Kachikwu: The challenge and the remedy

Kachikwu

Kachikwu

This is not the best of times for Emmanuel Ibe Kachikwu. These days, the man is the news and the news is the man. Most of the times, in fact almost all the times, in recent weeks, the news about him has been bad news. And it is understandable: the long, winding queues of people and vehicles waiting to buy petroleum products have refused to go. As the head of the government agency that deals with oil matters, and the minister that supervises that agency, the nation looks up to Kachikwu to get the citizens out of the mess called fuel scarcity.

To most Nigerians, President Muhammadu Buhari, who is actually the Minister of Petroleum Resources, is just a figurehead. Kachikwu is the man running the kingdom of oil. He is the face and the voice of the empire. When things go wrong, as they are now, he takes the blame. When things go right, as he says they will soon, the President takes the credit. It is laughable when people send petitions to the President either demanding a sack or that Kachikwu be investigated over fuel scarcity; as though the President is not a part of the hardship we face.

Somehow, it is understandable because Kachikwu is the man on the beat. He is expected to have the solution to the problem, every oil problem. Pitiably, the man seems trapped somewhere between the problem and the solution. Listening to him address a cross section of stakeholders the other day, you can’t help but pity him. Before coming to what he said, it is pertinent to point out that some politicians and questionable businessmen are more interested in getting Kachikwu out than getting the problems solved.

Besides the ground-shaking statement by Asiwaju Bola Ahmed Tinubu, two weeks ago, just this past week, a certain organisation called Oil Mogul, published some funny allegations in the newspapers by way of open letter to Buhari deriding and questioning Kachikwu’s competence in handling not just the fuel situation but managing the petroleum ministry and the Nigerian National Petroleum Corporation (NNPC). When you go through all the issues raised, they sounded more like the cries of a frustrated politician who blames everybody but himself on why he lost an election.

Among the issues raised by the petitioners was the allegation that Kachikwu was yet to meet with the International Oil Companies (IOCs) since he assumed office. Unfortunately, their petition to the President was published alongside a story announcing the readiness of the IOCs to give foreign exchange to some major marketers in the country to enable them import petroleum products for public consumption. The question arises: if the minister was yet to meet with these people as published by the petitioners, how come the IOCs agreed to help the marketers out of the crises?

One main action by Kachikwu that has attracted debate and which groups have written petitions about has been the restructuring of the NNPC. This action has not gone down well with a lot of oil sector interest groups who know that with the creation of lean, independent limited liability companies out of the unwieldy NNPC of the past, those sharp practices they used to pull for self-enrichment will now be easily exposed. Most of them have fought from all angles to stop the exercise.

Even the organised labour groups have come to terms with the fact that with the restructuring, new jobs would be created as each subsidiary expands and there will be better transparency and accountability in the operation of the NNPC as a whole. One other advantage is the fact that there is now going to be a complete devolution of power, unlike what was in the past when the GMD held the ultimate supervisory powers over all the subsidiaries. Each of the independent subsidiaries is to be managed by CEOs who only reports to the NNPC board through the GMD.

At a press conference to announce the restructuring, Kachikwu said all the analysis done in terms of the number of staff indicated that NNPC is overstaffed and that the only way they can absorb everybody was to create work so that everybody who is in the system will have something to get busy with. He announced that: “the principle of our restructuring is that nobody loses work because the environment is just too testy for now to throw people out of work. So, nobody is losing his/her job, but people are going to get busy in the respective business units and it is a chance for anybody who wants to progress in his career and prove himself to rise up and get what he/she wants.”

So far, in spite of certain setbacks caused by people who believe NNPC was better off even in its unproductive state, the restructuring is on its way to achieving the desired objective. Unfortunately, fuel scarcity, with its attendant negative impacts, has dwarfed whatever good thing the country stands to gain from the controversial restructuring of NNPC. Curiously, some petitioners believe that Kachikwu is conducting the affairs of NNPC without the President’s involvement. That cannot be true. Not a president like Buhari on whose watch the idea of NNPC came into being.

There is no doubt that a lot of people’s interests have been sacrificed since Kachikwu took over as GMD of NNPC. But this is without any regrets. The reason is simple: those who did genuine business with NNPC before the advent of the new leadership are still there. In fact, they are the ones solidly behind the restructuring and other ongoing reform programmes at the NNPC. The problem principally is with those who profited from the sharp practices that deprived the nation of billions of dollars.

In order to understand why most of these actions had to be taken, it would be good at this point to reflect on a short story Kachikwu himself told some stakeholders, last week, while addressing the issue of fuel scarcity. He said that on assumption of duty in August last year, he met on ground indebtedness close to N600bn owed petroleum products marketers for over one year. This made some of the major dealers and everybody who was importing fuel to very quietly reduce the levels of importation that they had. The situation went worse until the National Assembly and the President approved to eventually pay a good portion of that subsidy sometime in November although it was already too late.

He said that although they got the money, they didn’t have access to foreign exchange. He said: “the main critical reason why you have this supply gap today is that although NNPC has its own 445,000 barrels allocation of crude…and is indeed exceeding that, the individuals who should provide the balance of the 40 per cent component are not bringing in any product. So, we’ve had to be very creative over the last four, five months, until we basically ran out of options and the sort of creativity that we have put in place was forward buying, forward purchase, forward crude allocations, and also, just to bring in more product, because we saw NNPC transit from a 45 per cent provider to 70 per cent, and about this month, to 100 per cent provider of petroleum products in Nigeria.”

Kachikwu explained that that option was not sustainable because “we didn’t have the capacity, we didn’t have the funding, we didn’t have access to the product; and we didn’t have the foreign exchange. So, in very many ways, it’s surprising that we have even been able to survive this long. So, the key element has been how to find foreign exchange for those who eagerly want to participate in the downstream, who have been doing this traditionally, to get into the space, buy their products, come in, and distribute. That is something we have had to work on.”

In a bid to solve this problem, Kachikwu told the stakeholders that for the first time in Nigeria’s history, NNPC decided to approach and was able to convince the upstream companies to provide some foreign exchange buffer over the next one year for those who are bringing in products. “It’s been very innovative, putting $200 million of foreign exchange availability out into the space. It’s taken a lot of goodwill; it’s taken a lot of work…”

Still, he said: “the second thing we have done is, we have had to box our way through the CBN to get a little of allocation, because we provide the bulk of this foreign exchange, we should have a bit of it to help stabilise the situation, because fuel queue, don’t make any mistake about it, it doesn’t matter what we achieve in our transformation agenda, is the single most difficult item, which if not solved can bring down the polity and can create a mayhem here. So, it is something that we have focused on. So, I have been able to get a bit of co-operation from CBN on that.”

That, in a way explains it partially. He also talked about pipelines issue in comparative terms and what government has been doing to ensure that the situation is brought under control. It might be a consoling, compelling story; one that gives the impression that unknown to the public, the minister is not sleeping while the nation suffers. However, what matters to the ordinary Nigerian is to wake up one morning and the fuel queues have disappeared.

With the foreign arrangement described above, he said importation has started; but added “…it’s been a very difficult work, very challenging, but we are getting to the solutions. The first few cargoes are beginning to come in… But that is not a long-term solution.”

Beautiful! It is definitely not the long-term solution. The eternal solution will come when our refineries start producing at installed capacity. That will not only make fuel available, even for export, it will also create jobs for people like us.
Akpe writes from Abuja



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