According to a robust framework implemented to combat crude oil theft
… Allays fears of job losses due to NNPC transition
The Group Managing Director of the Nigerian National Petroleum Company Ltd, Mele Kyari, assured on Monday that with the way the Petroleum Industry Act is structured, what has resulted in the transition of NNPC Ltd into a CAMA, its operations as a going concern will not be affected by changes in government in subsequent years.
Kyari said this during an interview on Channels Television which was watched by THE WHISTLER.
On July 1 this year, NNPC LTD fully transformed into a company whose operations are regulated under the Companies and Related Matters Act following the implementation of the Petroleum Industry Act.
The Corporate Affairs Commission had on September 21 last year completed the incorporation of NNPC Ltd in accordance with the provisions of the Petroleum Industry Act 2021.
The PIA was signed into law by President Muhammadu Buhari on August 16, 2021, following its adoption by the National Assembly in July of the same year. With the registration by the CAC, NNPC Ltd was launched with an initial capital of N200 billion, making history the company with the highest registered capital in the country.
Buhari is expected to officially unveil the new NNPC Ltd on Tuesday at the State House.
Speaking during the interview, Kyari said the transition of NNPC would make it a commercially oriented, for-profit national oil company, independent from government and audited annually.
He said that in terms of operations, NNPC Ltd would be run as a private sector company and unlike before when it was government owned, NNPC should become more efficient in its operations.
He said the company will also effectively maximize returns on investment for Nigeria’s 200 million people, ensure returns for shareholders and pay taxes to the government.
When asked if the change of government on May 29 next year would affect NNPC’s operations, as it had with other government enterprises in the past, Kyari said, “I don’t see no political consideration to that (NNPC in transition). As you may know, deregulation is clearly spelled out in the POA within the timelines. Deregulation is about fixing the price of oil at the appropriate price and certain circumstances force the government and the state to decide whether they will give subsidies for certain products.
It has also taken steps to address the problem of crude oil theft and pipeline vandalism.
In a three-month period spanning January 1 and March 31 this year, Nigeria lost a whopping $1 billion in revenue due to crude oil theft.
The theft of crude oil has frustrated the government’s efforts to attract new investment into the oil and gas industry through the implementation of the Petroleum Industry Act.
The theft of crude oil had a negative effect on federal government revenues, which robbed the country of much-needed funds to spur economic development.
Apart from loss of revenue, the issue of oil theft is currently not only threatening NNPC’s quest for the country’s energy security, but also having a debilitating effect on Nigeria’s foreign exchange earnings.
Nigeria depends on crude oil revenues for over 90% of its foreign exchange earnings.
But Kyari said a robust framework is being implemented to tackle crude oil theft.
He described crude oil theft as an “elite business” that must be tackled “head-on”, adding that Nigeria is currently losing around 400,000 barrels of oil a day to the threat.
He said: “We’ve never seen the scale of the disruption and we’re losing over 400,000 barrels of crude oil a day and that’s a challenge.
“We are working with our partners and the security agencies and there is a solid framework that is implemented and ultimately we will contain the acts of vandals.
“We understand that crude oil theft is an elite business and we will tackle it head-on. We know that when we disassemble, everything will be back to normal. Between Mosimi and Atlas Cove we cannot pump oil due to vandals and it is a complex framework that we have put in place to meet these challenges and we will overcome it. The president has made it clear that we have to stop this.
Kyari also allayed fears that the transition will not result in job losses, as is typically the case with many other entities undergoing such processes.
He said: “The law is very clear that we have to keep everyone working for the company. Today, we have just over 7,000 direct employees of this company and the law requires us to retain all of them.
“We will also make sure that they receive compensation at least equal to what they have today and that no one will lose their job.
“The law also provides that they have to be more effective and efficient and so, within us and in our union, there is a perfect understanding that we have to do things differently and that a new culture has to take place, there has to there should be consequences and also appropriate rewards for doing things effectively. We have no problem managing the subsidiaries.