In a matter of weeks, Nigeria will break up the Nigerian National Petroleum Corporation (NNPC) into 30 separate units capable of generating revenue, Ibe Kachikwu Managing Director of the state-owned oil company said.
Each of the new subsidiaries will have its own managing director and ensure that NNPC as a whole becomes profitable by the end of the year. The company lost N267 billion ($1.34 billion) last year following the poor performance of its refining business and also the economic downturn in the country heavily reliant on revenue from oil. Crude prices have dropped by more than 70 percent since 2014.
“For the first time, we are unbundling the subset of the NNPC to 30 independent companies,” Kachikwu, who is also the minister of state for petroleum, said at the 25th Oloibiri Lecture Series and Energy Forum organized by Nigeria’s Society of Petroleum Engineers. “Titles like group executive directors are going to disappear and in their place you are going to have chief executive officers and they are going to take responsibilities for their titles. At the end of the day, the CEO of an upstream company must deliver an upstream result.”
“Production Sharing Contracts (PSC) terms haven’t been revised for quite a while, we will be looking at those, JVs, and we will be focusing more on how we can bring in the PSC-type terms into JV structures, so that way, we can begin to get them to work,” the NNPC MD said.
Kachikwu noted that an overhaul of the state-owned oil firm was key to ensuring the return to profitability and stability in the sector.
The minister had said in a January interview that the NNPC was expected to be broken into four business units from the more than 10 loss-making ones. He also said the state-owned oil firm will start privatizing some assets in 2018.