FG Appoints Kachikwu To Drive NNPC Reforms | Independent Newspapers Limited
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FG Appoints Kachikwu To Drive NNPC Reforms

Posted: Aug 5, 2015 at 2:17 am   /   by   /   comments (0)

•  No More Business As Usual – Stakeholders lReport Tasks FG On Massive Corruption In Sector

By Phillip Oladunjoye (Lagos), Chesa Chesa and Obas Esiedesa (Abuja)


Emmanuel Ibe Kachikwu, oil industry corporate player and Havard-trained lawyer, author and publisher, on Tuesday assumed office as new helmsman of the troubled Nigerian National Petroleum Corporation (NNPC).

Kachikwu’s appointment as Group Managing Director of NNPC by President Muhammadu Buhari beat bookmakers to the wide array of choices that had been touted for the anticipated Change Team that would midwife the new government’s vision of clearing the rot in the state-owned oil company.

It is coming at a time when the President said recently in Washington that the behemoth would be unbundled into two successor entities– regulator and investment vehicle.

Until early Tuesday when news filtered in on the possibility of Kachikwu picking the strategic corporate job, nobody appeared to look the way of the upwardly mobile man who has been involved in various spheres of business and human endeavours.

A first class graduate lawyer from the University of Nigeria, Nsukka, Enugu, from where he proceeded to the Harvard Law School before embarking on a career that took him to Texaco Nigeria Limited and later Exxon-Mobil. Kachikwu has had a stint in banking and then the oil industry. Before coming to the NNPC Towers, Kachikwu was the executive Vice Chairman and General Counsel of Exxon-Mobil (Africa), a very strong position in Nigeria’s oil and gas industry.

Reforms And Scandals

What is sure, according to those who know, is that he would be key to the planned reforms, just as they ask him to prepare to confront interests that have become entrenched over several decades of sleaze and poor accountability.

Besides the issue thrown up by the PwC ‘forensic audit of the corporation,’ there is the Nigeria Extractive Industries Transparency Initiative (NEITI) disclosure that Nigeria lost about 160 million barrels of crude oil worth $13.7 billion to crude oil thieves between 2009 and 2012.

NEITI said records from international oil companies: Shell Production Development Company, Nigerian Agip Oil Company and Chevron Nigeria Limited showed that over N4.8 trillion has been expended by government on subsidy payments alone.

The new NNPC boss assumes office at a time when a report by non-profit organisation, Natural Resource Governance Institutes (NRGI), called for total reform of the corporation and the Nigerian petroleum sector.

NGRI noted in the report, according to Reuters, that the reform is necessary, to curb the prevalence of corruption in the industry, one of which is the need for government to urgently end the 445,000 barrels per day crude allocation to the NNPC for local refineries, when it only utilises 100,000bpd, trading off the remaining in swap deals and crude exports. The poorly maintained refineries are however unable to process the bulk of the oil and over the years this allocation has devolved into a nexus of waste and revenue loss , the group added.

The other half of NNPC’s oil share is mostly sold to unqualified intermediaries earning significant margins for little or no added value, rather than directly to the end-users, NRGI said.

The group stressed that reducing losses in crude oil sales has become even more crucial with the slump in global oil prices that has crushed Nigeria’s currency and forced the government to borrow just to cover salaries. Oil sales account for about 70 per cent of government revenues.

The report stated that the mismanagement and corruption surrounding NNPC’s sale of crude lie at the heart of the problem for which former central bank governor Lamido Sanusi was sacked after pointing out that $20 billion was not remitted between January 2012 and July 2013.

Constitutionally, NNPC is meant to remit all revenues to the country’s treasury but the act establishing the state firm allows it to keep what it needs to cover costs with little oversight.

The refineries only process around 100,000 bpd. NNPC ultimately re-routes most, and payments enter separate accounts, which officials then draw upon freely,  NRGI wrote in its report, adding that NNPC explanations for its spending were incomplete and contradictory.

Discretionary spending of the proceeds from this oil has shot up to over $6 billion a year from 2011 to 2013 and was spent on a graft-ridden fuel subsidy scheme, ineffective pipeline protection contracts and costly crude transport by sea to the country’s refineries since their feedstock pipelines were left to rot.

In 2013, just 58 percent or $16.8 billion of these revenues were remitted to the country’s treasury.

