A common adage says “better late than never”! This is exactly what happened to our national cash cow which provides the national milk. The establishment of the Nigerian National Petroleum Corporation, NNPC, as a state enterprise, was meant to be a multinational corporation like its peers like Petronas of Malaysia and Petrobras of Brazil. Initially, when Nigeria was functioning, before the powerful institutions of Brentwood stifled our formulation and implementation of national policies, NNPC was the darling of every engineer in the world, as were our first and second generation universities. were to any teacher, as well as our hospitals to any doctor and patient around the world. Like everything Brentwood institutions confront in developing countries, the NNPC went off the rails and never had its base until today, and may never have it even with the rebranding, because any was done hastily rather than professionally.
The rebranding of NNPC from a state-owned company to a profit-driven limited liability company was supposed to impress the oil and gas world, or at least the African oil and gas market, but it it’s not the case. On the day President Muhammad’s Buhari renamed the NNPC, next to the Nigerian media, no international media carried this story! Even African countries like the Republic of Niger did not bother to make a fuss in Nigeria (the giant of Africa). This clearly shows us how seriously we are taken in 21st century Africa.
The old NNPC was the nation’s cash cow, so which cow is going to replace the old NNPC in providing the money that the almighty Federal Government, 36 States and 774 local governments share every month in Abuja? This is the question that demands an answer from our politicians and their allies who exploit the old NNPC. That’s how smart our politicians are. They blindly and hastily passed the Petroleum Industry Act, PIA, (thinking they are settling scores with their perceived enemies), forgetting what will replace the cow they let loose in the bush. Neither the federal government nor the state governments are ready for an alternate source of a new national cow like the old NNPC. Apart from Lagos State, no Nigerian state will be able to cope with this economic reality, which is a welcome development. Now politicians with a deficit in provident will be relegated from the political scene, as anyone vying for any office has to rack their brains critically to find sources of income to manage their constituents.
The old NNPC is well known internationally for its sloppy management of human and financial resources, this feature of NNPC alone has put the new NNPC Limited in a serious dilemma of securing reputable international investors. It is curious that neither Buhari nor the new management of NNPC Ltd have indicated which global oil and gas players are interested in investing in the renowned company! Why? It’s a simple question that has no single answer, even if there is, no one is willing to provide the answer, especially in the public domain. It’s a global norm that when giant public companies like our former NNPC rebrand, there are plenty of potential grooms who are more than willing to inject much-needed cash along with the necessary technological expertise. But in the case of our new brand NNPC Ltd, it was completely silent on the international oil and gas scene.
With the current crisis between Russia and Ukraine, it was a golden opportunity for Nigeria to attract good international investors for NNPC Ltd. For example, the Russians will be more than ready to enter, they are already in Ajaokuta Steel. The Chinese will also be more inclined to invest. Neither the federal government nor the old NNPC and the new NNPC sought out potential investors from either country. The Nigerian government should use the opportunity of having Dr. Mansur Mukhtar vice president of the Islamic Development Bank to attract Arab investors to the new NNPC. According to the Punch newspaper, NNPC is valued at 50 trillion naira (about $117.64 billion, at the exchange rate of $425). Using the opportunity of having Mansur Mukhtar, the new NNPC will solidify and have good footprints in the Middle East; the global oil and gas hotspot.
It is common knowledge that 2020 was the only good financial year for NNPC in more than four decades of existence; it was the only year that NNPC made a profit. So, we have serious problems here. No one will take the new NNPC with hard records seriously! One question now is, how will the new NNPC survive in this type of corporate culture? This culture results from several factors, which are typical of the Nigerian business environment and, to some extent, of developing countries in general. This culture does not appear to be changing at NNPC, as after the new brand NNPC Ltd was introduced to Nigerians, the new Managing Director stated “…a comprehensive expansion plan to shift its retail presence from fuel from 547 to more than 1,500 outlets over the next six months.” So, the fledgling NNPC is more interested in increasing the number of retail gas stations, rather than building refineries! And more interested in competing with AA Rano, Ashafa, etc. than competing with Dangote and BUA. The new NNPC is here to bring the same grief as the old one, as they say “old wine in a new bottle”.
The new NNPC should kindly focus on refining activities in Nigeria and in environmentally friendly countries, especially in Africa where they will have more benefits. The retail business should focus on African and Asian countries if the new venture is truly commercial because through this a lot of foreign currency will flow into the country. One could imagine Nigeria with the Dangote refinery, the BUA refinery and the new NNPC with at least one, and the same capacity as that of Dangote. This will incentivize Nigerian industrialization to move north, unemployment will decrease from the value chain to these refineries. But the retail stations are too small for the new NNPC. Period. The new NNPC must focus on the Trans-Saharan Gas Pipeline and the ECOWAS Gas Pipeline rather than just retail stations, especially now that the EU is demanding an alternative gas source from Russia.
A relevant aspect of the new NNPC’s arrival is the global shift from fossil fuels (which is the new NNPC’s main area of focus) to renewables, in which the new NNPC has little expertise. Renewable energy is the dominant factor. in today’s global energy affairs, therefore, the new NNPC cannot move away from it. Honestly, if the new NNPC lacks the Nigerian factor of doing business, it will have a good edge in this area. There is an abundance of renewable energy sources on its doorstep. While the new NNPC must lean into renewable energy to survive the competition of the 21st century, the refusal to venture into renewable energy calls for its extinction.
With the new NNPC, the income going to the federation account will be deflated. So how will the shortfall be made up? It’s a million dollar question. Our politicians are now being cornered into providing alternatives to the shortfall of creating the new NNPC. For a long time, our politicians have been too sleepy to rack their brains managing the scarce resources at their disposal, including generating new sources of revenue. Would this shortfall generated by the new NNPC force our politicians, especially those in the North, to accept the long clamor for “restructuring”?
Where would this new NNPC lead? It is certain that the new NNPC will lead to drastic changes in Nigerian public finances. This will most likely lead us to that dreaded BOM restructuring. With all levels of government running out of finances, it’s either a matter of changing the PIA back to the old order, or all governments will be forced to turn inward, which most don’t know how. TO DO. Changing the PIA will meet unprecedented resistance, both domestically and internationally. So, PIA created another monster that we ran away from. I hope Nigeria can withstand the pressure due to the insecurity in the country.
Abdullahi writes from London, UK via [email protected]