Business
NNPCL: Kyari breaks the jinx, creating prosperity for Nigerians by Femi Aderotimi
The historic payment of an interim dividend by the Nigerian National Petroleum Company Limited into the Federation Account less than three months into the stoppage of payment for fuel subsidy by the Federal Government has proven that Mallam Mele Kyari, the Group Chief Executive Officer (GCEO) of NNPCL, is indeed working for the good of Nigerians and the sustainability of the Nigerian oil and gas sector.
On July 7, 2019, when Kyari assumed the position of Group Managing Director of the now-defunct Nigerian National Petroleum Corporation (NNPC), the corporation was in a near-comatose state. It was laced with many challenges, ranging from grievous oil pipeline vandalism, corruption, incessant oil thefts, low production levels, and a lack of transparency.
For instance, a 2010 joint report by Transparency International and the Revenue Watch Institute found that NNPC had the poorest transparency record out of 44 national and international energy companies examined.
These scenarios fundamentally put Kyari on the spot.
Kyari’s appointment, however, came as a game-changer with a clear mission: to revitalise the struggling corporation and send an unequivocal message that the corporation’s lukewarm governance narratives of the past are gone for good.
There was a lot of mess to clear, but Kyari was ready, and he came in with his sleeves rolled up, and expectedly, he didn’t disappoint.
With a vision boldly anchored on the principle of Transparency, Accountability, performance, and Excellence (TAPE), Kyari, under the defunct NNPC, demonstrated a fundamental grasp of what fossil energy means and the imperative of effective governance of the giant national oil company.
In June 2020, for the first time in 43 years, the Kyari-led NNPC released the 2018 Audited Financial statements and, subsequently, the 2019 audited financial statements to the public for scrutiny, earning plaudits for the corporation from members of the public.
Significantly, in August 2021, the NNPC declared a N287 billion Profit After Tax (PAT) for 2020 for the first time in 44 years. Kyari’s magic wand played out as the corporation reduced its losses from N803 billion in 2018 to N1.7 billion in 2019, with the eventual declaration of a net profit in 2020. By fiscal 2021, the corporation’s profit had grown to N674 billion. Until this period, NNPC has been a loss-making entity, renowned for anomalies, undue political interference, and shades of burden.
Despite the numerous challenges, Kyari grew its production to an enviable level. As of February 2023, the NNPC had crossed 1.6 million barrels per day of crude oil and condensate combined.
The achievements of Kyari under the now-resting NNPC were numerous.
Among his other major landmark achievements was successfully flagging off construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project. The project, which is near completion and described as a game-changer, is an integral part of the Trans-Nigeria Gas Pipeline (TNGP) with a capacity to transport about 2.2 billion cubic feet of gas per day. Mallam Kyari also led the NNPCL to achieve a $300 million reduction in the cost of the AKK Gas Pipeline contract via contract renegotiation from the initial $2.8 billion.
Another of the most impressive accomplishments of Kyari’s stewardship at NNPC was the flag-off of the Kolmani Integrated Development Project in Bauchi State in November 2022, marking the commencement of efforts to commercially exploit oil in the Northern part of Nigeria. It was deemed one of the most massive projects. The Kolmani Oil Field, estimated to have a reserve of about one billion barrels of crude oil (OPL 809 and 810), lies in the Gongola Basin of the Upper Benue Trough, straddling Bauchi and Gombe States. The project will have the capacity to transport two billion standard cubic feet of natural gas daily to power plants in Abuja, Kaduna, Kano, and various gas-based industries, boosting the nation’s socioeconomic growth.
Mallam Kyari also touched the downstream operation of the NNPC with the introduction of Operation White, which has helped in streamlining petroleum product importation, supply, and distribution across the country.
As the then sole importer of petroleum products in the country, NNPC succeeded in keeping the nation well supplied.
The New NNPCL
Arguably, the signing of the Petroleum Industry Act (PIA) in August 2021 by former President Muhammadu Buhari was a major breakthrough for Kyari as it opened the door for more significant changes in the national oil giant.
