By Hector Igbikiowubo
LONDON – â€œThe Nigerian National Petroleum Corporation (NNPC) will either transform or liquidate,â€ Dr. Mohammed Sanusi Barkindo, Group Managing Director of the corporation told foreign banks yesterday in London to underscore managementâ€™s commitment to exploratory funding to drive its transformation agenda.
Dr. Barkindo who was accompanied by top management of the corporation explained that although the bankers may not take the corporation seriously because it had treaded and abandoned this course of action in the past urged the bankers to note that â€˜there is no plan Bâ€™.
He said it was important to note that the corporation was currently cash negative and had only been sustained by sovereign guarantees provided by the federal government. â€œHence, we must transform to a profitable and professionally driven enterprise and that is why we are exploring funding options. Indeed, it is the only way to go.â€
Dr. Barkindo told the bankers that the Petroleum industry Bill was at an advanced stage of the legislative process adding that the corporation had launched a transformation programme in anticipation of the changes expected to follow the passage of the bill into law.
He noted that the choice of Standard Chartered Bank as one of the 7 leading global investment banks the NNPC management would be meeting with was based on its success rate in some projects financing schemes in the country including the NGL-11 supplementary financing as well as the Satellite fields financing scheme, â€˜making it a natural candidate for this kind of exploratory talkâ€™.
While two local Nigerian banks including First Bank and UBA are expected to make presentations today, Dr. Barkindo disclosed that his management expects to learn about the experiences of other NOCs who have gone down the path of transformation and the various financing options available to them.
He said the NNPC management also expects to understand the overall capabilities of the different international i-banks in providing financing support to NOCs, while kick starting discussions on potential options for capitalisation and the outline of a process over the next few months.
Also speaking, Mr. Phillip Chukwu, the NNPC Group Executive Director in charge of Exploration and Production disclosed that the corporation had worked out plans to grow output from 60,000 barrels per day to 90,000 barrels per day by end of 2010 and 250,000 barrels per day by 2015.
He disclosed that even before the PIB, government had taken a conscious decision to grow the capacity of the National Petroleum Development Company (NPDC), a subsidiary of the NNPC, adding that efforts are currently ongoing to increase operatorship portfolios of the company in line with its aspirations.
Also speaking at one of the presentations, Ade Adeola who led the team from Standard Chartered Bank noted it was important to align the transformation agenda with a funding strategy.
He advised that the best way to grow the NNPC business was to first consolidate the exploration and production end, noting that once this is achieved it can become a cash cow to grow other aspects of corporationâ€™s business.
Adeola also advised that as a way going forward, it was important to execute one or two projects in which the corporation has controlling interest to enable the banks track the NNPCâ€™s capacity to keep to existing contractual obligations.
He also noted that the financial market is very sensitive to comments credited to government functionaries in the media.
â€œIf wrong information gets put out there and you do not counter it immediately, the market accepts it as the fact.â€
The banker also said the NNPC is critical to growth and development of the Nigerian economy, adding that â€˜if the NNPC does not work, it will be difficult to achieve thisâ€™.
The corporation also took presentations from the Deutshe Bank led by Mr. Kayode Akinkugbe and JP Morgan led by Olivier Frendo.
It would be recalled that the NNPC unveiled its 12 point transition implementation as part of its transformation programme Friday last week.