Stakeholders advise govt against privatisation of NNPC

Privatisation of Nigeria’s national oil company is not an option for now, a former General Manager, Finance at the Nigerian National Petroleum Corporation (NNPC) has advised the Federal Government.

Eromosele, who is also the Chief Executive Officer of M.E. Consulting Limited noted that privatization is not a panacea to the problems of NNPC.Eromosele gave this advice recently during a presentation at the Media for Oil Reform lectures organized in Lagos by Natural Resource Governance Institute (NRGI).

According to Eromosele, Statoil of Norway has proved that governments can efficiently run globally competitive company and equitably distribute wealth.
The company, which was established the same year as NNPC, privatised only a third of its interest in 2004 with shares quoted on the New York Security Exchange (NYSE).

Eromosele said privatization though solves some problems; it introduces others, adding “there is a need to balance national sovereign control of natural resources with the need for efficiency and profitability.”

He said the government can continue to maintain the ownership control of NNPC being a strategic asset to the nation, but should allow it to be managed as an enterprise.

He said some National NOCs such as Petrobras of Brazil, Petronas of Malaysia and Staoil have specialised in deep-water drilling technologies, an area once monopolised by IOCs.

Speaking about the poor management of NNPC, Niyi Akinoso said there are several assets the corporation left unproductive for years because of its reluctance to take the right decision, which has caused the nation a huge sum.

“For example, 15 of the original 24 Marginal Fields (oil block that produces about 10,000 barrels per day) awarded in 2003 are yet to go on production while a good number of those on production including independents hardly meet their obligations including royalty, concessional rentals and flare penalty payments with serious impact on government earnings”, Akinoso added.

Managing Partner, Sterling Partnership, Israel Aye, a barrister, said the development of an overarching petroleum policy and legs framework is key to reforming the oil and gas sector. “Passage of the Petroleum Industry Bill (PIB) into law is fundamental to providing certainty to the regulation of the industry,” he said.

Though an initial PIB proposed to integrate existing legislations into a single piece of legislation held some promises, the bill failed to sail through at the National Assembly. Current proposition, however, aims to dissect the PIB into three legislations: governance, fiscal and petroleum revenue management.