The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Dr Maikantu Kachala Baru has stated that the gains and effect that the Petroleum Industry Governance Bill will have on the oil industry in Nigeria and the economy at large need to be properly communicated by the media.
Baru said this during his keynote address at the National Association of Energy Correspondents of Nigeria (NAEC) 2018 Conference on Thursday, 16th August, delivered on his behalf by the Group General Manager, National Petroleum Investment Management Services (NAPIMS), Roland Ewubare. The event, which took place at the Eko Hotel and suites, Victoria Island, Lagos is themed: PIGB-Emerging Issues and Concerns.
Addressing the NAEC members, the NNPC boss said:
“The government relies on you as energy correspondents to assist, to propagate, disseminate and correctly inform the populace on the content and context of different aspects of the PIGB. Government counts on your support.”
Baru’s speech described the basic propositions of the PIGB and its implications for the NNPC and other petroleum-related institutions.
According to him, the PIGB aims to separate the Regulatory, Policy and Commercial roles of public sector agencies and allocate respective roles to agencies properly positioned to perform them. He added that the clear demarcation of the regulatory and commercial functions is a major step forward and a critical fulcrum of the bill. This will make the petroleum sector more transparent and ensure better accountability of revenue derived from the nation’s vast oil and gas resources.
Explaining the implications of the PIGB for the NNPC, Baru said it mandates the Petroleum minister to within six months after enactment, incorporate two new entities; the Nigerian Petroleum Assets Management Company (NPAMC) and the Nigerian Petroleum Company (NPC). The NPC will be a full commercial entity, operating as an integrated oil and gas company across all value chains; upstream, downstream and midstream. The initial shares shall be held by the ministry of petroleum incorporated (40%), ministry of Finance (40%) and the Bureau of Public Enterprises (20%). However, 10% shares of the company shall be offered on the Nigerian Stock Exchange (NSE) five years after incorporation. This will be followed by an additional 30% shares offering after 10 years.
Furthermore, the current situation whereby revenues flow first to the Federation account allows for funds generated from crude sales to be ploughed into other unrelated ventures like fuel subsidy. The PIGB will change this as the companies emerging will not be subjected to delayed budgetary process and approval.
Elucidating on the challenges involved in implementing the PIGB, Baru said the split of the NNPC into two entities is bound to generate tension between unions, if not properly communicated to the staff of the National company. There is also need for clarity regarding the nature of the NNPC liability to be transferred to the National Liability Management Company (NPLMC), asides the outstanding pension obligations of the DPR.
In order to properly address these challenges, Baru suggested that the NPAMC be structured in form of an agency rather than a company in consideration of its limited role in the administration of assets, using similar institutions such as Petoro in Norway.