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Is NNPC’s ‘Emergency Declaration’ Masking Inefficiencies?

Mele Kyari speaking at NOG2024

By William Emmanuel Ukpoju

The Nigerian National Petroleum Company Limited’s (NNPC) recent emergency declaration on the country’s crude oil production has been viewed as a desperate attempt to mask its systemic let-downs. The declaration by the Group Chief Executive Officer of NNPC Ltd, Mele Kyari, at the Nigeria Oil and Gas (NOG) Energy Week in Abuja, indicates the company’s helplessness to plan and prepare for the future. Despite promises of fuel production take-off in various refineries, the NNPC has consistently failed to meet deadlines, blaming excuses such as the COVID-19 pandemic and supply chain issues. The emergency declaration according to some analysts, “is a ploy to gain emergency powers, bypass regulatory scrutiny and oversight, and continue corrupt practices without accountability or transparency.”

he Nigerian National Petroleum Company Limited (NNPC Ltd) has declared a state of emergency on Nigeria’s crude oil production. The Group Chief Executive Officer of NNPC Ltd, Mele Kyari, made the declaration while speaking at the Nigeria Oil and Gas (NOG) Energy Week in Abuja recently. According to him, “We have decided to stop the debate. We have declared war on the challenges affecting our crude oil production. War means war. We have the right tools. We know what to fight. We know what we have to do at the level of assets. We have engaged our partners and we will work together to improve the situation,” Kyari said.

He further explained that a detailed analysis of assets revealed that Nigeria will be able to expediently produce two million barrels of crude oil per day without deploying new rigs, but the major obstruction to achieving that remains the inability of players to act promptly.

“War will help NNPC Ltd and its partners to speedily clear all identified obstacles to effective and efficient production such as delays in procurement processes, which have become a challenge in the industry,” he added.

On medium to long-term measures aimed at boosting and sustaining production, Kyari said the NNPC would replace all the old crude oil pipelines built over four decades ago and also introduce a rig-sharing programme with its partners to ensure that production rigs stay in the country for between four and five years, which is the standard practice in most places.

Mele Kyari, nevertheless, called on stakeholders in the oil industry to work in partnership towards reducing the cost of production and enhancing production to target levels.

Although the NNPC boss did not reveal the identity of those he intends to battle with, several analysts are alluding that perhaps Dangote’s allegations of “sabotage by cabals” are not baseless after all. It is therefore anticipated that as the drums of “war” begin to resonate throughout the oil spheres, peace will settle across the galaxies and the identity(ies) of those responsible for the continuous postponement of our refinery take-off will come to light. This time, the NNPC should not just stop at naming the culprits, but let the law take its course on them for putting Nigerians into so much pain and misery.       

Over the past few months, the NNPC has made several promises regarding fuel production take-off in various refineries. The Group Chief Executive Officer of the company, Mele Kyari, recently, announced that the Port-Harcourt Refinery will commence operations in August 2024, while the Kaduna and Warri Refineries will be finalized by the end of December this year. However, these deadlines have been consistently pushed back due to various excuses and Nigerians are beginning to wonder if it will surely come to pass.

Deadlines and excuses so far issued by NNPC:

– Port Harcourt Refinery:

– Initial deadline: December 2022

– Excuse: Delay in rehabilitation work due to COVID-19 pandemic and supply chain issues

– Revised deadline: August 2024

– Current status: Yet to meet the revised deadline

– Kaduna Refinery:

– Initial deadline: December 2022

– Excuse: Delay in rehabilitation work due to COVID-19 pandemic and supply chain issues

– Revised deadline: End of December 2024

– Current status: Yet to meet the revised deadline

– Warri Refinery:

– Initial deadline: December 2022

– Excuse: Delay in rehabilitation work due to COVID-19 pandemic and supply chain issues

– Revised deadline: End of December 2024

– Current status: Yet to meet the revised deadline

– Dangote Refinery?

General reasons for the delay:

– COVID-19 pandemic

– Supply chain issues

– Delay in rehabilitation work

– Delay in completion of construction work

– Funding issues

– Technical issues

– Unforeseen circumstances

It is widely hoped that the NNPC is battle-ready, and has fully stocked its armoury with the latest arsenals and other accessories because the battle against unforeseen circumstances, supply chain, technical issues and the rest will not be an easy task.   

Conversely, the recent allegations of sabotage by the Dangote refinery against International Oil Companies (IOCs) have added a new layer of complexity to the situation. The Dangote refinery claims that IOCs are deliberately hindering local crude purchases, despite efforts by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to enforce Domestic Crude Oil Supply Obligations (DCSO). Going by recent developments, the barrage of accusations and counter-accusations surrounding the Dangote refinery is not going to end anytime soon.

Critics argue that going by all these, “The NNPC’s emergency declaration is a ploy to gain emergency powers, which would allow it to bypass regulatory scrutiny and oversight.” Experts say this would “Give the company a free hand to continue its corrupt practices, without accountability or transparency.”

Furthermore, the NNPC’s emergency declaration has been viewed as “A clear indication of the company’s failure to plan and prepare for the future. Instead of investing in new infrastructure and technology, the NNPC has relied old unpatriotic and former colleagues to endorse disaster…”  

… “By declaring an emergency, the NNPC is attempting to shift the blame for the fuel crisis away from itself and onto external factors. However, this tactic will not fool Nigerians, who have grown tired of the company’s excuses and empty promises.

“Despite repeated promises to reform, the NNPC has failed to address its internal issues, leading to a decline in the country’s oil production and a worsening fuel crisis.

“For years, the NNPC has been plagued by venality, negligence, and a lack of transparency. The company has allegedly embezzled billions of dollars, and its operations have been cloaked in clandestineness.

“While the company claims that the move surrounding the emergency declaration is aimed at addressing the country’s fuel supply challenges, key players are sceptical about the true motives behind this declaration. In general, the NNPC’s emergency declaration appears to be a desperate attempt to mask its systemic failures. Rather than resorting to quick fixes, the company must address its internal issues, embrace transparency, and work towards sustainable solutions to restore public trust. Nigerians deserve better, and it is time for the NNPC to be held accountable for its actions.”

As the drums of “war” resonate throughout the oil spheres, the call has been made on the NNPC to name the culprits responsible for the continuous postponement of the take-off of the country’s refineries and for the law to take its course. Doing so may ensure that those responsible for putting Nigerians into so much pain and misery are brought to justice.

The battle ahead will not be easy, but armed with the breastplate of truth and honesty, and with the support of Nigerians and the determination to reform, the NNPC can overcome its challenges and restore the country’s oil production to its former glory. Industry observers have submitted that, all stakeholders must work together to ensure that the NNPC is held accountable for its actions.

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