FG to unbundle NNPC into 5 operational zones
The Minister of State, Petroleum Resources, Dr Ibe Kachikwu, on Thursday said that a major overhaul of the Nigerian National Petroleum Corporation (NNPC) system would be announced in the next one week.
Kachikwu stated that NNPC would be unbundled to four or five main operational zones comprising 30 companies to be headed by a director each.
He stated this in his remarks at the 2016 Annual Oloibiri Lecture Series and Energy Forum organised by Society of Petroleum Engineering (SPE) Nigeria Council.
“For the national oil company, a lot of work is going on; I am sure some of you have seen the effects.
“But within the next one week, we are going to be announcing some really major overhaul of the system; one that hasn’t been done in over 20 years.
“The effect of that would be to quite frankly unbundle the huge company into four to five main operational zones.
“The upstream, downstream, midstream, refining and of course every other companies that are trending to the venture group,” he said.
According to him, 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”.
He said that titles like the group executive directors which people had been used to in the last 30 years would disappear and would be replaced with chief executive officers.
Kachikwu said that there was the need for people to take responsibilities for their titles.
“They have to mean something; they are not administrative roles. So at the end of the day, a CEO of an upstream company must deliver me upstream results.
“We are very focused on that and along those chains; we are doing very dramatic things within the sector to bring the change.
“I am happy that we are gaining the cooperation of people within the industry; that is the only way we can guarantee sustainable career path for those in the industry.
“We are potentially moving in a direction where quite frankly for the first time in about 15 years, this company will be profitable,” he said.
The minister said that the step was a tip of the iceberg because the unbundling of the 30 companies would make the sector more competitive.
“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,” he said.
He said that there were key issues that were pertinent in the sector which included getting the upstream working again.
“The reality is that if we continue at this rate, the natural curve declines that you see in the production terrains will be devastating over the next five years.
He said that he was committed to try and do something that would move the oil industry back to working.
He said that focusing on gas policies was a key element and he was setting a target of 12-month type agenda to try and arrive at some conclusions.
He said that part of the plan was to work with the National Assembly and others with policy makers.
“We will definitely be working with the industry to try and get to a position that everybody is comfortable with but then we have no alternative today than giving more attention to what we need to do with gas.
“In terms of the value chain logistical dynamics, we got to begin to talk to ourselves because many times we have a polarised relationship between the oil companies and the government but the reality is to succeed.
“We all have to play in the same box and so, I am having a lot of conversations with the oil companies.
“That is going to continue but the essence is that we have got to begin to define the contractual terms in this industry,” he said