President Approves NNPC’s Restructuring into Seven Units, 20 Companies

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Dr. Ibe Kachikwu

• Nigeria to stop importing petrol in 18 months, says Kachikwu
• House opposes new structure, minister clarifies state oil firm has not been unbundled

Chineme Okafor and Damilola Oyedele in Abuja
President Muhammadu Buhari has approved the restructuring of the Nigerian National Petroleum Corporation (NNPC) into seven new divisions, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, announced on Tuesday at a press briefing in Abuja.

He explained that under the new structure, NNPC will have five core new divisions comprising the upstream, downstream, refining group, gas and power, as well as the ventures’ groups. The other two, he said, are finance and services groups.
He said the restructuring was the only opportunity available to the NNPC to become productive again, adding that employees of the corporation would have to work to earn their wages going forward.

Kachikwu pointed out that nothing much had changed with the unbundling except for the distribution of subsidiary companies of the corporation that would further be restructured into direct management of the new divisions.

He named some of the heads of the new divisions to include Mr. Bello Rabiu who would take charge as the head of the upstream company; Mr. Henry Ikem-Obi who would head the downstream company; Mr. Anibor Kragho as the head of refining group; Mr. Saidu Mohammed as head of gas and power market; and Babatunde Adeniran as head of the ventures’ groups.

Isiaka Abdul Rasaq is the chief financial officer, while the deputy managing director of the Nigeria Liquefied Natural Gas (NLNG), Mr. Isa Inuwa is now to head the corporate services unit of NNPC.

He listed some of the subsidiaries under the divisions to include Upstream: the Nigerian Petroleum development Company (NPDC) and Integrated Data Services Limited (IDSL); Downstream Retail: Nigerian Product Marketing Company (NPMC), which was formerly PPMC, (NPSC); Gas and Power: Nigerian Gas Pipeline and Transportation Company (NGPTC), Nigerian Gas Marketing Company (NGMC), and gas and power investment; and the Refineries: Warri Refining and Petrochemical Company (WRPC), Kaduna Refining and Petrochemical Company (KRPC), and Port Harcourt Refining and Petrochemical Company (PHRC).
The ventures’ company includes medicals, property, pensions, shipping, and wheel insurance.

Kachikwu said: “The president has approved the final phase of the restructuring of the NNPC, under that phase it is not so much different from what we have now but we have restructured ourselves into four key business components: the upstream, which is what you used to call the Exploration and Production (E&P), the downstream, which is what you called the Commercial and Investment (C&I), the gas power market, which is basically a pullout from the E&P, the refinery group, which is basically the three refineries, and of course the ventures, which is every other small company here and there that did not have a sense of direction.

“Underneath these companies, we have a collective of 20 companies on the whole, where we had about 16 before, so only about four are new introductions. So it is not so much the size and we have not split NNPC into 30 companies, but there are four major divisional groups.

“Four or five are business focused, while others provide services. Beneath these five that are business-geared are the companies that are there. For example, with PPMC, we have taken the pipeline and depots unit and put them into a different company so that somebody focuses on that, while PPMC deals with the marketing of products.”

According to him, all the analysis done to date in terms of the number of staff is that we are overstaffed and the only way we can do this is to create work so that everybody who is in the system has something that they are doing and so that they get busy and earn money.

On the restructuring, he explained that “this took months of work with consultants to flesh that out”, adding, “The principle of our restructuring is that nobody loses work because the environment is just too testy for now to throw people out of work.
So nobody is losing his/her job, but people are going to get busy in the respective business units and it is a chance for anybody who wants to progress in his career and prove himself to rise up and get what he/she wants.

“It is a five business focused unbundling and they all report to the GMD and the whole idea is to focus everybody that it is no longer an administrative but business role. The group is going to become more nimble.”

Similarly, the minister who disclosed that Nigeria was working to end importation of petrol in the next 18 months, said it would cost about $500 million to get the country’s refineries back to full capacity.

Kachikwu said that the plan would be supported by his ongoing discussions with new joint venture partners to build refineries alongside the country’s four existing refineries in Kaduna, Warri and Port Harcourt.

He said it was a shame that the country imports most of its domestic petrol needs, and that by the time the plan comes to fruition, the country should be able to attain self-sufficiency in providing for its domestic fuel needs.

