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Baru’s Transformational Reforms In NNPC




The Nigerian National Petroleum Corporation (NNPC) has been depicted by its implacable critics as a cesspool of corruption and for a good measure too. Over the years arguably, no agency has the axiomatic Nigerian strand of sleaze been more manifest than the state owned Oil giant whose reputation has been tarnished by unrelenting criticism of its less than transparent operations.
At the height of this reign of impunity and vast corruption, the former Governor of the Central Bank of Nigeria and the present Emir of Kano, Sanusi Lamido Sanusi had in 2014, accused the NNPC of failing to remit $20 billion into the coffers of government. This was during the era of high Oil prices. He had also complained about the lack of transparency in the operations of the subsidy payment regime and was booted[I1] out of office for blowing the whistle on corruption.

Recently, Sanusi Lamido Sanusi took a potshot at the present management of NNPC when he said that only an angel may be able to run the Corporation. Sanusi said “I have not seen a change in laws or regulations that will institutionalize changes that make it impossible for things to be done.”
Sanusi’s sabre rattling may play into the narrative that corruption is alive and well under the present administration in spite of the unwavering commitment of the Buhari administration to deal a mortal blow on pandemic corruption, the archetypal monster that has stymied our development. Given empirical evidence and ongoing efforts by the present management of NNPC under the guidance and leadership of Dr. Maikanti Kacalla Baru, the Group Managing Director of the Corporation, Sanusi’s criticism is premised on a lack of full information and therefore misplaced.
Four years out of government is quite a long time. The revered royal father saddled with the onerous task of administering a sophisticated emirate such as Kano may have been so overwhelmed by the task at hand that he is clearly out of touch with reality. And given the not too long enviable reputation of NNPC especially under the past administrations, the use of the brush of corruption to wrongly paint the present NNPC and its management as corrupt may be overlooked by a gullible citizenry.
But it is certainly uncharitable and unfair to throw a spanner in the works especially when Baru and his management are working round the clock to turn around the fortunes of the Corporation. Asking angels to intervene in the affairs of men is not only escapist but defeatist. As a nation, we are blessed with honest hardworking leaders, who though may be in the minority are on daily basis given their best for the good of the nation.

When Baru was appointed the Group Managing Director of NNPC in 2016, he was not under any illusion as to the formidable challenges and task ahead. He inherited a Corporation in decay and in dire need of a new direction. Independent agencies such as the Nigerian Extractive Industries Transparency Initiative (NEITI) had raised the alarm about the lack of transparency and massive corruption in the Corporation. On assumption of office, Baru demonstrated the uncommon determination to steer a new and refreshing course for NNPC. In line with the anti-corruption policy of the Buhari administration, he unveiled a well thought out 12-point agenda designed to cleanse the Augean Stable and reinvigorate the Corporation. The 12-point agenda include the creation of an all-inclusive internal advisory council on security comprising representatives from NNPC, the IOCs, the Unions and security operatives to brainstorm and address host community agitations, implementation of new business models to grant needed autonomy to the strategic business units and autonomous business units within the corporation, provision of directions and control to ensure their growth and profitability. Baru also pledged to continue to explore ways of relieving government from the burden of cash calls obligation and to address and defray the agreed call arrears of the IOCs and restore Oil and gas production and grow the reserve portfolio.

He also pledged to focus on increasing crude oil production by the Nigerian Petroleum Development Company, NPDC, review all weak contractual agreements and terminate bad ones as appropriate, leverage on equity positions to cause the development of key gas assets for both domestic and export, repair and restore Oil and gas pipeline infrastructure. Baru also promised to improve the refining efficiency of the four existing refineries to pave way for future expansion, pursue diversification of business by refocusing on the implementation of renewable energy programmes and frontier exploration services and to continue to ensure service delivery, entrench the culture of professionalism through transparency and accountability.
The 12-point agenda as enunciated by Baru is ambitious, revolutionary and represents a concerted effort to make a clean break with the past. Under his guidance, NNPC commenced and completed the repair of critical Oil and gas infrastructure leading to the deferment of about 700,000 bopd. The Corporation commenced and completed the repair of the vandalized 36” and 42” IT Export pipeline leading to the restoration of production operations from NNPC/MPN.

In 2016, when he took over the helm of affairs at NNPC, the national daily average production stood at 1.83 million barrel, in 2017, it rose to about 1.88 million barrels and in 2018 the nation had achieved its projected target of 2.2 million barrels of Oil and condensate per day occasioned by the improvement in security and the resumption of production operations in the forcados Oil Terminal (FOT) and Qua Iboe Terminal (QIT) pipelines. By June 28th, 2017, NNPC attained a record peak production of 2.3 million barrels of oil and condensate per day. Under the leadership and guidance of Baru, the repayment agreement for JV cash call arears has been negotiated and executed for arrears has been negotiated and executed for arrears up to end 2015 all the IOC partners in NNPC’s JVCs.

