NNPC Reform: GMD to Assume Direct Supervision of NAPIMS

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Dr. Ibe Kachikwu

Chineme Okafor in Abuja

The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC) is to take over direct control of the Nigeria Petroleum Investment Management Services (NAPIMS) in line with the ongoing restructuring of the corporation.

Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who confirmed this recently in Abuja at the 25th Annual Oloibiri Lecture Series and Energy Forum (OLEF) of the Society of Petroleum Engineers said the move was aimed at safeguarding the sanctity of contracts and investments, which the company manages on behalf of the federal government.

He explained that the federal government would relocate the operational base of NAPIMS from its current base to the office of the GMD.

He said under a new arrangement to restructure the NNPC, NAPIMS would have to move from being under the Exploration and Production (E&P) subsidiary of the corporation to the office of the GMD.

Currently a Corporate Services Unit (CSU) in the E&P Directorate of the NNPC, NAPIMS is statutorily charged with the responsibility of managing Nigeria government’s investment in the upstream sector of the oil and gas industry.

NAPIMS also makes the most of the margin that accrues to the government by effectively supervising the Joint Venture Contracts (JVCs), Production Sharing Contracts (PSCs) and Service Contracts (SCs), all of which the federal government has interests in.

NAPIMS equally oversees the budgets and performance, as well as ranking of projects that give higher returns on investment to the government. But its activities had constituently been questioned and accused of lacking in transparency.

One of such was a recent allegation and investigation by the House of Representatives that it boycotted extant due process to award a $260 million contract for the Exxonmobil’s Usan Deepwater Project.

But Kachikwu said that he had initiated new efforts to restructure NAPIMS and that it would have to be relocated to a base of direct supervision from the GMD.
“I am sure most of you who are dealing with our systems are beginning to notice a very drastic reduction in the time it takes for us to get back to you and deal with transactions, I am committed to cutting those down and that has been to move from an average of a two-year contract approvals to not more than six months. It is troubling right now but we can achieve that.

“NAPIMS for example in the new structure is going to be moved from a being hidden under the E&P group back straightaway to the GMD’s office and potentially after the PIB back to the minister’s office, that way we are having the deals with oil companies very direct, poignant and timely,” said Kachikwu.

He also talked about cost-cutting measures for oil and gas operations in Nigeria, as well as sourcing for finances to undertake critical projects in the industry.

According to him, “Cost is very important to us because I think we all got very spoilt in the era of $110 per barrel oil and we are going to focus on how we are going to cut costs.”

He added: “We set a benchmark of 30 per cent cost cut in our OPEX number and determinedly using that as a guide in our CAPEX numbers by 20 per cent.

“We are achieving that in some areas, but at the end of this year, the share reality of oil industry competition will force down the prices because the reality is that if you are not able to bring in a barrel of oil at a competitive cost, you are dead on arrival,” he added.

  • Chike

    Whenever I read or listen to this minister, I become more confused about the Nigerian Oil and Gas Industry!

  • RumuPHC

    Ibe Kachikwu is the man!

    This is the first time in a long while you hear a Nigeria oil minister speak in the language of oil & Gas and in the intrest of Nigeria and not as a stooge of the IOCs.

    On the international scene, much unlike the previous architect that was charged with this very strategic ministry, Kachikwu as minister of state of Petroluem ministry has been on the road doing oil diplomacy to convince major oil producers to agree to freeze and probably cut production. Surprisingly he is achieving results as oil prices have started climbing based on the endorsement of kachikwu’s quest by Saudi Arabia. Apparently, Kachikwu is going to be single handedly responsible for saving the 2016 budget which was benchmarked at $39 per barrel.

    At home, Kachikwu has shown clearly that he understands his brief as GMD of NNPC unlike the previous set of clueless heads of the oil corporation. His drive to reorganize the NNPC and cut cost will definitely place the corporation in good stead to be competitive and profitable in future.

    Crude oil price will certainly renounce and reach another height within the next 36 months. The question however is how prepared will Nigeria be to reap the full benefits of the next oil boom. I have no doubt that with a minister like Ibe Kachikwu and a leader like PMB, Nigeria will benefit massively from the next upswing in crude oil revenue.

    How I wish we have many Kachikwus in other equally strategic MDAs in Nigeria.