…passing the PIB will never be enough on its own. Implementation requires ensuring that the habits and culture of the past do not infect the new organisation. This means putting in place a board of the most proficient hands with the skill sets needed to turn our strategic national assets into productive wealth to drive and diversify our economy.
Nationally owned companies should be accountable, with well-defined mandates and an objective of commercial efficiency. While the above are laudable improvements in reporting performance, a second publication, a policy brief titledby #FixOurOil and BUDGiT – a civil society organisation devoted to fiscal and budgetary transparency – gave a more blunt assessment of NNPC’s actual financial and operational performance: “NNPC has been overwhelmed by commercial inefficiencies, scandals and a reputational damage that has lingered for nearly four decades” from the 1980 Crude Oil Sales Tribunal , that investigated some...
Beyond debts as a measure of NOC efficiency, other crude measures can be found in an NOC’s revenues and profitability, its refineries’ capacity utilisation or how efficiently it runs its refineries. A third measure reserves and reserve replacement ratios is not considered here. Measuring NNPC’s performance on revenues against that of Petrobras , and refinery capacity utilisation against that of Equinor, illustrates how inefficient NNPC is.
Comparing Equinor and NNPC’s refinery capacity utilisation shows that Equinor’s three refineries averaged 92.8 per cent capacity utilisation in 2018, to NNPCs three refineries of 11.21 per cent. A 2015 comparison of average refinery capacity utilisation in the U.S.A, of 90.98 per cent, and Nigeria, of 4.88 per cent, is even worse. Unless NNPC’s refineries can operate at 90 per cent capacity, they will continue to lose money.
By contrast NNPC’s board has always been a bone of contention as can be seen from the board tenure and GMD turnover. The average tenure of a Petronas CEO is six years. The average tenure of a Saudi Aramco CEO is nine years. NNPC, in contrast, has had 20 GMDs in 42 years, at an average tenure of two years each. It is no wonder that in a study surveying over 2000 NNPC staff members, Dr. Olive Egbuta observed that staff viewed GMDs as political appointees.