NNPC anchored repayment on incremental production. Also, for 2016, JV cash call shortfall, $400 million was paid to JV partners as a bullet payment in April, 2017 – with the balance to be paid in twelve installments. This commitment has rekindled the confidence the nation’s JV partners in pursuing new projects, thus enabling the transition into the self-funding models for cash-calls financed by NNPC/CNL JV of project Cheata which was oversubscribed. Driven by the desire to save cost, NNPC renegotiated upstream contracts and obtained discounts of over $2billion from various service providers to stem high production costs. In addition, Baru ensured the cancellation of all non performing agreements and continued to pursue all outstanding payments due to government.
In the gas sector, NNPC has significantly increased gas supply to power plants and industries. This achievement was made possible as a result of the completion of the repairs of vandalized 20” ELPS – A pipeline which ramped up Chevron Escravos Gas Plants that were hitherto shutdown. These include Oredo Gas Plant, Sapele Gas Plant, Ovade Gas Plant and Oben and NGC Gas Compressors. Baru has addressed the issue of condensate evacuation that had restricted the issue of condensate evacuation that had restricted the ramping up of gas supply from Oben, Utorogu and Ughelli gas plants. NNPC have also commissioned NPDC’s Utorogu NAG-2 and Oredo EPF-2 gas plants.
Under the leadership and guidance of Baru, there has been exponential growth in domestic gas supply. NNPC has also made significant progress in the seven (7) critical Gas Supply Development projects with approval of consultants to support the projects.
In the downstream sector, NNPC stabilized the market with sufficient product availability nationwide. Through the concerted efforts of Baru and his team, the modest refining efforts of NNPC and the DSDP Scheme saved the nation about 40 billion in 2017. The resuscitation of products transportation pipelines network has enabled NNPC to move products to depots at faster and cheaper rates.
In spite of the string of impressive achievements scored by NNPC under the guidance of Baru, challenges still remain. The issue of subsidy payment has remained a recurring decimal. There is a consensus of opinion that racketeering which is widely believed to have bedeviled the subsidy regime has impoverished Nigerians. Despite aspersions cast on the NNPC from certain quarters, Baru insists that he and his team are above board in their dealings. The present NNPC management has consistently stated that all subsidy claims and entitlements by NNPC are duly verified and approved by PPPRA and relevant certificates issued.
In the same vein, Minister of Finance, Kemi Adeosun, has explained the NNPC is under recovering costs being the sole importers of the petroleum products which it also sells below the cost price. In defence of NNPC and the truth, she stated that technically there is no longer subsidy payments to Oil and marketers as in the past since the NNPC bears the cost of the difference between the N145 pump and the actual landing cost of the product which in some cases stand at N180 per litre. She said “Now, when there is talk of payment of subsidy, technically there is no subsidy, but there is under-recovery.”
The failure of the four local refineries to produce enough fuel for local consumption has cast a long shadow on the concerted efforts by Baru and the Ministry of Petroleum Resources to bring about a positive change. For years the refineries have been largely comatose. Within the last three years, a lot of work has been done to revive obsolete facilities in the sector. The petroleum ministry under the leadership of Ibe Kachikwu and the NNPC under the guidance of Baru are working hard to re-position and revamp the refineries through massive refurbishing of the refineries and strategic partnerships. By 2019, it is expected that these concerted efforts will lead to Nigeria being self-sufficient in refining petroleum products.
The achievements recorded by NNPC under the guidance of Maikanti Baru was made possible through the concerted effort of a Nigerian patriot not by an angel. The situation in NNPC is not perfect, no human institution is put clearly Baru and his 12-point agenda is beginning to yield the desired results, to spur a paradigm shift. It was in recognition of his patriotic service to Nigeria and his untiring efforts to reposition the NNPC that he was awarded the Forbes Best of Africa Oil &Gas Man of the Year Prize. According to Forbes, it had followed with keen interest the rising profile and impressive career path of the NNPC GMD through the years. Forbes further stated: “For these and other landmark achievements which you have recorded throughout your enviable career, your nomination for this Prestigious Forbes 2017 Award has been approved by Forbes Custom’s Award Committee.
These and other prestigious awards in recognition of the ongoing revolution in NNPC, it is hoped will spur Baru to greater heights as he seeks to re-position NNPC and bring it to global acclaim in the service of Nigeria and humanity.

Ukah wrote in from Lagos

Abba Mahmood returns next week




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