By Obas Esiedesa
The laws setting up the Nigerian National Petroleum Corporation (NNPC) did not explicitly mandate it to be commercially driven and this has resulted in its decades of poor performance, energy expert, Najim Animashaun has stated.
Animashaun, Principal Partner at Prism and Partners, made the submission at an online Master Class on Natural Resources Charter organized by the Nigeria Natural Resources Charter (NNRC).
He pointed out that the law setting up the NNPC as a National Oil Company (NOC) does not give it the mandate to be commercial oriented in operation.
He said compared to other National Oil Companies across the globe NNPC has performed poorly because it regularly deviated from its core mandate of looking for oil and gas and producing them.
Animashaun observed that Petronas (Brazilian NOC) with lower reserves could generate more revenues and 26 times more profits than NNPC while subject to the biggest corruption investigation in its history and paying fines or making provisions in excess of US$10 billion on its balance sheet and still make profit because it is commercially driven.
He emphasized that commercial efficiency was key to successful operation of an NOC, adding that for NNPC to achieve that the laws setting it up have to be changed.
He pointed at the lack of technical ability in the board of NNPC as pointer to the fact that big reforms are needed to make it profitable and able to deliver more benefits to the country.
He stated that only two of the eleven-member NNPC board set up last week by President Muhammadu Buhari have oil and gas industry experience.
The energy added that often times, NNPC operates above its board, by going directly to the President to get approval for its projects.
He called for a quick passage of the Petroleum Industry Bill (PIB) by the National Assembly, explaining that a new law for the industry would free up NNPC as an NOC to focus on its core mandate and compete with other NOCs and oil companies for business.
Earlier, another expert, Dr Adedeji Adeniran who spoke on NNRC Precept 6 – State Owned Enterprises, which states that “Nationally owned companies should be accountable, with well-defined mandates and an objective of commercial efficiency”, said NNPC has performed poorly on this benchmark.
He said studies have found NNPC lacking as a SOE on Role and Funding; Corporate Governance; and Accountability and Transparency.
He disclosed that as an entity NNPC is “bleeding red” as it recorded N344.6 billion losses in 2018 with the Central Headquarters contributing N158.6 billion to the losses.