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Stakeholders set agenda for new NNPC GMD

Stakeholders set agenda for new NNPC GMD

By Femi Asu

Thursday, 6 August 2015

Industry stakeholders have stressed the need for the new Group Managing Director for the Nigerian National Petroleum Corporation, Dr. Emmanuel Kachikwu, to urgently address the issues of joint venture cash calls, contracting process and the operation of the refineries.

President Muhammadu Buhari had on Wednesday relieved Dr. Joseph Dawha of his appointment as the NNPC GMD and announced Kachikwu as his replacement.

Stakeholders who spoke with our correspondent in separate interviews described the appointment as positive for the country’s beleaguered oil and gas industry.

The Chairman and Chief Executive Officer, International Energy Services Limited and a former top executive at the NNPC, Dr. Diran Fawibe, said, “He is aware of all the issues, the challenges facing the industry and how to reposition the industry to fulfil its role in the Nigerian economy.

He said the new GMD would be expected to push for the reform of the oil sector and the NNPC in particular, adding, “He knows what should be done as far as the reform of the oil and gas industry, of which NNPC is a critical element, is concerned.

“A lot of things will fall into place once the reform is undertaken and completed. Some of the issues that tend to make NNPC as a dysfunctional organization will then be corrected and proper adjustment will be made and the NNPC can then function.”

One of the major issues bedeviling oil and gas operations in the country today is the issue of cash call, Fawibe said.

“Government through NNPC has not been honouring cash calls, and this has been a limiting factor for activities in the industry. The issue of cash calls, one would expect him, coming from the private sector, to be able to come up with creative approach to solve this problem once and for all.

“Then the contracting process in the industry should also be looked into. A situation where it took as long as 24 to 36 months to get projects sanctioned is not good for the industry, and it introduces uncertainty. In other countries, it is usually between three and six months. As a private sector oil industry professional, who has international overview of what goes on in the industry, he should be able to introduce a change in the work processes.”

The President of the Nigerian Association for Energy Economics, Prof. Wumi Iledare, described the new GMD as having the right exposure, adding, “Of course, NNPC is different from ExxonMobil. So he has a different mindset.

“He must build his team and empower them. ExxonMobil has a governance structure with a functional framework for value creation. I am hopeful that he has a term of appointment with measurable performance indicators. Here is my hope that he can avoid the political landmines to succeed.

“The governance structure of NNPC has to change for him to succeed. He has to listen to his GEDs. He must be allowed to function under an apolitical NNPC board,” Iledare added.

An energy expert and Senior Lecturer, Energy Law at the University of Lagos, Dr. Adedayo Ayoade, said, “The NNPC is actually in a state of chaos. The President has said he wants to split the NNPC into two, commercial and regulatory arms. The new GMD is to make the NNPC more commercially versatile and strengthen the regulatory arm.”

Ayoade stressed the need to insulate the NNPC from political pressure to ensure that it is accountable and transparent. “Until we remove political interference, the NNPC cannot function.”

An analyst for Oil and Gas Africa at Renaissance Capital, Temilade Esho, said, “We are optimistic his (Kachikwu’s) level of experience and work ethic is what Nigeria needs to sweep out corruption in the NNPC.

“Firstly, we believe this could be beneficial to JV producers, like Seplat. It could be a step towards resolving the issue of accumulated NNPC receivables which remains the main challenge for the JV producers. NNPC owes Seplat about $500m in receivables and owes the entire industry about $5bn.”

She said, “We like that he is a technocrat with no prior political exposure. This supports President Buhari’s manifesto to clean out the opaque nature of the state oil company. We believe this will produce a more transparent and less opaque NNPC. We see this news as positive overall and await more appointments in the NNPC in the next few weeks.”


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