As the Nigerian National Petroleum Company Limited (NNPC) officially transits to a private entity that would be regulated in line with the provisions of the Companies and Allied Matters Act (CAMA), the nomenclature of the Group Managing Director (GMD) of the national oil company would also change to the Group Chief Executive Officer (GCEO), in line with the Petroleum Industry Act (PIA) 2021.
This is coming as Nigeria produced less crude oil in the first six months of 2022 compared with the same period in 2020 and 2021, an analysis of the data on the country’s total oil production from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has indicated.
According to findings by THISDAY, companies globally take conscious efforts to define how their impact would be measured, ranging from services to relationship management with both the employees and external stakeholders. Under the new status, NNPC Limited would be the holding company.
The Corporate Affairs Commission on September 21, 2021, completed the incorporation of the NNPC Limited following the provisions of the PIA 2021.
The PIA was signed into law by President Muhammadu Buhari on August 16, 2021, following its passage by the National Assembly in July of the same year.
Specifically, Section 53(1) of the Petroleum Industry Act 2021 requires the Minister of Petroleum Resources to cause for the incorporation of the NNPC Limited within six months of the enactment of the PIA in consultation with the Minister of Finance on the nominal shares of the company.
With the registration by the CAC, NNPC Limited was floated with an initial capital of N200 billion making history as the company with the highest share capital in the country.
Since when the PIA was signed into law last year, the management of the NNPC has taken proactive steps to prepare it for the July 1 take-off as a CAMA company.
President Muhammadu Buhari would unveil the new NNPC Limited on July 19.
The shift in nomenclature from GMD to GCEO implies that going forward, the NNPC subsidiaries would be managed by the GCEO.
THISDAY learnt that consequently, the GCEO would now be directly responsible for the overall growth of all the subsidiaries and the holding company (NNPC Limited) and the Group CEO being the chief accounting officer is empowered to make decisions in line with established governances by CAMA.
However, the title GCEO comes with additional responsibility for measurable performance, upholding the highest level of professionalism and accountability while acting as the company’s representative in all strategic engagements globally.
This is a significant departure from the way NNPC used to operate as a corporation where most of the major decisions would have to pass through Federal Executive Council (FEC) approvals, among others.
PIA introduced a landmark reform through the creation of NNPC Limited as a commercially focused CAMA entity that would operate without recourse to direct funding from the federal government.
This was a monumental change expected to reshape the overall industry in Nigeria while serving as a model for other National Oil Companies (NOCs).
In addition, this change would naturally come with higher expectations in terms of delivering value, greater responsibility for regulatory compliance, active engagement with stakeholders and above all, a scaled sense of accountability in the entire organisation.
“We recognise the strategic importance of our talent pool in this journey and winning their commitment to delivering the desired results would continue to encourage us to innovate and reorganize the NNPC in a way that will be motivating and rewarding. We would, therefore, remain innovative in our structure and nomenclatures that fit our aspirations and inspire us to deliver exceptional value,” a top official at the NNPC who pleaded to remain anonymous, told THISDAY.
Furthermore, with the new status, greater emphasis must be placed on corporate governance. PIA 2021 made clear provisions regarding the Board of NNPC Limited. These provisions alongside CAMA mandate NNPC to be structured in a manner that conforms with best practices.
Muhammadu Buhari inaugurated the Board of NNPC Limited and charged the Board members to ensure that the company remains focused on profitability, continuous value creation beyond legal and regulatory compliance, and operational excellence at par with industry peers while acting as an enabler to foster development.
NNPC had explained that it was fully committed to effective corporate governance, accountability, appropriate risk management and sustainable value in the face of the energy transition.
To achieve this strategic requirement, four committees were set up by the Board of NNPC Limited comprising, the Board Establishment Committee (BEC), Board Finance, Strategy, and Investment Committee (BFSIC), Board Sustainability Committee (BSG) and Board Audit Committee (BAC).
