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NNPC’s New Challenges

THE Nigerian National Petroleum Company, NNPC, last week launched the final phases of a transformation that would make it more transparent, more accountable, and ultimately a provider of better services to the public. On paper the transformation plans are sound, what remains is their implementation.

NNPC, lately, has accepted it is uncompetitive. Its 10,000 staff, two-thirds of which play administrative roles, while in similar organisations, two-thirds of the staff is technical hands, with competences in the core business of the organisations, is one example of its limitations.

The other issues NNPC admitted it faced included unrestrained government interference, inability to access funding for its projects, and perennial conflicts over its roles as an operator, national company and a regulator. The transformation would result in the creation of 11 companies out of the present NNPC.

While the NNPC works at the final administrative, financial and legislative details of the transformation, two matters that are outstanding may require more immediate solutions. The first is the adequate delivery of petroleum products to Nigerians at affordable prices. Product scarcity had dragged for months in all parts of Nigeria.

For the first time in years, Lagos and Abuja which were usually spared long fuel scarcity spells have joined in the misery.

The second issue, vandalisation of pipelines, is linked to fuel scarcity. NNPC argues it cannot distribute products because its pipelines are regularly vandalised. The costs of repairing vandalised pipelines are simply outrageous and a major drain on the country’s resources.

Close to N175 billion has been spent on repairing vandalised pipelines since 2000. Vandalisation of pipelines disrupts supplies and hurts exports earnings. NNPC faces this challenge and must find the appropriate combination of technology and human resources to stop the haemorrhage.

How would NNPC deal with product delivery in the short term while awaiting the de-regulation? There are no answers in sight. The daily horror of national life being interrupted by unstable fuel supplies is one that the government itself must halt. The economic and social consequences have deep impacts on meeting national development goals.

As the NNPC transforms to a commercial entity, the matters around de-regulations have to be addressed more honestly. Claims that de-regulation would lead Nigerians to an ideal society are misleading. The promises of better infrastructure – electricity, roads, health services, education – from the messages promoting de-regulation do not match the realities of the new policy that would see Nigerians pay for petroleum services at market prices.

The challenges before the NNPC then must include the realisation that it cannot abdicate its responsibilities to Nigerians while it transforms. NNPC has a responsibility to ensure minimal disruption to further economic and social activities as it makes its transformation.

Nigerians will understand this better than a new NNPC that would leave them in the lurch.


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