Nigeria’s Energy Sector Undergoing Reforms

When the President Muhammadu Buhari’s administration took over on the leadership of Nigeria on May 29th last year, it ignited a lot of hope and great expectations in view of his change mantra to tear down the walls of corruption and bring back good values for all Nigerians.

Sebastine Obasi writes that for the petroleum industry, which lays the golden egg that feeds the economy; expectations are even higher, as current reforms indicate that there could be a change for the better, even as Nigeria braces up for the power challenges. Is the present leadership of Nigeria’s energy sector taking the nation to the promise land? Are the ongoing reforms sustainable and in tune with the desired hope that the country will join the comity of oil producing nations, whose citizenry benefit from the God-given natural resource? These are the questions agitating the minds of Nigerians, who have waited for a long time to see their country develop like other countries endowed with oil, otherwise known as the black gold.

Revised industry legislation The ongoing reforms in the industry have led to the introduction of a new version of the petroleum industry bill, otherwise known as the Petroleum Industry Governance Bill, PIGB, which seeks to eliminate the group structure of the Nigerian National Petroleum Corporation, NNPC. The draft law split the NNPC into two commercial entities and scrapped the office of the Group Managing Director, GMD.

Under the new law, Dr. Ibe Kachikwu, may well be the last GMD of the NNPC. Under the new draft legislation, the NNPC will be split into a national oil company that will be partly privatised and a Petroleum Assets Management Company that will be responsible for the management of the NNPC’s oil and gas investments in assets; a role currently played by the National Petroleum Investment Management Services, NAPIMS. Each of the companies will comprise boards with non-executive chairmen, a managing director and executive directors and other members with many years’ experience in management positions in oil companies.

According to the Director, Centre for Petroleum Energy Economics and Law, University of Ibadan, Prof. Adeola Adenikinju, unbundling the NNPC would allow the new national oil company to operate independently and more efficiently. He said: “To be able to function like a business enterprise that will be attractive to the capital market to raise funds and take decisions promptly, the corporate governance will be what is obtained primarily in the oil sector.”

Also speaking, the Senior Manager, Civil Society Legislative Advocacy Centre, CISLAC, Mr. Kolawole Banwo, said the separation would give a clear cut distinction between the independent regulator and a national oil company, NOC, that operates commercially with profit in mind. He noted that the new NOC will have the ability to seek capital and investment outside the usual joint venture calls or tax payers’ money.

He added that unbundling the NNPC would make the Corporation become a brand that can be commercially viable and efficiently managed. “That way it will be more efficient to compete for space in the commercial world, as merit will become the basis of engagement,” he said.

Also, the Nigerian Programme Coordinator, Natural Resource Governance Institute, NRGI, Mr. Dauda Garuba, argued that Nigeria ought to have a national oil company that should not be limited to doing business in Nigeria. “Petrobras of Brazil is doing business in Nigeria. Can’t Nigeria go to another country and have its own business? That is the huge gain we are going to have from this (unbundling),” he said.