Hurricane Kachikwu Sweeps Through NNPC

There seems no end in sight to the mass purge that is currently going on at the Nigerian National Petroleum Corporation (NNPC), since the advent of Dr. Emmanuel Ibe Kachikwu, as Group Managing Director.

Despite the gale of sacks already undertaken at the state-owned corporation, Kachikwu, prodded by President Muhammadu Buhari, who appointed him only a fortnight ago, has vowed to extend the cleansing even to the junior cadre of the workers.  For him, there is no relenting in the determination to sack more people, until the corporation is adequately pruned and made efficient and result-oriented like a private sector corporation.

In what may be aptly described as “Hurricane Kachikwu, the former Executive Vice President for Africa of Exxon Mobil Corporation, from where he was hired,  bared his fang, barely 24 hours after he resumed office, sacking eight of the corporation’s Group Executive Directors.

Those affected were: Bernard Otti, Finance and Accounts; Dr. Timothy Okon, Exploration and Production (Acting), who also doubled as Coordinator, Corporate Planning and Strategy; Engr. Adebayo Ibirogba, Engineering and Technology; Dr. David Ige, Gas and Power; Ms. Aisha Abdurrahman, Commercial and Investment; Dr. Dan Efebo, Corporate Services; Engr. Ian Udoh, Refining and Petrochemicals; and Dr. Attahiru Yusuf, Business Development.

A statement by NNPC’s Group General Manager, Group Public Affairs Division, Ohi Alegbe, noted that the Federal Government approved their retirement with immediate effect. Dr. Kachikwu, according to him, personally conveyed the government’s decision to the retiring executive, while expressing gratitude to them for their services.

 

New Thinking

They were replaced by four GEDs already approved by the Presidency to man four new directorates, with Alegbe quoting Kachikwu as saying that the new appointments “are in line with the Federal Government’s aspiration to transform the corporation into a lean, efficient, business-focused, transparent and accountable national oil company in keeping with international best practices.”

This was followed with the firing of the Managing Director of the Petroleum Product Marketing Company (PPMC), Prince Haruna Momoh, after which he took on the heads of other NNPC subsidiaries and 38 other management staff in one fell swoop.

A statement by Alegbe said the latest move reduced the corporation’s management staff from 122 to 83.

In line with the government’s new thinking of transforming the corporation into a cash cow, Alegbe said 12 persons from the private sector have been hired “to jump-start a new business outlook to enhance the operational environment as a profit-driven business as against the current civil service orientation.”

According to the corporation, the appointments which were approved by President Muhammadu Buhari, include: Dr. Maikanti Baru, Group Executive Director, Exploration & Production; Isiaka Abdulrazaq, Group Executive Director, Finance & Services; Engr. Dennis Nnamdi Ajulu, Group Executive Director, Refining & Technology; and Dr. Babatunde Victor Adeniran, Group Executive Director, Commercial & Investment.

New Company Secretary/Legal Adviser and Managing Directors were also named for the corporation’s Strategic Business Units.

They are: Chidi Momah, Group General Manager, Company Secretary & Legal Adviser; Mrs. Esther Nnamdi Ogbue, MD, Pipelines and Products Marketing Company (PPMC); Engr Chinedu Ezeribe, MD, Warri Refinning& Petrochemicals Company (WRPC); Babatunde Bakare, MD, Nigerian Gas Company (NGC); Inuwa Ibrahim Waya, MD, Hyson; Abubakar Mai-Bornu, MD, Nigerian Petroleum Development Company (NPDC); and Ladipo Fagbola, MD, NNPC Retail.

Others are: Rowland Ewubare, MD, Integrated Data Services Limited (IDSL); Modupe Bammeke, MD, NNPC Properties; Abdulkadir Saidu, MD, Duke Oil; and Dafe Sejebor, Group General Manager, Nigerian Petroleum Investment Management Services (NAPIMS).

The new GMD also approved the redeployment of Gbenga Olu Komolafe as the Group General Manager, Special Duties. Until his appointment, Komolafe was GGM, Crude Oil Marketing Division of the corporation.

The most senior General Manager in the Crude Oil Marketing Division, Musa Yola Usman, was directed to function as the Group General Manager in acting capacity, fueling insinuations that the deployment of Komolafe followed allegations of fraud. The corporation however denounced such, describing it as mischievous and unprofessional.

