Where Will Mele Kyari Take NNPC?

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His appointment elicited a deluge of approval, suggesting Mallam Mele Kolo Kyari, recently appointed the next Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC) is well accepted by the industry. But where will he lead the corporation to?, asks Chineme Okafor

In the first of the tweets he made from his official Twitter handle – @mkkyari, shortly after his appointment was announced and stakeholders applauded it, Kyari, who is expected to shortly take over from the retiring NNPC’s GMD, Dr. Maikanti Baru, perhaps pointed to the direction his management of the corporation would take.

“Deeply challenged to do more on transparency and accountability aspirations of @NGRPresident, @AsoRock @NNPCgroup, @nigeriaeiti #OOTT and the global transparency community,” Kyari, said in response to a congratulatory tweet made by the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Mr. Waziri Adio.

Perhaps realising how important it is for the NNPC to wholly embrace the practice of transparency and accountability in its management of Nigeria’s hydrocarbon resources, Kyari, indicated he would put a lot of energy in making the NNPC come clean on all its businesses.

This suggests he would respect and follow through the legal procedures of running the NNPC as enshrined in its 1977 establishing Act without getting entangled in needless power tussle with any member of the corporation’s board, or even circumventing the legal powers of the board in key decisions involving contracts and procurements.

Kyari’s Experience

Until the appointment which he is expected to take up from July 7 as the 19th GMD of NNPC, Kyari was Nigeria’s national representative at the Organisation of Petroleum Exporting Country (OPEC), as well as NNPC’s Group General Manager, Crude Oil Marketing Division (COMD).

According to a statement from the Group General Manager, Public Affairs of NNPC, Mr. Ndu Ughamadu, Kyari, is a quintessential crude oil marketer with prerequisite certification and outfield pedigree in petroleum economics and crude oil and gas trading.

He has in the last 27 years moved across the entire value-chain of the petroleum industry and has reportedly kept exceptional records of performance at areas he had worked.

The NNPC spokesman claimed in the statement that under Kyari’s watch, the COMD recorded noticeable transformation in the management and sales of the various grades of Nigeria’s crude oil with transparency and automation of the processes at the centre of the transactions.

Besides the claims of the corporation’s statement, the Secretary General of the OPEC, Mohammed Barkindo, in a congratulatory letter said Kyari’s appointment did not come as a surprise to him because according to him, he has an exemplary record in his works at the NNPC.

“You have earned the respect of your colleagues in OPEC’s Economic Commission Board (ECB) where you have conducted yourself with gravitas and greatly contributed to the discussions and decisions of this body,” said Barkindo, in his letter.

In the same vein, Adio, whose agency – the NEITI is extremely keen on transparent management of Nigeria’s natural resources including oil and gas, said Kyari was a well-known transparency champion and shared the same principles with NEITI on good governance of the oil and gas industry.

Adio in this regard said: “As a member of the global EITI Working Group on commodity trading transparency, Kyari’s appointment has placed him in a vantage position to push the frontiers of openness and to work more closely with NEITI and the global EITI to implement remedial issues in NEITI’s reports.”

He further suggested his appointment was an intimation of more openness and reforms at the NNPC. Industry experts equally affirmed this, stating the corporation would need such stated qualities of Kyari to become truly independent and efficient.

Task before Him

But beyond his stated work ethics and qualities of commitment to good processes, the real job before Kyari will centre around the implementation of the findings of NEITI’s reports which are branded as remediation issues.

According to years of audit reports of operations of stakeholders in Nigeria’s oil sector by the NEITI, the NNPC had over time the corporation has recorded differences in actual volume of crude oil lifted and actual volume of production. NEITI explained that over the years domestic crude oil was valued at $15.67 billion (N2.44 trillion) was lifted but only N1.36 trillion was received and N0.83 trillion deducted, thus leaving an unreconciled balance of N0.25 trillion.

NEITI also said the corporation do not comply with the 30-days remittance rule by crude oil and gas traders, while no consideration was paid on four Oil Mining Leases (OMLs) in of the Nigeria Agip Oil Company (NAOC) Joint Venture assigned by NNPC to NPDC in December 2012.

It also noted that the NNPC owed an outstanding debt of N3.98 billion to the country as a result of over-recovery under the Petroleum Support Fund Scheme (PSF) in 2012. Similarly, it explained NNPC’s records of revenue were not consistent with the underlying records of sales transactions and that there were under-reporting of revenue receivable by the corporation which may have resulted to a loss of $439.71 million.

Again, on poor transactional transparency, the NEITI stated that its review of some JV partners’ contributions revealed that cash call payments documented in cash-call schedule and template sometimes differed from actual payments reflected in JV operations bank statements. The corporation has also failed to remit about $1.8 billion worth of gas flare penalty as at 2014.

Further with regards to specificity, the NEITI indicated that about N250 billion was the unreconciled balance from crude oil sales for 2014 that the NNPC has yet to deal with. It stated that N2.45 trillion was the value of the total crude oil sales in 2014 while the sum of N1.44 trillion was received.

As at 2014, the NEITI said there is a prior year Petroleum Profit Tax (PPT) liability of $1.18 billion that is yet to be remitted by NNPC’s subsidiary – the Nigerian Petroleum Development Company (NPDC), as well as another outstanding PPT liability of $1.12 billion.

To underpin how important it is that Kyari takes the NEITI remediation issues seriously, Adio, in his congratulatory message to him said, “the implementation of the findings of NEITI’s reports will not just be effective for operations of NNPC but also for optimisation of benefits of the oil and gas sector to Nigeria and Nigerians.”

Again, getting NNPC’s decrepit refineries in Kaduna, Warri and Port Harcourt to work in such manner that the country’s reliance on imported volumes of petroleum products which the NNPC is frequently fingered to manipulate the figures and make fraudulent subsidy claims, would be another focus for Kyari.

In the last four years, NNPC expenditure or claims on petrol importation has risen and remained contentious. Such expenditure and importation activities have as claimed by experts placed the NNPC as a mere trader in the oil industry as against potentials as a national oil company capable of establishing and running profitable ventures in the upstream, midstream and downstream sectors of the industry.

Kyari, thus would have to move the NNPC forward towards being a competitive player in petroleum products refining and sales especially as the Dangote refinery in Lagos looks set to begin operation; gas production and sales for power production and industrial uses; as well as rational oil and gas exploration to grow Nigeria’s reserves. And, all these he would have to do with transparency and accountability in focus.

And, he would have to inspire his subordinates – Roland Ewubare, Chief Operating Officer, Upstream; Mustapha Yinusa Yakubu, Chief Operating Officer, Refining and Petrochemicals; Yusuf Usman, Chief Operating Officer, Gas and Power; Lawrencia Ndupu, Chief Operating Officer, Ventures; Umar Ajiya, Chief Financial Officer; Adeyemi Adetunji, Chief Operating Officer, Downstream; Farouk Said, Chief Operating Officer, Corporate Services, to tow the same path.