“The policy on the whole is that we must target a time frame or 12 and 18 months to get out of importation. It is not good for the country, it is not a good image, it does not create jobs and we lose tax when it comes to the government and creates a huge amount of, quite frankly, emotional backlash when people have to queue looking for fuel.

“We are working feverishly, trying to work with joint venture partners who can come in and work with us. We have advertised recently for co-located refineries and asking people to come and co-locate new refineries into our refinery premises so that they can share pipelines, tankages, and we are working hard to see that we can complete whatever refinery upgrade we are trying to do within the next 12 to 18 months.

“Obviously, for the co-located refineries which are the new ones, we are targeting to see that we are able to finish within two to three years and if we do that, we will have excess capacity of refined products and bear in mind that Dangote is also bringing on-stream his own refinery.”

Speaking to THISDAY on the rationale for the restructuring of NNPC, especially the creation of the 20 new companies or new business units (NBUs), Kachikwu said it was done to prepare them for private sector participation.

“As you know, we intend to concession or enter into joint ventures in respect to injecting new capital and the operations of some of these firms; so they had to be unbundled so the right sort of investors can come in with capital and expertise to turn them around.

“Also the rationale for the restructuring of the corporation stemmed from the fact that it had become unwieldy, so the aim is to create smaller units with deliverable targets that are easier to manage,” he said.

However, before Kachikwu’s announcement on the president’s approval of NNPC’s restructuring, the House of Representatives yesterday cautioned against restructuring it without an amendment to the Act which established the state run-oil firm.

The House recalled that the NNPC was established through the Nigerian National Petroleum Corporation, CAP N123, Laws of the Federation, 2004, adding that its structure could therefore only be altered, changed or otherwise amended only by an Act of the National Assembly.

Following a resolution sponsored as matter of urgent importance by the Hon. Jarigbe Agom Jarigbe (Cross River PDP), the House urged Buhari, who is also the Minister for Petroleum Resources, to urgently transmit an executive bill to the National Assembly, if he intends to unbundle NNPC or execute fundamental restructuring or reforms in the oil sector.

Jarigbe noted that since petroleum and natural gas are included in the Exclusive Legislative List (Item 39) in the Nigerian Constitution, “not even a presidential fiat can restructure it”.

He called for the condemnation of what he termed an executive legislation by Kachikwu to “unbundle NNPC into 30 different entities without legislative approval”.
“The minister’s pronouncement preempts the provisions of the proposed Petroleum Industry Bill (PIB), which has not been introduced in the Eighth National Assembly,” he added.

The matter was referred to the House Committees on Petroleum Upstream, Petroleum Downstream, Gas and Local Content and Legislative Compliance.

However, Kachikwu, in his defence, told THISDAY that NNPC has not been broken up or unbundled as erroneously reported, explaining that what the president approved was the restructuring of the corporation and there was nothing wrong with it as long as it was done within the confines of the law.

“NNPC has not be unbundled or broken up. It remains the same entity but with different units internally for enhanced efficiency and profitability. Besides, the NNPC Act allows for the restructuring of NNPC.

“It is the PIB that provides for the unbundling or break up of NNPC into separate units and that has not happened with what we have done,” he said.

  • Dammy

    Kachichukwu said “But what is more important is that at the same time, we are also unbundling the subsets of these companies to close to about 30 independent companies with their own managing directors; and so, titles like the group executive directors, which you have been used to in the last 30 years, will disappear; and in place of those, you are going to have chief executive officers.”

    This, he said, would make people take responsibility for their titles, as the positions must mean something and not administrative roles.

    “We are potentially moving in a direction where quite frankly for the first time in about 15 years, this company will be profitable; but that is a tip of the iceberg, because by the time these 30 companies are unbundled with their managing directors setting programmes, you are going to meet us in the active work space, we are going to be competing and we are going to make these things work.”

    EITHER AM NOT COMPREHENDING OR THAT GOVERNMENT IS SAYING DIFFERENT THINGS AT A TIME, SOMEONE SHOULD PLEASE HELP ME TO EXPATIATE BETWEEN THE NEWS OF 4TH MARCH AND THAT OF TODAY.

  • Toby

    We remember “stealing is not corruption”, today “restructuring is not unbundling or break up”. Please how can one restructure without breaking up?

    • Country Man

      Again, you grossly misunderstood GEJ (may be due to entrenched hatred). When that statement was made he labored to explain to Nigerians that we must distinguish stealing from corruption which has a very broad application. People that are stealing our resources must be identified and called by their proper names like ole, barawo, onye oshi, etc which in our culture is very abhorrent. GEJ never said that stealing is not corruption …..

