Will the federal government’s decision to split NNPC into 30 firms ensure accountability?

The federal government has announced the plans to split the Nigerian National Petroleum Corporation (NNPC) into five operational zones and 30 independent companies, each with its own managing director.

This was disclosed by the Minister of State for Petroleum Resources and Group Managing Director of the NNPC, Dr. Ibe Kachikwu, at the 2016 Annual Oloibiri Lecture Series and Energy Forum organised by Society of Petroleum Engineering (SPE) Nigeria Council at Abuja, yesterday.

The decision to split the NNPC into 30 “profitable” companies adds to the the list of President Muhammadu Buhari’s  reforms in the nation’s oil sector. Since the beginning of the new administration, the NNPC has posted monthly updates of its financial status on its official twitter page. Added to this was the release of a 38-page 2015 full year report on the company’s official website last month.

However, the decision to split the NNPC into 30 companies comes with mixed feelings amongst Nigerians, who question if the split is a step in the right direction. The split of the NNPC means:

Competition for business opportunities

“The transformation of the national oil company is expected to see these new players compete for business opportunities across the global oil and gas industry with expected sustainable profits,” said Dr. Ibe Kachikwu.

No more Administrative roles but accountability in the NNPC

The new 30 independent companies will have their own managing directors hence; titles like group executive directors will no longer exist in the NNPC as each company will now have chief executive officers.

The new Chief Executive Officers are expected to take up responsibilities of their new role and deliver upstream results to the Group Managing Director of the NNPC .

Huge profit in view for the NNPC

The Nigerian National Petroleum Corporation (NNPC), which contributes immensely to the government’s income in past years, has been mired in corruption allegations. The federal government believes it can transform the NNPC into a profitable enterprise by splitting the company.

According Dr. Ibe Kachikwu, the NNPC within the last seven months has successfully begun to cut down on its losses from the N160 billion loss which the corporation last incurred to N3 billion in its January operations. He further states that NNPC, would return to profitability by July 2016, the first time the company would be making profit in 15 years.

A step in the right direction?

Splitting the NNPC into 30 companies came as no surprise since the initial plan of the federal government was to split the  Nigerian National Petroleum Corporation, NNPC, into two companies – the Nigeria Petroleum Assets Management Company (NPAM) and a National Oil Company (NOC) that would be run on commercial lines and partly privatised.

The adoption of the Treasury Single Account (TSA) undoubtedly has resulted in the blocking of financial leakages in the public sector, making more funds available for the business of governance and ensuring the welfare of our citizens however, the splitting of the NNPC into 30 companies appears to be confusion at its peak if the TSA was created to ensure accountability.

An important caveat for federal government is its failure to acknowledge the fact that the NNPC cannot reform itself internally. Rather, the NNPC needs institutional framework, which can only be done with the passage of the Petroleum Industry Bill (PIB) for defining policy, institutional and commercial framework for oil and gas operations in Nigeria.

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