Sack Imminent in NNPC Top Management

There is palpable fear in the oil and gas industry that the Nigeria’s President-elect, Muhammadu Buhari has concluded plans to sack and replace all top management of the Nigerian National Petroleum Corporation, (NNPC), as part of his mission to overhaul the oil and gas industry.
All Progressives Congress, (APC), sources revealed that the new administration will first sack and replace the top management of the state oil company and it will then review its accounts to restore credibility. A bill will be drafted to break the NNPC into four entities, as already prescribed in the latest Petroleum Industry Bill, (PIB) draft. But it will also, crucially, remove the oil minister from the NNPC’s board of directors to curb political interference, one APC source said.
Others said more generally that the minister’s current powers would be heavily trimmed. Oil and gas will have separate companies for upstream, with a third covering pipelines and refining, and a fourth will be an inspectorate. It could be submitted to parliament in the first quarter of next year, one parliamentary APC source said. “We need to address the structural issues and leave the fiscal for now,” Senator Bukola Saraki, whose APC party controls both houses of parliament after a landslide win, told Reuters. “A more transparent NNPC is needed with reasonable accounting,” he said.
The sources, however said oil firms keen to know how Nigeria’s president elect Muhammadu Buhari plans to tax them could wait a long time as he address ending corruption and reforming the opaque national oil company his most urgent sector priorities. Four party sources from Buhari’s APC told Reuters the issue of fiscal terms, seen as crucial by the industry, will have to wait on current thinking about oil and gas policies for Africa’s leading producer.
Crude output has stagnated close to two million barrels per day (bpd) over the past few years, owing partly to under-investment. Buhari’s electoral victory on March 28 is seen as fallout from the masses perception that President Goodluck Jonathan allowed corruption to flourish in the oil sector with NNPC tainted with multibillion dollar oil corruption scandals. Buhari was seen as one of the few Nigerian leaders to have cracked down on corruption during his military rule in 1983-1985 and many Nigerians hope he will repeat the feat.
Jonathan’s administration also re-drafted a Petroleum Industry Bill, (PIB), in 2012 which is meant to change everything from fiscal terms to overhauling the NNPC, environmental rules and revenue sharing, but its comprehensive nature caused disputes between lawmakers, making it to remain in the works for a decade. The oil companies are worried about tax in the proposed bill which is 20 per cent tax on offshore projects and 50 per cent for onshore. Shell, Exxon and other majors had all complained publicly that the terms are unfair, given the risk associated with operating in Nigeria.
Interestingly, the fiscal terms of the bill have been holding back billions of dollars of investment, especially into capitalintensive deepwater offshore, leading some to propose the bill be broken up into several pieces debated separately. “It doesn’t need to be an omnibus, you can take things piecemeal,” one APC source said. According to Control Risks’ Thomas Hansen, “the cabinet needs to strategise first and fiscal terms are likely to take longer and require discussions with the international oil companies.”