It is noteworthy that Kyari worked tirelessly to ensure the passage of the PIA, an initiative aimed at overhauling the country’s energy laws, creating a deregulated environment, freeing the oil sector from government control, and unbundling the oil company.
The passage of the PIA gave birth to the new, refreshed, and rejuvenated Nigerian National Petroleum Company Limited (NNPCL).
The birth of the NNPCL in 2021 wound up the Nigerian National Petroleum Corporation, NNPC, after 46 years of operation.
Official Logo/NNPCL
The PIA empowered NNPCL to operate like every private company in Nigeria with exemptions from the Fiscal Responsibility Act, Public Procurement Act, and TSA in order to ensure there are no excuses for failure.
Following this milestone, Kyari, who is now the GCEO of NNPCL, initiated new investment benchmarks to further rejuvenate the once-ineffective company.
At the launch of the new NNPCL, Mallam Kyari explained the ABCs of the new oil company, stressing that every Nigerian is a shareholder of the company.
According to him, “I’m happy to say at this moment that this country is changing. And by the way, I can tell you we are the competition. We are NNPCL. We don’t create rules anymore. We are the competition.
“We will pay taxes; we will pay royalties like anyone; we will also pay dividends to our shareholders, which many of you are. So, we are in business, and business means competition. We are a private sector; forget about the fact that we are owned by the government 100 percent.
“By the way, as you are also aware, we are going to do an initial public offering (IPO) very soon, and we’ll sell a part of our equity. It’s in the law, and once that happens, we will not be any different for any of you, and it will be a very different business environment.”
In June this year, NNPCL, in a major landmark, signed four memoranda of understanding (MoUs) with five African countries as part of the Nigeria-Morocco gas pipeline (NMGP) project.
The deal was sealed with Morocco, Cote d’Ivoire, Liberia, Benin, and Guinea. The NMGP is a 5,600-kilometre gas pipeline project that traverses 13 African countries. The project would create an opportunity to monetize Nigeria’s abundant hydrocarbon resources by expanding access to energy to support economic growth, industrialization, and job creation across the country and beyond. The project will contribute to accelerating access to energy for all, improving the living conditions of the Nigerian populace, integrating the economies of the sub-region, and mitigating desertification.
In a major step towards bolstering Nigeria’s energy security and promoting the utilisation of its abundant gas resources, the NNPCL and UTM Offshore Limited recently signed a Heads of Terms (HoT) agreement for the construction of the nation’s first indigenous Floating LNG project.
The oil company explained that apart from significantly cutting down on gas flaring and supporting the country’s commitment to reducing carbon emissions, the project would also create over 7,000 job opportunities, contributing to the nation’s economic growth and development.
In his resolve to put an end to the business of oil thieves, Kyari introduced the “Crude Theft Monitoring Application” (CTMA) to check the theft of Nigeria’s oil. The CTMA, which has been helpful in preventing oil theft, has application options for reporting incidents with prompt follow-up and responses. Additionally, the portal included a feature for validating crude sales documents.
Most recently, Kyari has continued to unclog the pores of the company by combating illegal refineries. His efforts at combating crude oil theft and illegal refineries were positive, leading to a significant spike in daily oil production, reaching 1.6 million barrels per day.
In the last few weeks, in addition to several other breakthroughs, the NNPCL announced it had busted 240 illegal refineries and committed pipeline vandalism in the Niger Delta region. A few weeks ago, a private security contractor engaged by the national oil company also intercepted a vessel conveying 800,000 litres of stolen crude oil at an offshore location. The vessel was heading to Cameroon. It was later destroyed.
This is, however, a testament to Kyari’s resolution to completely eradicate the business of oil thieves in the country.
All of these recent achievements and breakthroughs have stemmed from the leadership of a resilient man who is leaving no stone unturned in transforming Nigeria’s oil and gas sector via transparency and accountability-driven policies.
Overall, the implementation of the PIA and NNPCL’s consolidation deals have set Nigeria’s oil and gas industry on a transformative path, unlocking opportunities for growth and prosperity in the sector.