 

Expect More

Kachikwu told journalists after a meeting with President Buhari last week that the purge, part of efforts to restructure the corporation for enhanced performance and better accountability, would continue, even it would be subjected to a fresh round of forensic audit. This, he said, would cover the corporation’s accounts for the period between 2014 and 2015 to ascertain its true financial state.

The NNPC GMD said the purge will be done after the audit of staff which he described as part of a three-pronged approach that includes pruning the work force and reworking the business model in the ongoing repositioning of the nation’s oil corporation.

After months of public outcry, the ex-President Goodluck Jonathan administration hired the international accounting firm of PricewaterhouseCoopers (PwC) to undertake a forensic audit of the NNPC account, if only to verify claims by former Governor of the Central Bank of Nigeria (CBN), now Emir of Kano, Lamido Sanusi, that the corporation has over the years become a house of sleaze.

In its executive summary of its audit report, PwC wrote: “We did not have access to NPDC’s full accounts and records and we have not ascertained the amount of costs and expenses which should be applied to the US$5.11billion Crude Oil revenue (net of royalties and PPT paid) per the NPDC submission to the Senate Committee which should be considered as dividend payment by NPDC to NNPC for ultimate remittance to the Federation Account.”

The report also recommended “that the NNPC model of operation must be urgently reviewed and restructured, as the current model which has been in operation since the creation of the Corporation cannot be sustained.”

According to Kachikwu, the ongoing reforms and restructuring would in the next six months give birth to a new NNPC, in which the era of anything goes would have become a thing of the past.

For him, “things have been done wrongly and things need to be done differently. We are doing a lot of work in terms of repositioning, restructuring, getting the right personnel in key places and setting a culture of accountability and service delivery so that the new NNPC that you are going to see will be a different institution altogether.

“The restructuring will be complete. It is A to Z. I have done the first three layers, which are going to be the GEDs to GGMs and General Managers. You are going to have a lot more now. The GEDs and GGMs will take it to the next layer, which is the lower layer. The whole idea is to go back to being able to look at your appraisals; how well have you done in the job? If you have done very well, how do we elevate you to a position where you can offer more service? If you have not done well enough, we can retrain you and if you have not done well enough and there is no possibility of retraining you, we will let you go. At the end of the day, NNPC is not a public service. It is a corporation and will run like a company generating money for the people of Nigeria. And so, that whole concept of ‘anything goes’ should stop. And this is the first stage of that whole process.”

Kachikwu explained that the reforms going on at the Corporation are centered on people and process.

“We are going to put processes and controls in place. We are going to do retraining and repositioning and then, we are going to re-engage our majors and minors, all those who are active in the sector, for us to work as a team to try to take Nigeria forward. It is going to be the process stage. The final stage will be the business stage, which is now looking at all the existing contracts; are they good, are they ok, do they need to be re-kitted and redone? We will look at the PSCs, what do we do going forward? We will look at the challenges posed by very reduced balance sheet as a result of $40 or $50 per barrel oil, what do we do to energise recovery and income growth so that government will have money to work with?”

He said the exercise would be very intensive, very calibrated work, adding that “a lot of us are not spending time sleeping but over the next five to six months, you will begin to see emerging a new NNPC, a new process of oil administration in the country and obviously giving fillip to Mr. President’s dream of taking the oil industry back to where it should be.”

TSA

Kachikwu also said NNPC is considering how to implement the President’s directive on the Treasury Single Account in a way that it will not affect the operations of the oil company.

The new GMD said his approach to restructuring NNPC would be based on a three-pronged process, explaining that there was the people aspect, which is being handled now by “getting the right people in the right places”.

On the second pronged strategy, he said: “We are going to get a forensic audit done so that we know clearly, not the (limited) one done by PricewaterhouseCoopers (PwC), but a proper forensic audit that will cover us all the way to 2014, 2015, and we will be able to say to you this is the state of the corporation and the economy.

“We are going to put processes and controls in place; we are going to do retraining and repositioning and then we are going to engage our (oil) majors and minors, all those who are active in the sector for us to work as a team trying to take Nigeria forward.

“The final stage will be the business stage, looking at all the existing contracts — are they good? Are they ok? Do they need to be redone? Look at the PSCs (Production Sharing Contracts) and what do we do going forward? Look at the challenges posed by the reducing balancing sheet as a result of $50 or $40 per barrel for dark oil.

“What do we do to energise recovery and the income growth so that the government will have money to work with?