The responsibilities of the committees are as follows: Board Audit Committee with oversight functions covering internal and external audit, enterprise risk management and internal controls, financial reporting, ethics, and compliance; Board Finance, Strategy and Investment Committee with oversight functions covering strategic planning, financing strategies and capital allocation, investment framework, performance reporting and Information Technology; Board Establishment Committee with oversight functions covering corporate governance, nomination and capacity development, succession planning and remuneration of directors, and Board Sustainability Committee with oversight functions covering long term sustainability, HSE, energy transition and Corporate Social Responsibility among others.
The Board committees are expected to be carrying out oversight functions of planning and implementation of the company’s strategy and to define a framework for measuring and monitoring the performance of the company.
In terms of staff welfare, “today NNPC is an equal opportunity employer of choice, going into the future, NNPC would be one of the most admired, attractive, and exciting global organisations to work with.
“Our Employee Value Propositions promise to be competitive and working with the company will offer employees the opportunity to actively contribute to creating long-term sustainable value for all stakeholders. This singular sense of fulfilment of professionalism and patriotism for the greater good would be the best form of reward and recognition for our dedicated staff,” the source added.
Group Managing Director of the NNPC Ltd, Mr Mele Kyari, recently explained: “On 1st of July, we crossed over to the NNPC Limited both technically and financially on every aspect. Not only that, on the 19th of July, I’m inviting all of you to be present. Mr President will unveil the NNPC Limited to all of us on the 19th of July, and I’m inviting you.
“The meaning of this to our industry is that you’re going to have the partner of choice, the partner that will support you, the partner that will be the largest capitalised company in Africa. Not only that, a partner that will be born of best practice, of everything that you can think of because we’re going to be a CAMA company. We are going to be another Shell, decision making would be easy, finances will also be easy.”
Kyari stated that the NNPC would be very frontal in its moves to acquire as many oil and gas assets as possible with the mindset to become one of the biggest oil firms in the world.
“What is very fundamental is that the NNPC is set to be the partner of choice. We will be the biggest capitalised company in Africa. We will be the partner that will be focused on the commercial value of every engagement that we do.
“We will be the biggest oil and gas company and therefore there will be no distinction between the NNPC and the rest of the partners that we have in this business.
With Growing Drilling Challenge, Nigeria’s H1 Oil Production Falls by 28m Barrels
Meanwhile, the data from NUPRC showed that Nigeria produced 302.4 million barrels in the first half of 2020, which was regarded as the COVID-19 year, 248.6 million barrels in the same period in 2021, and slumped further to 220.016 million barrels from January to June this year. That is an 11.29 per cent change between 2021 and 2022.
With the drop from the 302.4 million barrels in the first half of 2020 to 220.016 million barrels in the first half of 2022, Nigeria lost 82 million barrels of production between 2020 and 2022.
The NUPRC data further showed that in the first six months of 2021, when the world had started recovering from the pandemic, Nigeria also surpassed this year’s six-month drilling total for the same period by 28.6 million barrels.
The figures highlight the seriousness of the drastic fall in the country’s crude production capacity, which has been blamed on massive oil theft, deteriorating upstream infrastructure, prolonged lack of investment in the sector as well as the inability to restart oil wells shut down in the height of the pandemic.
Of the country’s recorded 35 terminals/streams, the NUPRC data showed that Ajapa, Ima and Anambra Basin remain non-producing, while Tulja-Okwuibome started producing in 2022, after a period of dormancy in 2020 and 2022.
To underscore the seriousness of the under-production challenge, out of the 1.772 million barrels per day of crude oil allocated to the country by the Organisation of Petroleum Exporting Countries (OPEC) in June, Nigeria was only able to produce 1.158 million bpd, according to the latest Monthly Oil Market Report (MOMR) by the organisation.
A THISDAY review during the week showed that Nigeria’s daily underperformance pegged against the OPEC quota yielded a whopping 614,000 bpd or 19.034 million barrels deficit for the month alone.
A further breakdown revealed that valued against $110 per barrel for the period, Nigeria may have lost as much as $2,093,740,000 to its inability to increase the country’s production level.
For a country with a huge foreign exchange shortage, the loss could, if it had been plugged, for a start, help cash-strapped federating units (states and local governments) embark on major projects.
Ejiofor Alike in Lagos and Emmanuel Addeh in Abuja
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