NEWS ANALYSIS: NNPC’s new GMD and the challenges ahead

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The Minister of State for Petroleum Resources, Mr Ibe Kachikwu, on July 8 formally stepped down as the Group Managing Director (GMD) of NNPC and handed over to the new helmsman, Mr Maikanti Baru

Kachikwu had in the last eight months doubled as the Minister of State for Petroleum Resources and NNPC GMD.

Kachikwu’s dual role, which was described by some experts and unionists as abnormal, ‎ has been corrected with the appointment of Baru to steer the affairs of the corporation.

For some, the double role was somewhat a setback for NNPC, as the bulk of the work in the corporation was stalled by other pressing activities which preoccupied the minister’s time.

Mr Emmanuel Ogar, an energy expert, said that although the idea of one person functioning as minister and GMD was not the best, Kachikwu had, nonetheless, performed well in ensuring stability in the system.

He, however, said that the new GMD would have so many issues to deal with, adding that such matters included ensuring sanity in the Niger Delta region and infrastructure development in the oil and gas sector.

He said that Baru would also have to forestall the recurrence of fuel supply challenges in the system, while facilitating the full deregulation of the downstream oil sector.

However, Kachikwu, at the handing over ceremony in Abuja, assured Baru of the Federal Government’s total support in efforts to move the corporation to a greater height.

He said that NNPC had undergone series of restructuring which ought to be sustained to enable it move to the next level, recalling that the corporation had achieved a lot in the past 11 months.

He said that during the period, the corporation cut its operational costs by 30 per cent, partially deregulated the downstream sector and also commercialised its business.

“We need to find a structure in which private funds will be used to help our refineries to work at 90-per-cent capacity.

“Our target is to ensure that by 2019, we will no longer export crude,’’ he said.

The minister advised Baru to focus his energy on deregulation of the downstream sector, product availability, infrastructure development, legacy audit and restructuring.

He said that this would enable the corporation to continue to be a profit-making organisation, a status which it currently assumed.

Kachikwu further advised the GMD not to lose focus, insisting that any lack of focus would be inimical to the corporation’s development aspirations.

In the meantime, Baru has articulated a 12-point development agenda for the NNPC, which included addressing and defraying cash call arrears owed International Oil Companies (IOC), while ensuring that the Federal Government was relieved of the burden of cash call obligations.

He promised to create an all-inclusive internal advisory console of security, comprising various stakeholders to brainstorm and come up with suggestions that would address security and host communities’ agitations.

Baru also vowed to undertake an appraisal of the Nigerian Petroleum Development Company (NPDC), ensuring that all weak contractual agreements be reviewed and the bad ones terminated immediately.

He declared that NNPC would leverage on its equity position to cause the development of key gas assets for enhanced domestic supply and export, while pursuing the expansion of the gas network across the country.

Baru further announced that he would implement the new business models of NNPC and grant the needed autonomy to the Strategic Business Units of the corporation so as to ensure their growth and profitability.

He stressed that tangible efforts would also be made to grow NNPC’s oil and gas reserves portfolio.

“We will repair and restore our oil and gas pipeline infrastructure, while providing robust security system for it. Besides, we will improve the refining efficiency of the four existing refineries to pave way for future expansion,’’ he said.

Nevertheless, Mr Bank-Anthony Okoroafor, an energy expert, emphasised that a major focus of Baru’s activities should be on infrastructure development so as to facilitate the development of the oil and gas sector.

He noted that poor infrastructure and inadequate policies had hindered development in the sector, calling on the new GMD to ensure that tangible efforts were made in those directions.

All in all, analysts believe that the vast experience of Baru in the industry will be used to foster the structured growth of the corporation in a pragmatic way.

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