Existential purpose of NNPC is obviously questionable

EnergyDay Editorial Board

Service institutions and public utilities all over the world are founded on core values enunciated by political leadership. The United States of America’s President in 1973, was confronted by the harsh realities of his country’s dependence on crude oil from a hostile community of Arab Countries and he knew instinctively, the sensible thing to do.

Richard Nixon was the incumbent President at that time; he exemplified a strong leadership quality in addressing a major issue of importance to his country. In his first State of the union address to the American people, following the 1973 oil crisis, President Nixon said , “let this be our national goal: At the end of this decade, in the year 1980, the United States will not be dependent on any other country for energy.

“We need to provide our jobs, to heat our homes, and to keep our transportation moving,” Nixon declared.

America of course, continued to rely on Nigeria and a mix of other global oil suppliers for her energy needs, but the country remained faithful to President Richard Nixon’s declaration.

In due time, the US terminated crude oil purchases from Nigeria and other benefactor countries. Nigeria lamented the loss of the American market but quickly found a near fit alternative in the Asian markets of China, India and a select number of European destinations.

Brazil was in the same strait as America during this period, which paradoxically, marked Nigeria’s ascent as a major crude oil exporting country.

The South American country did not for a moment, dilly dally on the options that will help it out of the hole it found itself. The government promptly announced the use of Ethanol, as a product substitute in place of crude oil dependence.

The United States of America and Brazil are today, net exporters of crude and refined oil and gas to the global market. For us in Nigeria, the narrative is the exact opposite of what is sensible.

EnergyDay Nigeria feels it is certainly not a ‘CURSE’ that nature blessed us with abundant resources of crude oil and gas, but it looks like a ‘curse’ that we have not learnt to choose the right leaders to manage our huge natural resources.

This is about the fourth week of national distress over a simple issue of efficient distribution of Premium Motor Spirits (PMS) across the country and Mallam Abba Kyari, Group Managing Director(GMD), of the state owned oil company, Nigerian National Petroleum Corporation(NNPC), is still in office, as though it is not a big deal that we are in this mess?

According to the GMD NNPC, “we’ll have to wait for the Aliko Dangote Refinery , which on completion, is expected to contribute 60% of its 650,000bpd output to the country’s domestic fuel needs;

While the local refinery in Port Harcourt will add up its 215,000bpd but even at that, “We would still have a shortfall of 17 million litres daily deficit of Premium Motor Spirit” Abbah Kyari recently confirmed.

He added that , “We need to refine 1.5 million barrels a day to keep our heads above water”.

The conclusion of EnergyDay from the rhetoric and actions of the GMD NNPC, is that the Corporation is determined to promote systemic inefficiency and protect corrupt values.

A reason why it allowed the entry of contaminated fuel into the market by untouchable oil marketers, and then voted for a humongous budget to clean up that particular contamination.

A reason why four State owned refineries are altogether not functioning over a period of more than ten years. A reason why the country will expend N3 trillion as subsidy expense in 2022 alone.

This is one institution that should be unbundled and scrapped instead of being converted into a limited liability company, as planned by the government through the newly accented Petroleum Industry Act(PIA) .

At EnergyDay, we belief the fundamental question is no longer about the economics or logistics of petroleum supplies or its distribution. It is more about the existential purpose of the NNPC.

We need to speak to the truth of this ridiculous nightmare and have it sorted out as quickly as possible.

The economic costs of sustaining the current subsidy regime is more damnable than the political consequences to abrogate it .

EnergyDay recommends the immediate exit of NNPC from PMS importation and the subsidy conundrum. We recommend that Kaduna refinery be leased out “as it is” to a willing private operator.

We further recommend increased production of methanol by willing investors as a substitute fuel mix, together with CNG ( Compressed Natural Gas). We recommend open market trading of PMS as a tool to achieve fair pricing.