NNPC, energy security, and economic growth in downstream

The Nigerian National Petroleum Company Limited (NNPCL), Nigeria’s national oil company (NOC), not too long ago registered with the corporate affairs commission to operate in Nigeria’s oil industry, to make profit as a profit oriented limited liability company. This status (“NNPC Ltd”) was unveiled by then President Muhammadu Buhari, precisely on Tuesday, 19 July 2022. The scorecard for this NOC has not been impressive (especially in the recent past) from all indications, and is hereby urged to practice and perform like her contemporaries in other nations; the likes of PETROBRAS, PETRONAS, PetroChina, Saudi Aramco, ADNOC, etcetera. NNPCL is expected to emulate some of the mentioned oil and gas organisations, and operate exactly in their mold for the benefit of this country. If anyone studies the degree of economic impacts that these NOCs have on their nations’ economies, then we will come to terms to collectively urge, persuade and charge the newly appointed 11-man board of NNPCL to sit up and deliver on their national assignment through the operations and management of NNPCL. It must never again be business as usual (where a business oriented organisation continually posts deficit balances every year, without shame or remorse). The current economic reforms in the President’s Renewed Hope agenda, should start manifesting from the performances of this newly constituted board; and I hope they will not disappoint the people of Nigeria.
Omowumi Iledare, a professor and petroleum economist with the Emerald Energy Institute, Abuja, spoke along with others over the oil and gas sector, saying that “reforms are restoring Nigeria’s credibility in global oil markets”; just as experts have hailed the Petroleum Industry Act’s (PIA) implementation, with his remark that its full implementation is a major win for the sector. Bashir Ojulari’s appointment signals a strategic shift at NNPC; especially with the shutdown of the Port Harcourt refinery for optimal yield because, the company’s operations must not continue to remain “a drain pipe” as it had been in the recent past, but should be a money spinning business enterprise. Imagine if the organisation takes a cue from Dangote Refinery, which obviously will be yielding $7 million every blessed day for the federal government from exports of fertilizer.
From another perspective, implementation of PIA could permit transfer or divestment of the shares wholly owned by the federal government (subject to such approval by the federal government and the endorsement of the National Economic Council on behalf of government). This, on its own shall put paid to all the unnecessary financial leakages since the investors/shareholders shall come up to strictly and squarely manage the operations purely on business basis, with a view to be recording profits at the end of every operational cycle (where it will no longer be business as usual of continuously recording losses).
Having a holistic view of the functions of NNPCL with her 20 subsidiaries, the organisation is primarily mandated to explore, produce, refine oil, and market and retail petroleum products. It is also charged to be involved in petrochemicals and gas development, oil and gas engineering; with the additional tasks of supervising federal government’s investments in the upstream sector, and the marketing of Nigeria’s accruable crude oil that are extracted on a daily basis. With the latest policy on naira for crude supplies to local manufacturers, the economy should be inching very close to actualizing the desired good outcome of the economic reforms and social safety for the people of this country; if it simply hits the mark of energy self sufficiency through local refining of crude oil that satisfactorily and adequately takes care of the nation’s daily demand/consumption of premium motor spirit, PMS.
Beyond this, the newly appointed board of NNPCL should (as a matter of urgency) see to the actual implementation of the usage of compressed natural gas, CNG, to realistically run the daily energy consumption of the economy such as transportation, power generations for both factory operations/industrial uses and domestic consumptions at homes; powered off national grid, as an alternative energy supply source. Such a realizable goal in the energy sector could then pass for an impressive performance on the scorecard that confirms President Tinubu’s democracy day comment that “Nigeria is working, worst days behind us”, which has come exactly two years after his maiden remark on subsidy removal at swearing in 2023.
Energy security is one critical economic factor that effectively impacts the economy, and puts it on the right growth path. Energy security is the life wire of positive growth and sustainable development. In economics, there can be no progress if productivity is not powered by energy consumption for sustainable daily economic and commercial activities going on in the society; with the ultimate being wealth creation. It therefore means that without energy, there cannot be any realistic economic progress, but total stagnancy in the macro economy. This is the major reason the NNPCL should prioritise and stay focused and work out a very sustainable, affordable, sufficient energy supplies programme for all activities within the economy, to foster real economic growth. This is a direct charge to the newly constituted board of the NOC (NNPCL) for this economy to manifest real economic growth.