NRGI recommended elimination of the mismanaged refinery allocation completely, which would be a quick win for Buhari, before a full restructuring of NNPC can be undertaken.

Right Direction

His appointment has so far been hailed as well thought out, both for the good of the industry, the Nigerian economy and balancing of the political equation of the country.  Most industry operators who spoke with Daily Independent also commended President Buhari for his choice, which is being generally viewed as a step in the right direction.

One industry source, who does not want his name in print, described the new GMD as someone that is very strict when it comes to applying the rules and following due process.

“He is always very strict to rules. He is the type of person that believes in due process,” he said, advising that the new GMD would have to re-engineer the minds of the staff of the corporation to conform with the new system.

“He will be confronted with the business-as-usual challenge, but he has to change the mindset of the staff to move the corporation forward. He is someone that if given the opportunity the country will enjoy him,” he said.

The president of NUPENG, Achese Igwe, however, sees Kachikwu confronting a daunting challenge, saying he would succeed as the new GMD only if he is availed the enabling environment to operate.

He said there are lots of bottlenecks and daunting challenges, which the new GMD must attend to while sanitising the corporation, as well as the industry, but said without the enabling environment he might find it difficult to succeed.

“If you bring a messiah to a place and the enabling environment is not there, the messiah will not succeed.

“There are numerous challenges such as oil bunkering, oil theft, inefficient refineries among others, which the new GMD must attend to. He must also sensitise the staff so that they will be attuned to the new system before the corporation can move forward.

“There are a lot of bottlenecks, but I hope if the new GMD is given a free hand to operate we will have a good NNPC,” he said.

Also speaking to Daily Independent, the chief of staff to the National President of Independent Petroleum Marketers, Chinedu Ukadike said the appointment of Kachikwu “is a welcome development”.

Ukadike expressed hope that the new NNPC boss would ease the process of distribution of petroleum products across the country.

Energy consultant, Andrew Ikwo believes the appointment marks the beginning of genuine efforts to reform the sector, noting that the earlier; the system is cleaned up the better for Nigeria.

According to him, Nigerians, petroleum industry players and other stakeholders have expected this move, and I gladly welcome it. It is the beginning of many changes in NNPC especially on how the corporation conducts its business.

“We knew Buhari would most likely bring in an outsider to head the corporation as that was the only way a complete reform can be achieved. Some people have called for the dismantling of NNPC, but I do not subscribe to that because all oil and gas producing countries in the world have national oil companies. It is just a question of how each nation manages its own affairs”, he explained.

Promises Hardwork

The new GMD formerly assumed after a brief ceremony at the NNPC Towers, Abuja on Tuesday.

Speaking at the event, the new helmsman expressed gratitude to his predecessor, Dawha for his hard work in holding the corporation, while pledging to work assiduously in achieving the president’s growth aspiration for the oil and gas industry.

Flip Side

The new GMD has long been known to play at very top levels in the business, social and political circles. In the power caucus, he has been touted since the 90s to tail around with former military President Ibrahim Babangida, who is known for planting his younger followers in positions of power and influence across the country.

Aside his steady career in the oil industry, he has developed a strong knack for writing and publishing. Kachiwku had authored three books since 1986, the most topical being his compendium of Nigeria’s legal instruments for foreign investment. The book titled: Nigerian Foreign Investment Law and Policy was published in 1998. His knack for publishing also took him to promoting two soft journals, Hints and Complete Fashion; both with bias for women and basic human vanities. Hints, which was Nigeria’s first romance magazine, sold like hot cake in the early 90s, and became a model that several other romance writers and publishers were soon to copy.

Dambatta Takes Over At NCC

The press statement by presidential spokesman, Femi Adesina, also announced Buhari’s appointment of Professor Umaru Garba Danbatta as the new Executive Vice Chairman and Chief Executive of the Nigerian Communications Commission (NCC).

Danbatta, who holds a Doctorate Degree in Electronic Engineering, takes over from Dr. Eugene Juwah whose tenure expired on July 29, 2015.

The new NCC Chief Executive’s other academic qualifications include a Bachelors Degree in Electronic Engineering and Telecommunications as well as a Masters Degree in the same field.

He is a Fellow of the Nigerian Society of Engineers and has had a meritorious career in which he rose to become Professor of Electrical Engineering and Electronics at Bayero University, Kano, specializing in Telecommunications Engineering and Information and Communications Technology.