By Obinna F Nwachukwu
On Monday, scores of demonstrators hit the streets of Abuja demanding the immediate dismissal of the Group Managing Director of the Nigerian National Petroleum Corporation Limited, Mele Kyari, over the lingering fuel scarcity in the country.
The protest comes on the heels of the company’s confession that its substantial debt to suppliers is endangering the sustainable fuel supply.
Among other things, the corporation highlighted that the financial strain is placing significant pressure on its operations and threatening the stability of fuel supplies.
Presidential Candidate of the People’s Democratic Party ( PDP) in the 2023 election Alhaji Atiku Abubakar as well as human rights lawyer, Femi Falana, also raised concerns that the rising cost of living, arbitrary hike in the pump price of petrol and its attendant scarcity had contributed to the number of fewer vehicles plying the Nigerian road with calls for the rejiggling of the NNPCL leadership.
Chanting solidarity songs and displaying several banners that read ‘We are tired of fuel scarcity and stories on why refineries are not working, ‘No direction under Kyari’ and ‘We want accountability in the affairs of NNPCL’, the demonstrators led by one Aminu Abbas alleged that Kyari’s tenure was marked by a dismal scorecard that raises more questions than answers.
But a closer observation of the group and its leadership shows that it was a rented crowd out on a mischief mission. Sources within the NNPCL revealed that it had been long the unregistered group and many others have been writing letters to the GMD requesting for financial support else they would embark on protests around Abuja. And following the refusal of the NNPCL leadership to give in to their demands, the protest became an inevitable but regrettable action.
The fact remains that despite the harsh criticisms of the NNPCL, the national oil company under Mele Kyari as Group CEO, has in recent times worked very hard to improve Nigeria’s daily crude production by as much as 60,000 barrels per day.
The NNPC Ltd, which has been on transition since the passage of the Petroleum Industry Act (PIA) has been championing the push to transform Nigeria into a gas-powered nation in keeping with its enormous natural endowment with over 209 trillion cubic feet proven natural gas reserves.
It is building a gas infrastructure to deepen the use of gas in the domestic market, while also promoting the West Africa Gas Pipeline and the Nigeria-Morocco Gas Pipeline, as well as the Train 7 of the NLNG and number of Floating LNG Projects to deliver gas to the global market.
The company is also aggressively expanding its portfolio in the power sector to make the company a truly rounded energy company. Apart from its stakes in a number of Independent Power Plants such as Afam VI, Okpai Phases 1 and 2 with a combined installed capacity of 1,420MW, there have been plans to build three new power plants in the AKK Pipeline corridor Abuja, Kaduna, and Kano. The ground-breaking ceremony of the 1,350MW wholly owned Gwagwalada Power Plant was performed by President Bola Ahmed Tinubu in August last year
Prior to his appointment, Kyari, a Maiduguri-born Petroleum Engineering graduate from Borno State was the Group General Manager in charge of the Crude Oil Marketing Department (COMD). He has worked with the NNPC and the Nigerian oil and gas industry for over 33 years. On assumption of office, Kyari inherited an NNPC that was still struggling to shake off the negative image of a national oil company where nothing works.
Established on April 1, 1977 as Nigeria’s national oil company, the NNPC before Kyari, was living in the dark shadows of a cesspool of monumental corruption and opacity; a place perpetually lagging behind its peers in other climes; where nothing was done properly and efficiency to the benefit of its shareholders, which are the Nigerian people.
Knowing that NNPC needed a new vista and a break away from its decadent past, he saw his appointment as an opportunity of lifetime to give the NNPC a new direction in the way, its operations and businesses are well conducted, and give Nigerians a renewed hope.
Days after his inauguration, the reform-minded oil, and gas industry technocrat unfolded an agenda for NNPC’s rebirth. He called it the Transparency, Accountability and Performance Excellence (TAPE), a five-step strategic roadmap for NNPC’s attainment of efficiency and global excellence.
During the official unveiling of the TAPE agenda, Kyari said it was the only way to transform the NNPC and enhance its potential and capacity to compete with other national oil companies around the world.
He told members of the then NNPC’s Management team to buckle up, shape up, ship in with the new direction, or ship out with the old ways of doing things.
He said the five steps for realizing the objectives of TAPE were to ensure:
- NNPC would open up its systems to public scrutiny;
- Its operational processes would be made transparent and accountable to the Nigerian people and the government;
- The new system would operate along with well-defined operational processes, benchmarked against established global best practices by world-class oil and gas companies;
- Set the right operational cost structure, to guarantee value-addition towards NNPC’s sustained profitability, and
- Set achievable goals, priorities and performance standards and criteria, by developing suitable governance structures for its strategic business units, and the entrenchment of team-spirit, work ethic and collaboration with all key stakeholders to achieve set corporate goals.
