By Hector Igbikiowubo

THE Nigerian National Petroleum Corporation, NNPC, last year recorded over N20 billion in savings on recurrent annual expenditure, owing to a medley of cost efficient strategies introduced by Dr. Mohammed Sanusi Barkindo, the corporation’s Group Managing Director.

Dr. Barkindo made the disclosure in a comprehensive score-card of the corporation in the last one year, noting that the NNPC introduced a cost-efficient strategies across the departments and strategic business units of the group.  

“For instance, part of the money was saved from the Exploration and Production Directorate through the renegotiation of contracts with suppliers and the elimination of unnecessary committee meetings that incur huge travel costs,” Barkindo stated.

Also in the Directorates of Corporate Services, CS, and Refining and Petrochemicals, R&P, the cost-saving measures introduced include the renegotiation of contracts with suppliers and the reduction of chemical consumption through a cutback in steam losses and overheads respectively.

At the Pipelines and Products Marketing Company, PPMC, huge amounts were also saved through cut in demurrage costs and interest on late payments.

The Finance and Accounts Directorate also benefitted from the cost-saving measures through the imposition of a budget cap to limit spending, while the Nigerian Gas Company, a subsidiary of the NNPC, had its revenue boosted through the collection of debts from the Power Holding Company of Nigeria, PHCN, and other commercial debtors.

Introduction of international best practices

Upon his appointment as the GMD of the NNPC by President Umaru Yar’Adua  on 12 January 2009, Dr. Barkindo, an erstwhile acting Secretary General of the Organisation of the Petroleum Exporting Countries, OPEC, brought his more than two decades career experience at the NNPC to advantage when  he embarked on a painstaking tour and appraisal of the situation on ground. Moving swiftly the new helmsman authorised the hiring of consultants to assist with defining the scope of change required and to bring international benchmark and best practices to his transformation mandate.

“One of the key actions taken after reviewing with the consultants was the setting up of the Transformation Office to coordinate and monitor progress being made in the transformation journey. This has yielded some positive results as can be seen from the over N20 billion savings which is a humble step in the process of transforming the corporation from a cost centre into a profit centre”, Dr Barkindo said.

Identification of key growth paths

Dr. Barkindo and his team have also identified key growth paths, including growth in oil reserves and managed expansion in production capacity; repositioning gas for rapid domestic, regional and export penetration; revitalisation of downstream capacity to support domestic energy needs and reforming key institutions to anchor sustained growth in the industry.

It was gathered that the consultants have since gone to work with the setting up of the Transformation Office to coordinate and monitor progress in this regard.

Apart from his transformation drive, Barkindo a veteran advocate of Climate Change Initiative has helped NNPC in capturing the benefits of Carbon Credits that would accrue from gas utilisation efforts.  In the downstream sector the NNPC management has been working round the clock to provide lasting solution to the perennial challenge of artificial fuel scarcity wrought by plethora of extraneous factors like Tanker Drivers strike, pipeline vandalism, and refusal of credit facility to marketers by banks among others.

To resolve this impasse the NNPC is set for the commencement of a two- day high level meeting of all the key operators in the downstream sector of the oil and gas industry in Nigeria. Already critical stakeholders in the downstream sector have signaled their intention to participate fully in the forum designed to find a comprehensive and lasting solution to the fuel supply and distribution challenge noticeable within the last few months.