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Repositioning the NNPC and Baru’s knack for openness

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By Kingsley Ukah
It will take a great deal of sustained and concerted reforms to ensure that the Nigerian National Petroleum Corporation (NNPC) runs effectively and efficiently in line with global best practices; and for it to serve, without interruptions, the common good of Nigerians.

For decades, the oil corporation has consistently been in the bad books of Nigerians who see it as a behemoth that has been appropriated by successive administrations to service political interests and private ends.

However, the decision of the NNPC Group Managing Director (GMD), Dr. Mikanti Baru, to continually open up the corporation for public appraisal and promote transparent and accountable management is novel in the ecology of the Federal Government’s anti-corruption crusade. Baru is committed to seeking strategic partnership where necessary in a deliberate bid to erase the negative perception that the NNPC cannot achieve the desired results or apply standard best practices in operations.

There is no doubt that leadership is key to every organisation that seeks to succeed. Since coming on board, the GMD has committed himself to doing things that will give the corporation a positive outlook. But one must quickly admit that it is not always easy turning things around in a corporation where corruption has been entrenched and reforms frustrated for years. But what is going well for Baru is his willingness to take on challenges and search for solutions. Apparently, that is why he is succeeding.

That Baru has chosen not to grandstand over the recurring question on the actual volume of Premium Motor Spirit (PMS), popularly known as petrol, being consumed in the country, says much about his ability to be above the fray.

He has not been imprudent in his disposition. He has not created any ballyhoo over the matter that has been understandably politicized.  There is a sense in which the management of the nation’s oil sector has become a political decision under the watch of successive federal government.

But credit must be given to the exceptional leadership and sincerity of purpose that Baru has brought to bear in the management of the NNPC presently. For instance, as part of its expanding strategic partnership, it is a welcome development that corporation has agreed to work with the World Bank and the Federal Ministry of Finance to finally lay these decades of concern about the opacity in the public finance management of the subsector in which the corporation plays a very significant role to a rest.

It gladdened the heart when I heard the Chief Operating Officer (COO) Downstream, NNPC, Mr. Henry Obih, say that the decision of the corporation to abide by the directive of the National Executive Council (NEC) to work with the finance ministry and world bank to finally unravel this mystery.  That such efforts have been frustrated in the pas attests to the financial discipline that President Muhammadu Buhari has inculcated into governance. On this score, the leadership of Baru has demonstrated its support for the president’s philosophy of prudent financial management. He has shown by his disposition that he has nothing to hide.

In a widely reported Nigerian Oil and Gas Conference and Exhibition held recently in Abuja, the NNPC COO, said that: We (the NNPC) are presently in a joint project with the Federal Ministry of Finance. We are doing a study around consumption to determine the actual consumption by the people. He explained that “we have to put it on scale to see what we call the daily load or the evacuation, as against the actual consumption, that is, what people go to the pump every day to buy for their cars and generators at homes and for other uses.”

Obih said: “This is why the National Economic Council has mandated that we work with the Federal Ministry of Finance. We also had meetings with the World Bank about six weeks ago, and we are trying to progress in a global study that would help us get around the actual numbers of what we consume in Nigeria.”  This is forward-looking. While awaiting the outcome of the tripartite investigation, it is equally good that the NNPC has chosen to set some records straight against the backdrop of the ongoing campaign of calumny sponsored largely by the mafia in the sector.

Different consumption figures had been put out there in the social media to deceive the unsuspecting public. This tripartite intervention should, in the interim, put to rest the associated concerns while the investigation will, expectedly, assuage the frayed of Nigerians. Meantime, in terms of daily truck out from depots around the country and in terms of the records of the Petroleum Product Pricing Regulatory Agency (PPPRA) and the Department of Petroleum Resources (DPR) the NNPC trucked out 48 million litres daily in 2016 and 50 million litres in 2017.

The problem of rising volume of fuel is compounded by cross-border smuggling, because Nigeria remains the cheapest source of PMS in the West African sub-region. Unfortunately, Nigeria has a network of oil mafia that cuts across the entire chains of oil businesses in the country.  The mafia group is very big and powerful and has been operating for decades. It is also feeding fat on segments of the country’s pipeline network. It will take consistent and persistent efforts to defeat the oil cartel. At every point, it is fighting back and this has made the work of the Baru-led NNPC a little bit more difficult.

Obih, confirmed the challenges facing the corporation. Read him: “But again, one significant challenge is the fact that we have cross-border smuggling. Nigeria remains the cheapest source of PMS in the West African sub-region. All our neighbouring countries are selling at over 200 per cent high of the price that we pay at the pump. We have challenges in the pipelines that run through land, specifically, the System 2B, for instance; the one that runs around Lagos. It remains a big challenge, because there is a mafia that lives and feeds on those pipelines.

But it is not entirely bad news about the NNPC. Good things are happening under Baru as revealed by the COO, especially in the area of Joint Venture cash call payments. According to him, “What is heartening this year is that we can, at least, say that in a couple of the areas, we can see attempt to address them. For as long as I have been in this industry, we have been discussing cash calls as a never-ending issue. I think we were able to sit down together as an industry and government to try and tackle that issue and we should not underrate the importance of that.

“What is of significant today is that argument is off the table. For the first time, we finished a year without NNPC owing cash calls. That just essentially opens up the appetite. What that has done is that it opens up the appetite to have a conversation about investment. Nigeria is competing for capital with every other country in the world and sometimes we forget that and think that we are world unto ourselves, but the reality is that each of these companies operates in 20, 30, 80 countries and people are competing for capital. The whole JV process, we all need to put our hands on the plough to ensure it does not derail. We cannot take it for granted that we have a funding structure that works and assume it will continue to work.”

It is incumbent on Nigerians, especially stakeholders who have been yearning, over the years, for the NNPC to truly deliver on its mandate, to support the ongoing process to reposition the corporation. Baru can deliver with the right support and climate. However, the NNPC must now ensure that a strong technology-driven mechanism is put in place to ensure the real-time monitoring of the pattern of consumption in the country. This is what should engage attention and not petty issues that distract.

Ukah wrote in from Lagos

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