And slowly but steadily, the Group Chief Executive has been returning Nigeria to the glorious days of producing crude oil sufficient to satisfy its Organisation of Petroleum Exporting Countries (OPEC) quota.
Indeed, from a low of 900,000 barrels monthly oil production in the last quarter of 2022, under the Kyari-led NNPCL, Nigeria in July 2024 hit 1.53 million barrels per day, including condensates, according to data from the upstream regulator.
So, it’s not just gloom and doom and missed deadlines for delivering on refinery overhauls and construction of grid length gas pipelines.
Aside the breakup of a decades-long inability to release yearly Annual Financial Statements (AFS), several industry operators also acknowledge the role played by Kyari in saving their operations.
For instance, before his appointment, the upstream sector of the country’s petroleum industry was facing a myriad of challenges. Prices at the international crude oil were experiencing a rapid decline.
Earnings from crude oil exports were significantly lower than the situation a few years ago. The average oil production volumes of 1.9 million barrels per day were significantly below the country’s approved 2.3 million barrels per day capacity in the 2019 Federal Budget.
New investments in the industry have stalled for several years as a result of the growing uncertainty over lingering issues that bordered on the poor operational environment. Key among the issues was the unresolved Petroleum Industry Bill (PIB), whose passage had continued to await the attention of the National Assembly and the government, fueling the pervading uncertainty among existing and prospective investors in the industry. But it took some smart moves by the Kyari led NNPC to get the PIA passed into law and assented to by the president.
That is not all, since assumption of office, Mele Kyari had ensured the execution of a funding and technical services agreement (FTSA) as well as a alternative financing deal for NPDC’s OML 13 valued at about $3.15 billion and OML 65 for $876 million. These agreements resulted in a 32% and 21% incremental production output in OMLs 40 and 30.
Kyari has also been able to save costs for the government through NNPC’s revision of joint venture and production sharing contract (PSC) operators’ unit costs, down to $19 per barrel and $18.3 per barrel, from the initial $31 per barrel and $24.3 per barrel respectively.
Concerned about the impact of high oil production cost on the government revenue, Kyari has, in the last one year, demonstrated commitment to achieving the industry target of reducing oil production cost to an average of $10 per barrel by 2021.
Under Kyari’s management , the NPDC also acquired four new oil acreages (OMLs 11, 24, 116 and 98, while recovering debts for gas supplies totaling about N16.64 billion and $3.55 million.
In terms of gas development, Kyari has made significant progress in the development of an integrated gas handling facility, with the commissioning scheduled for the third quarter of this year.
Despite the challenges in the oil and gas industry, Kyari was able to ensure the NNPC subsidiary in charge of the government investment interests in the oil industry joint venture projects, the National Petroleum Investment Management Services (NAPIMS), was able to achieve an average oil production capacity of 1.8 million barrels per day prior to the decision by OPEC to cut its members’ output to boost crude oil prices and stabilize the oil market.
Kyari has also supported NAPIMS to secure external funding for the SPDC’s Santolina 3 projects expected to deliver an average production of 16,300 barrels of oil per day, while also superintending over the resolution of the Escravos gas-to-liquids (EGTL) cost dispute with Chevron Nigeria Limited (CNL).
The settlement agreement is expected to bring in additional $2billion to the Federal Government in the next 20 years, while providing about 1.5 million litres of diesel per day to the country.
Apart from the diversification of the portfolios of its investment to create wealth, Kyari has made the NNPC to become a profitable venture by reviving its moribund subsidiaries and providing the building blocks for stronger strategic business units (SBUs) and Corporate Services Units (CSUs) to rake in more revenue to support the overall growth of the corporation.
IDSL achieved 20% year-on-year revenue growth and completed eight reservoir studies alongside the upgrade of IDSL’s Data Processing Centre. Revenue performance from the agencies as shown in the NNPC audited actual plan about N38.05billion and N25.77billion respectively, which is 48% above plan.
In addition, Nigeria has regained its position as the largest crude oil producer in Africa, ahead of Algeria, Angola. In 2022, the company posted its second consecutive year of ‘profit’ announcing N674.1 billion in the 2021 financial period and growing it from N287 billion in 2020. The figure represents an increase of N387 billion or 134.8 per cent when compared to the previous N287 billion recorded in 2020. And just last year, 2023, NNPCL announced a profit of N2.5 trillion for the 16 months from December 2022. How else can an organization been run if not this way.