    • vic

      yes, one can reshuffle an organisation without breaking it into different unrelated entities.

      • Toby

        Reshuffling ain’t same thing as creating 30 companies from one. The 30 companies ain’t same as 30 departments. A company is a legal entity.

    • Jon West

      Kachikwu is right. Restructuring is not unbundling. He is a lawyer and surely knows that he cannot unbundle NNPC without changes in the NNPC and Petroleum Acts.

      • Toby

        My bros, we have to keep in mind that from one company 20 new ones are created. To me, that is restructuring, unbundling, breaking and building.

  • Abidilagungun

    You had 16 companies and said it was unwieldy and now you have created 20 companies and you say it is efficient! Please can you just stop these semantics and go to the business of running the company and the industry.

    • Daniel

      It is better to further break it down. People must directly take responsibility for their actions.

      As a teacher, I would prefer to teach ten students in a classroom, rather than fifty in one room.

      Supervision is a lot easier. And the employee’s work is felt directly.

  • RICHARDSON

    This step by the executive is to force the hands of the legislature to approve the PIB bill into an act.
    To me it is a welcome move by the executive because we have been disappointed by the lethargy of our legislative arm of government regarding the PIB.
    Yes, it will be more unwieldy to run 30 different units but if there is at the apex a board working with the minister things will improve somehow until the legislature sees wisdom and passes the PIB bill into law.

  • Felix Chukwuma

    This is a welcome development. It is high time everyone started working to earn their pay either in NNPC or elsewhere. I believe the new structure will be transparent enough to easily discourage all form of corruption and promote efficiency

  • Romla

    Decentraliztion/restructuring/unbundling is not a bad thing,it could be and should be a positive thing.This depends though on whether it has been well researched and is going to be effectively and properly implemented with sincerity,honesty,transparency with competence as the key issue.It must be implemented not just on paper,but practically.In the case of NNPC for example it should go down to decentalizing the locations of these proposed companies to possibly all or most regions of the country with the South-South where the resources are located, housing many or most of these companies.Other criteria for location should include location of biggest amount of consumption etc.I do know that in our country decentralization/unbundling/restructuring has always meant the call to lobby for positions in the new companies with the less competent outdoing the more competent.We should recollect that the decentralization/restructuring/unbundling of the power sector started if i am not wrong from what i read in the 80″s,with what was called commercialization.As of today no meaningful result or value has been added to growth or performance in the sector.I wish Kachikwu well,because he is a world class talent who i believe means well.The end they justfies the means.The results of this restructuring in about another two years will be the real judge of whether this decision and it”s implementation were appropriate.

  • FrankNinja

    Kachikwu is on the right path. We just have legislooters with cobwebs for brains otherwise they would start talking about how to fast track the PIB and support reforms in the oil and gas sector. NNPC is not only a relic of mismangement but is archaic. Breaking it up into commercially run companies with injection of private capital and talent will allow focus and expansion. Had NNPC unbundled years ago it would have been in offshore, Ghana, Kenya and wherever else oil is found. Its refineries would have been supplying not just Nigeria but the entire West African and Southern African coast. Its retail outlets would have been all over Africa. Ride on Kachikwu. This is what the pace of reform and repositioning should look like.

    • Daniel

      Some people have forgot the PIB has been lying in the National Assembly for almost a decade because of dirty politics.

      This is why we run a presidential system. The President has enormous powers to take decisions.

      It is a smart move to by-pass the hawks in the House of Assembly.

  • Daniel Obior

    This NNPC restructuring is a complete waste of time.
    Privatise NNPC with government holding minority share, and the result will be profoundly different.

    • 9jaRealist

      Thank you!

      The following statement by Mr. Kachikwu neither sounds like meaningful restructuring nor as someone ‘on the right path’ (as one commenter below posited):

      “the upstream, which is what you used to call the Exploration and Production (E&P), the downstream, which is what you called the Commercial and Investment (C&I), the gas power market, which is basically a pullout from the E&P, the refinery group, which is basically the three refineries, and of course the ventures.”

      • Jon West

        This is what happens when a CEO is also a showman. Acting and showboating interferes with business commosense and semantics.

    • Jon West

      That’s how it will end up finally, after they have wasted our time and resources running from pillar to post. All the successful National Oil Companies are run as privatised businesses.

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