NNPC: A Vampire And Her Full Cup
By: Ross Alabo George
If her key accomplishment is making sure that a major oil producing
country like Nigeria has petroleum products in filling stations around the
country and the long queues disappear, then, the simple truth is that we
do not need her. If all she does is make sure that our crude oil is
shipped into foreign lands as raw materials that create jobs abroad,
perpetuating poverty at home, then she deserves nothing but spite. If she
was listed in the New York Stock Exchange, her value will be less than a
dollar. The NNPC has become a big-for-nothing enterprise.
For over three decades, the NNPC has operated at a loss, and has not
contributed a dime (from its profits) to the national coffers from all its
multibillion dollar operations. The corporation has suffered from
visionless leadership and poor management.
When President Goodluck Jonathan appointed Ms. D. Allison-Madueke as
minister of petroleum resources, it was because the president wanted her
to deploy her years of industry experience and the content of her glorious
resume into productive leadership. Nigerians looked forward to rapid
reforms in a sector that has become the cash cow of the nation. So far,
the story has been that of colossal disappointment. I am sure that the
president is deeply disappointed about the sorry state of the petroleum
ministry and the NNPC.
Ms. Diezani Allison-Madueke is the most powerful minister of petroleum
this country has ever had. Before her, Prof. Tam David-West used to be man
that held that 'title'. Prof. David-West doubled as the chairman of NNPC
board of directors, and no other minister of petroleum after him ever did,
until Ms. Madueke demanded to be, and got the nod to become.
With that power, David-West signed the contract for the second Port
Harcourt refineries, pipelines, and storage facilities across the country.
In fact local gasoline production exceeded local demands. Minister
David-West, with the support of General Mohammed Buhari laid the
foundation for the petroleum industry we have today, and nothing much has
changed, in terms of structure, since David-West left as minister.
The Petroleum Industry Bill (PIB) was to be the flagship initiative of the
Jonathan administration, but the political intrigues seem to have
overwhelmed the minister. Some senators from the South-South Region
quietly express their concern about the slothful manner and indifference
with which the bill has been handled. They are disappointed that the
minister has not been able to galvanize the required support of
More worrisome is their complaint that the presidency and the PDP has not
completely deployed its weight on the matter. The PIB falls short of
reforming the most critical organization of the industry. So, even when
passed into law, the PIB will serve more as reinforcement to the existing
regulatory framework, community participation and royalties. The PIB would
not reform the NNPC.
The NNPC has no vision. It is a national enterprise that has not grown for
decades and continues to depend on crude oil sales solely for its revenue.
NNPC has no major profit yielding investment locally or internationally.
Its subsidiaries, which are potentially viable groups on their own, have
become mere departments of a sluggish behemoth. Most of the NNPC's
subsidiaries except the NPDC (credit of Ms. Diezani) operate at a loss,
and this has been the case for decades.
Russia is the World's number one oil producing nation. It dwarfs Nigeria
in both exports and reserves. However, Russia does not just depend on
sales from crude oil. It leverages on its comparative advantages in
petroleum, and expands its frontiers globally.
Bashneft is an independent state-owned Russian oil company. It is one of
the largest producer of oil products in Russia. The company operates 140
oil and natural gas fields in Russia and has an annual oil production of
16 million tonnes. Bashneft owns three oil refineries located in Ufa with
a combined capacity of 820,000 bbl/d (130,000 m3/d) and 100 petrol
After three decade, the NNPC is struggling to fix its 3 refineries, while
other oil producing nations have transformed their state-owned oil
enterprises into profitable ventures.
Venezuela is in many ways like Nigeria, the state-owned PDVSA is the
government cash cow, in fact to be empoloyed in the PDVSA you had to be
loyal to the Chavez revolution. Despite that extent of politicization ,
the PDVSA has been profitable and venturing beyond the shores of the
Western hemisphere. In 2007, PDVSA bought 82.14% percent of Electricidad
de Caracas company from AES Corporation as part of a renationalization
Citgo Petroleum Corporation, USA is 100% owned by PDVSA.– PDVSA owns a 50%
stake in Nynäs Petroleum, Sweden. Until April 2008, PDVSA was the sole
owner of Bahamas Oil Refining Company (BORCO), Bahamas. Hovensa LLC
refinery, US Virgin Islands – Hovensa is jointly owned by PDVSA and Hess
Oil Virgin Islands Corp. PDVSA was a 50% owner of Ruhr Oel GmbH, the other
half belonging to BP's German unit Aral AG. PDVSA sold its part to
Russia's Rosneft on October 2010, raking in profit shared with Venezuela.
Gazprom, was created in 1989 when the Ministry of Gas Industry of the
Soviet Union transformed itself into a corporation, keeping all its assets
intact. The company was later privatised in part, but currently the
Russian government holds a majority stake. In 2011, the company produced
about 513.2 billion cubic metres (18.12 trillion cubic feet) of natural
gas, amounting to more than 17% of worldwide gas production. In addition,
Gazprom produced about 32.3 million tons of crude oil and nearly 12.1
million tons of gas condensate. Gazprom's activities accounted for 8% of
Russia's gross domestic product in 2011.
Gazprom has controlling shares in over 300 major business subsidiaries,
across over 50 countries. Mostly in oil and gas, and energy. Gazprom
business empire extends to Nigeria. Nigaz is a joint venture between the
Russian gas company Gazprom and the Nigerian National Petroleum
Corporation. Nigaz was established in 2009. It plans to invest US$2.5
billion to build oil and gas refineries, pipelines and gas power stations
The reforms the NNPC need are those that will re-establish it as a
profitable venture. The whole idea of Transcorp Plc is what the NNPC is
suppose to be. It should be investing in Telecommunication, Energy, Solid
Minerals, Transportation and even Education.
Why are our refineries not working when the monies the NNPC claims it
spent importing fuel can buy the NNPC at least four good refineries in
Europe? It is simply because the NNPC is run like a ministry rather than
The NNPC cannot manage a refinery when its contemporaries across the globe
are acquiring such assets. A ministry does not run a business.
But when an enterprise has been running at a loss for over decade, the
question the president must ask is if such an enterprise should remain the
way it is. The PIB will mean nothing if the NNPC remains this way. Time to
reform the NNPC is now. She is finished!