountability.

“He also needs to engage the industry, although not as an agency but as an investor. If he is going to succeed, in my opinion, he needs to de-emphasise the agency role of the NNPC and play the commercial role. Even if the PIB is not passed, he can take that document and look at what is expected of the NNPC and follow it,” he added.

An energy expert, Mr Bala Zakka, who also decried the state of the government-owned refineries, said, “Nigeria is too big not to have functional refineries. So, our expectation is that the new GMD, in collaboration with the next Minister of Petroleum Resources, will make sure that at least one refinery is fixed and, if possible, let us establish one new refinery in four years.”

According to him, Africa is looking for leadership as far as the oil and gas industry is concerned and Nigeria has huge resources to do that.

“But if Nigeria continues to drag her feet, then Africa is likely to look elsewhere for leadership,” he added.

The Petroleum and Natural Gas Senior Staff Association of Nigeria, on Monday, called on the new GMD to tackle pipeline vandalism, crude oil theft and other challenges.

PENGASSAN commended Baru for his contributions to the growth of the industry, adding that “history will remember him for his good works that brought stability to the industry in terms of industrial relations management and free flow of refined products.”

It said, “We agree that the nation’s oil and gas industry is on a steady progression to the next level. However, the challenges associated with pipeline vandalism, crude oil theft, inadequate infrastructure, pricing uncertainties, and the obsolete refineries, as well as the contentious fuel subsidy issues and resting of the Petroleum Industry Bill, are issues the Nigerian masses expect the new NNPC board to champion.”

The union commended Kyari’s leadership of the team that proposed and managed the Direct Sales and Direct Purchase arrangement of petroleum products from 2016, saying the process saved the nation of over $1m in 2016.

Meanwhile, the new GMD has promised that the nation’s four refineries will become fully operational before 2023.

Speaking at the valedictory session for Baru at the corporation’s headquarters in Abuja, Kyari also vowed that the country must become a net exporter of petroleum products before 2023.

He said, “There is the legitimate expectation of Nigerians that why are we an oil-producing country with four refineries and yet importing sometimes 100 per cent of our petroleum products’ requirements? It is very sad.

“The GMD emeritus has told you the steps that we are taking to get the Port Harcourt refinery  in place and I’m assuring you that we will follow it up to make sure that within the life of this administration, before Baba’s (President Muhammadu Buhari) tenure ends in 2023, we will deliver on the four refineries.”

Kyari described as critical the cooperation of the private sector, particularly the Dangote refinery, which he said could be a game changer for the country.

He said, “We cannot set time for them (Dangote), but the latest information we have is that it will come on stream in the first quarter of 2020. We will support them on this.

“And by having our four refineries functional by 2023 and having the Dangote refinery running, with so many other initiatives that are coming up, we think that by 2023 when Baba leaves, this country must be a net exporter of petroleum products.”

He said the nation’s crude oil production and reserves would increase to three million barrels per day and at least 40 billion barrels respectively before 2023.

Kyari, however, said, “Today, we are still grappling with the reality that this company did not deliver what it could have delivered. In the last three years, we have made significant strides and I’m proud to say that I’m part of the many decisions that led to this.”

He said international oil companies operating in the country must be ready to do business and make a moderate or reasonable profit.

“For the executives of international oil companies, we will work with you and there are two things we have to do with you, which are to grow production and reserves, and also it should be beneficial to all. We’re going to make it win-win,” he added.

The new NNPC boss also warned operators and stakeholders in the industry not to give members of his family gifts, as this would have no influence on him.

Kyari, who spoke after receiving the mantle of leadership from Baru, said he never prayed to head the oil firm, and stressed that he would strive to further curb corruption in the NNPC.

He said, “I’m not sure I’m the best. I don’t believe that, because there are better people here. I only have a first degree. And I know that in this corporation you have at least 40 people with PhD. But that tells you that leadership comes in two ways — you earn it and there is always a divine part of it.”

On his plans to end corruption, he said, “We are going to work with the EFCC (Economic and Financial Crimes Commission) to make sure that we take out corruption in our system. Gone are the days where we see NNPC as a very opaque institution.

“We have a responsibility to declare what we do to the citizens of this country. It is their right, not favour. So, we will work with the press and be transparent to all.”

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