Oil Workers’ Protest Shows Challenge Of Buhari’s Reform | Independent Newspapers Limited
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Oil Workers’ Protest Shows Challenge Of Buhari’s Reform

Posted: Mar 13, 2016 at 4:48 am   /   by   /   comments (1)

It has been nearly a year since Nigerians elected former military ruler Muhammadu Buhari on promises of overhauling the way the country’s government is run. Yet a key step in overhauling the oil sector — which generates 70 percent of state revenues — last week prompted a backlash that threatened to bring Africa’s biggest economy to a halt, reports FT.

Hours after Emmanuel Ibe Kachikwu, managing director of the Nigerian National Petroleum Corporation (NNPC) and minister of state for petroleum resources, announced that Buhari had approved the restructuring of the company, thousands of employees in two unions went on strike, complaining they had been left in the dark about the changes.

They closed down two-state-run refineries, with tanker drivers and filling station operators downing tools. Staff barricaded the company’s headquarters in Abuja and demonstrated against the changes. Filling stations in Lagos and Abuja, the capital, were left empty, paralysing traffic.

The response showed the strength of resistance to changing the status quo in Africa’s biggest economy, which is reeling from the low oil price and years of poor management of the country’s vast energy resources.

The NNPC, set up by Buhari when he was oil minister in the 1970s, has long been criticised for its complex bureaucracy that critics say is not only inefficient but may enable graft through a lack of transparency.

Past attempts to reform the energy sector have also faced fierce resistance. When Buhari’s predecessor, Goodluck Jonathan, tried to remove fuel subsidies in 2012, the resulting strikes and street protests caused economic paralysis. He reversed course soon after.

Legislation to revamp the sector has been stalled in the National Assembly since 2008, holding up as much as $100 billion of new investment from international oil majors.

Last year, the NNPC recorded losses of $1.34 billion — although the fact that the figure is known at all indicates a level of transparency not seen in years; the company last month released annual financial results for the first time in a decade.

Kachikwu, a former ExxonMobil executive, has vowed to transform the company, which sells 1-2.4 million barrels of oil a day, “from a loss making corporation to a commercial and viable business entity that would be profitable for Nigerians”.

His restructuring plan reorganised the NNPC into seven new divisions, each led by chief executives responsible for operating profitable businesses.

Last week’s strike was called off after talks between Kachikwu and the union. The NNPC announced on Twitter that the two unions had “resolved to support the restructuring and change process”.

But the restructuring plan remains under attack by some lawmakers who say it violates legislation that established the NNPC nearly four decades ago. There is also confusion about whether legislative approval is needed for the reform to be enacted.

Kachikwu has tried to reassure his critics, telling reporters the company had not been “unbundled” into divisions but “simply reorganised”. If his changes succeed in simplifying the management of the corporation, it would herald a big step forward. But industry experts and insiders warn the devil is in the details and say smooth implementation is by no means assured.