Petroleum sector to witness transparency, cost reduction, others, says NNPC’s MD Kachikwu
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, has unveiled plan that would move the country’s oil and gas sector towards profitability.
Among other things, the GMD, has vowed to flush out more people who engage in illegal activities from the NNPC, reduce loses of Nigeria’s crude oil resources and ensure transparency in the award of contracts.
Speaking with journalists in Lagos, he disclosed that the award of contract by the corporation would henceforth be made public to ensure transparency and to make the activities of the corporation transparent and open to the general public.
“Contracts will be made open to the public and we will choose the best module that works for us and that helps us save money.
“We need to clean the system and carry everybody along. The concept of what is right and wrong will take us very far,” he said.
Kachikwu added that the corporation would urgently embark on a transparency operation to regain its lost credibility.
According to him, the transparency operation would start with an audit of the corporation’s finances, which was last audited in 2010. He said the corporation’s finance would not only be audited and brought up to date, but would also be made available to the general public.
The GMD said the transparency operation would also involve posting of the corporation’s activities on its website regularly.
He added that along with the regular data, there would also be a weekly broadcast of issues concerning the corporation on its website from now henceforth.
Kachikwu said though, there are huge challenges in driving the corporation forward, but they would be surmounted with good planning and efficiency.
He noted that the challenge of cleaning NNPC would be a bumpy, exciting ride, which would eventually yield positive results.
He disclosed that the country is losing about N250 billion yearly, owing to the inefficiencies of the Pipelines and Product Marketing Company (PPMC), which is one of its subsidiaries.
According to Kachikwu, the PPMC is responsible for over 80 per cent of the losses incurred by the corporation.
“The corporation loses N250 billion a year through the PPMC, and now we are committed to ensuring that the Chief Executive Officers of these subsidiaries make their companies profitable,” he said.
Kachikwu said the NNPC was likely to lose more staff members going forward, explaining that currently, the people retiring from the service of the corporation were not being replaced.
For NNPC Retail, which overseas branded NNPC filling stations, he said a lot of fraud was being perpetrated through the avenue, adding that a huge amount of products has been missing in transit with no one accounting for it.
The NNPC boss stressed that the proliferation of NNPC-branded filling stations in the country did not follow an ideal model, saying the corporation would streamline the number of such stations, and ensure that subsequent growth seen in its retail section was justifiable.
Speaking on the refineries, Kachikwu said selling the national assets now would not be economically viable as they would be sold as scraps.
He confirmed the three-month deadline given to the managers of the refineries to make them profitable, saying the corporation might be compelled to shut them down for repairs if the needed progress is not achieved.
He said it would make more economic sense for the country to export crude oil and import finished petroleum products; instead of banking on re
fineries that cannot work at 60 per cent capacity or above.
“Refineries must operate at a minimum of 60 per cent capacity to be profitable. Anything below that is a loss,” he said.
Kachikwu disclosed that the Federal Government wants to first fix the refineries before considering the issue of sale. “If you sell them in their current state, you’ll sell them as scraps, so there will be no value coming back to you anyway, which is logical. “The very intelligent thing to do is, let’s fix the refineries and if they are not performing you sell them as finished, completed and enhanced refineries and you get better value.
“What I will love to see ultimately is, if they do not work, and I hope that they do work, is to at least on a majority shareholding, the refineries can be taken over by foreign investor who then takes over the technical management, almost something like the Nigeria LNG model”, he added.
“If after we finish and we think that the issue is management, then we see if there is somebody willing to buy a majority share that has the skills and market reach internationally to do the work. Obviously if we did that and by then we have expressions of interest, people who are building refineries in this political environment will be given the first right of refusal because they will be able to help manage what is there, help to share skills. I have not lost faith in myself as a business man, but we have to take all the social realities together.”
He described pipeline security as integral to the current NNPC management, adding the PPMC would likely start a company, which would solely oversee pipelines security and management.
He said the corporation was currently evaluating different proposals in terms of technology for product pipelines monitoring, blaming influential members of the society for being responsible for the bursting of pipelines in the country.