New NNPC: The Fears And Frills Unlimited

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In a typical Nigerian manner, the NNPC threw a big party in Abuja last Tuesday to announce its transformation from a state-owned enterprise to state-owned commercial enterprise, changing from Nigerian National Petroleum Corporation (NNPC) to NNPC Limited. To many Nigerians, it is just a mere name change; just like P&T changed to NET and later to NITEL, and ECN changed to NEPA and later NEP PLC, both without making any meaningful impact in the lives of the citizens. Nigerians have witnessed too many of these unimpactful christening and re- christening ceremonies to be impressed. But to President Buhari and the executives in the oil company, NNPC Limited would focus on becoming “a new dynamic global energy company of choice to deliver energy for the future.’’

In other words, NNPC Limited would now be run like the international oil companies that are state-owned, like Saudi Aramco, owned partly by the Kingdom of Saudi Arabia and American oil investors (ARAMCO actually stands for Arab-American Oil Company) and PETRONAS Global, owned by Malaysia (Yes. That same Malaysia that reportedly, borrowed palm fruits from Nigeria in the 1960s, and are now the world’s largest producer of palm oil).

President Buhari was there at the Tuesday event, and he noted the striking coincidence that had played out. Forty-five years ago, he, as Petroleum Minister, had facilitated the establishment of NNPC under the military régime of General Obasanjo. Now, here he was, an elected President, witnessing its conversion to “a commercially-driven and independent national oil company that will operate without relying on government funding and free from institutional regulation…’’. The ceremony was typically replete with pomp and glee. There were dances, singing and good speeches. A typical government function, full of promise and expectations.

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But I have my reservations about the new NNPC and I do not, in all sincerity, believe that it would achieve much; not close to its well-run international peers, unless there is a radical departure from the usual. For as long as the Board, management and employees of NNPC Limited are the same as those that have been managing NNPC, the organizational culture would remain unchanged, and so, this so-called transformation would become an effort in futility. There are so many deeply-rooted and entrenched interests in every section of NNPC; and they have been there for so many years that they have become as ossified as Zuma Rock. The culture is anti-business, or at best civil-service like, with no orientation for profitability as the organizational or individual goals. Any surprise that none of NNPC’s four refineries has been working in the last two decades? Yet, their workers are earning salaries every month and getting promoted every year.

Most of the management staff of NNPC are from a particular section of the country and they owe their positions to their religious and ethnic affiliations. A good number of the employees got their appointments, not through a competitive recruitment process, but because they were recommended by emirs, senators, governors or other influential military and government officials. Members of the Board of Directors are mostly senior politicians who represent either a geopolitical zone or a political interest. An appointment into NNPC Board is a reward for your role in the political process.

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With all due respect to Senator (Mrs) Marjorie Okadigbo, she is the Chairman of the place today because her husband was Buhari’s running mate in the 2003 election! President Buhari does not forget a favour. I do not begrudge this benefaction, but suffice it to say that neither Aramco nor PETRONAS would be so generous in filling their Board positions.

So, what should the company do differently this time? First, let me commend Mr Mele Kyari, the CEO of NNPC, for dreaming big and aiming high, by spearheading this change. It is rare for long-serving staffers like Mele to be transformational in outlook. But right from his first day on the job three years ago, he’s been trying to make a difference. I therefore recommend that for NNPC Limited to succeed, Mele Kyari and his management team should serve as interim management of the company for the next two years during which a comprehensive overhaul of the place, to be led by an international consulting firm, should be undertaken. All of the senior and junior management staff should be replaced in the next two years with Nigerians headhunted and recruited from international oil companies like Shell, Chevron, Saudi Aramco (Yes! Many Nigerians are working there); Agip and the rest. Of course, the federal character of the nation should be maintained as much as possible, but without compromising competence, quality and standards.

One of the reasons the IOCs thrive is because of their high-quality business ethics, principles, practices and processes. Take NLNG for example. Shell is the operator of NLNG, owned 51% by the federal government through NNPC. Although Shell is a minority shareholder, it provides the chief executive and most of the management staff. Initially, the CEOs were foreigners, but in the last 10 years or so, Nigerians, seconded from Shell, have been running the place. Hence, Shell’s business principles and practices prevail there. It is the reason NLNG is so successful that it earns over $100 billion in revenue paid about $20 billion to the government as dividend and $9 billion tax last year. Take SEPLAT Energy and First E&P as another example. They are the two most successful Nigerian-owned oil exploration and production companies. It is no coincidence that both are managed by former Shell executives who, of course, are using Shell business principles and processes. I know Shell a bit because I once served as its Media Consultant in the mid-1990s. NNPC Limited cannot or should not re-invent the wheel. The company should take the first correct step and replace its current staff with carefully selected competent Nigerians hired from the IOCs, both within and outside the country. It would be their lot to begin to build a high-achieving culture that rewards success and punishes failure.

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That’s when the real transformation would begin! But if the status quo is maintained, and business continues as usual, this transition would achieve nothing for the country.

Etim Etim
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