“It is a very intensive and calibrated work. A lot of us are not spending time sleeping, but over the next five to six months you will begin to see a new emergence in the NNPC, a new process of oil administration in the country and obviously giving fillip to Mr. President’s dream of taking the oil industry back to where it should be.”

He explained that a lot of things had been mishandled in the past and that things needed to be corrected.

He said his team was doing a lot of work on repositioning, restrategising and getting the right personnel in key places, and setting a culture for accountability and service delivery.

“I think that the new NNPC that you are going to see going forward will be a different institution all together,” he said.

He assured that in the next 60 days, some of the strategic targets would be translated into concrete milestones to the appreciation of Nigerians.

Stakeholders React

Meanwhile, upon the appointment of Kachikwu as the new Group Managing Director of NNPC, industry stakeholders have stressed the need for him to also urgently address the issues of joint venture cash calls, contracting process and the operation of the refineries.

For instance, Chairman and Chief Executive Officer, International Energy Services Limited and a former top executive at the NNPC, Dr. Diran Fawibe, believes Kachikwu “is aware of all the issues, the challenges facing the industry and how to reposition the industry to fulfil its role in the Nigerian economy.”

He said the new GMD would be expected to push for the reform of the oil sector and the NNPC in particular, just as “he knows what should be done as far as the reform of the oil and gas industry is concerned, of which NNPC is a critical element.

“A lot of things will fall into place once the reform is undertaken and completed. Some of the issues that tend to make NNPC a dysfunctional organisation will then be corrected and proper adjustment will be made and the NNPC can then function.”

“One of the major issues bedeviling oil and gas operations in the country today is the issue of cash call,” Fawibe said.

“Government through NNPC has not been honouring cash calls, and this has been a limiting factor for activities in the industry. The issue of cash calls, one would expect him as someone coming from the private sector, to be able to come up with creative approach to solve this problem once and for all.

“Then the contracting process in the industry should also be looked into. A situation where it took as long as 24 to 36 months to get projects sanctioned is not good for the industry, and it introduces uncertainty. In other countries, it is usually between three and six months. As a private sector oil industry professional, who has international overview of what goes on in the industry, he should be able to introduce a change in the work processes,” he added.

Also, President of the Nigerian Association for Energy Economics, Prof. Wumi Iledare, described the new GMD as having the right exposure, adding that though NNPC is different from ExxonMobil, the new GMD has a different mindset.

“He must build his team and empower them. ExxonMobil has a governance structure with a functional framework for value creation. I am hopeful that he has a term of appointments with measurable performance indicators. Here is my hope that he can avoid the political landmines to succeed.

“The governance structure of NNPC has to change for him to succeed. He has to listen to his GEDs. He must be allowed to function under an apolitical NNPC board,” Iledare added.

Similarly, An energy expert and Senior Lecturer, Energy Law at the University of Lagos, Dr. Adedayo Ayoade, said, “The NNPC is actually in a state of chaos. The President has said he wants to split the NNPC into two, commercial and regulatory arms. The new GMD is to make the NNPC more commercially versatile and strengthen the regulatory arm.”

Ayoade said it has become necessary to insulate the NNPC from political pressure to ensure that it is accountable and transparent. “Until we remove political interference, the NNPC cannot function.”

An analyst for Oil and Gas Africa at Renaissance Capital, Temilade Esho, expressed optimism that “his (Kachikwu’s) level of experience and work ethic is what Nigeria needs to sweep out corruption in the NNPC.

“Firstly, we believe this could be beneficial to JV producers, like Seplat. It could be a step towards resolving the issue of accumulated NNPC receivables, which remains the main challenge for the JV producers. NNPC owes Seplat about $500m in receivables and owes the entire industry about $5 billion.”

“We like that he is a technocrat with no prior political exposure. This supports President Buhari’s manifesto to clean out the opaque nature of the state oil company. We believe this will produce a more transparent and less opaque NNPC. We see this news as positive overall and await more appointments in the NNPC in the next few weeks,” she said.

Hopes

Based on the cleaning exercise and the expressions of hope from Nigerians for a viable and profit oriented NNPC, the action of the GMD may well be in tune with what Nigerians are expecting. Time would tell however, whether the ongoing cleansing would offer government the rejuvenated and nimble honey-pot envisioned of a corporation whose executives have over the years become an alternative government, whose crevices are littered with ‘dead bodies’ that Buhari and Kachikwu now hope to exhume.

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