Breaking News

NNPC running at over N200bn loss,FG

By Hector Igbikiowubo and Oscarline Onwuemenyi
ABUJA — The  Minister of Petroleum Resources, Dr. Rilwanu Lukman, has disclosed that the nation’s oil and gas behemoth, the Nigeria National Petroleum Corporation (NNPC) was currently running at a loss of more than N200 billion, with contingent liabilities of more than N146 billion and $277 million.

Dr Lukman

He noted that only a drastic and comprehensive transformation of the corporation could save the corporation from an impending demise.

Lukman stated that, “The corporation is currently running at a loss of more than N200 billion, with contingent liabilities of more than N146 billion and $277 million. If this trend is not reversed, the corporation as we know it today will cease to exist.”

Lukman, who made this disclosure on Friday at the second NNPC Transformation Town hall meeting, and the launch of the Transformation Agenda, in Abuja, noted that the c ountry could not afford a failure in the transformation programme of the corporation as that would spell doom for the energy sector reforms.

According to him, “The PIB when passed into law will remain just a piece of legislation if its intent is not well executed. NNPC is the delivery engine for the execution of the PIB when passed into law and the NNPC transformation programme lies at the heart of the energy sector reform. I cannot fathom the costs of your failure.

“Without NNPC’s transformation, the vision and aspirations behind the PIB will remain a theoretical construct. More broadly, without NNPC’s transformation, there can be no energy sector reform. Therefore, failure of the transformation programme is not an option.”

The minister stated that the NNPC and the entire Nigerian petroleum industry country is at a critical juncture in its history, adding that transforming the corporation would positively impact the company, the nation’s economy and the people.

He noted, however, that, “A transformation programme of this magnitude requires tough decisions to be made. Therefore, be prepared for a tough ride ahead as will not be and has never been easy.” He said the corporation was faced with some key challenges including providing reliable product supply within the country and to the world, being good stewards of the national resources and building a commercially viable petroleum sector.

“The recent fuel crisis has been a case in point and has been a trying ordeal for all our fellow citizens. The inconvenience, the long queues at filling stations and the frequent shortages are unacceptable in a country like ours.

“These challenges are harsh reminders that the oil and gas sector in Nigeria is not working well. A reliable fuel supply across the nation is essential to ensuring national security and continued economic growth. NNPC has the clear responsibility in making this work,” the minister added.

Lukman noted that the NNPC is ahead of the curve in thinking through the implications of the Petroleum Industry Bill (PIB), and pitting in place the building blocks under the new regulatory regime.

He said, “I have taken very ken interest in your transformation, not just because you are the country’s National Oil Company (NOC), but also because you will blaze atrail for other institutions. In fact, I have asked other institutions to look up to you and learn from your experience in this regard.”

The minister urged the corporation not to relent in its efforts or get complacent. It is not yet time for you to rest on your laurels. The transformation journey has only just begun. With significant work ahead of us, the next 18 months will be critical and indeed the most challenging period in the history of this corporation and Nigeria’s oil and gas industry,” he added.

While making a case for the transformation agenda, the Group Managing Director of the NNPC, Dr. Mohammed Sanusi Barkindo, explained that the vision of the corporation was to become a world_class national oil and gas company as well as to become a major international player in the next ten years.

He noted that the NNPC currently contributes more than 80 percent of the Federal Government’s revenues and 95 percent of its foreign exchange.

“NNPC’s transformation is a crucial element of the government’s overall reform agenda for the energy sector. The corporation’s retail target, for instance, is to grow into the nation’s largest petroleum retailer by December 2011.

Barkindo pointed out that the first phase of the transformation would require the corporation to stabilize its financial systems and its operations.

He added that, “Stabilizing the financials and operations of the company will require tough decisions and in some instances drastic measures may be necessary. We will make our decisions carefully and as humanely as possible.

“However, this does not require that we skirt around the difficult issues. Where required, we must be prepared to confront and make decisions that could bring short term pain but lasting benefits and make us better off as employees, as consumers and most importantly as citizens of this country.”

Barkindo further explained that NNPC was not alone in this transformation bid, adding that other national oil companies (NOCs) and even International Oil Companies (IOCs) have also had to undertake difficult decisions to stay lean and efficient.

“Most recently, Shell and British Petroleum (BP) radically restructured their organizations and streamlined their staff by up to five percent of their workforce to reduce up to $5 billion in annual cost. A lean and efficient organisation is the ticket to be competitive in the industry today,” he stressed.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.