Okechukwu Nnodim, Abuja
The deregulation of the downstream oil sector and
the increase in the pump price of Premium Motor
Spirit from N86.5 per litre to N145 have led to the
reduction in the consumption of the product by 30
per cent across the country, the Federal Government
has said.
This is coming as the Minister of State for
Petroleum Resources, Dr. Ibe Kachikwu, formally
handed over the position of Group Managing
Director of the Nigerian National Petroleum
Corporation to Dr. Maikanti Baru, at the
corporation’s headquarters in Abuja on Friday.
President Muhammadu Buhari had on Monday
approved the appointment of Baru as the new GMD
of NNPC.
Speaking at the ceremony, Kachikwu, who outlined
some achievements recorded during his 11-month
tenure as GMD, stated that Nigeria currently
produces between 1.9 to 2.3 million barrels of
crude oil daily, adding that the government was
working hard to clear the over $6bn joint venture
cash call obligations to international oil companies.
He said, “We undertook deregulation at the time
nobody thought it was possible and if there’s
anything we leave for this industry, it must be the
legacy of that deregulation.
“Today our consumption of fuel has gone down by
30 per cent; we have no queues in the filling
stations; we have one and a half months of self
sufficiency; we have strategic reserves in place that
we are putting together and we have a funding
scheme to enable the downstream to be able to
adequately fund itself.
“We have succeeded in removing subsidy and
saving over N1.4tn for this country on a yearly
basis. We have reduced upstream contracting
period from the average of between two and half
years to between six and nine months and we have
started a massive commercialisation of every
aspect of our business.”
Kachikwu said the NNPC has been able to cut
operational cost by 30 per cent, adding that
Nigerian refineries had started working for the first
time in about 10 years, “but still not at the capacity
that we want.”
He added, “We need to find a structure, and we
have started, in which private funds will come into
the refineries and we will be able to rebuild our
refineries to 90 or 100 per cent capacity.
“I’ve already made a commitment that by 2018, 60
per cent of refined products importation will stop
and by 2019 we must become a net exporter of
refined petroleum products. I am happy to announce
that in our May results, for the first time in the
history of this company, the NNPC made a profit of
N270m.”
On JV cash call funding, he said this had been one
major challenge.
The minister said, “We are still in the process of
covering that gap and paying the arrears of over
$6bn and covering up the year-to-year demands of
close to about $5m to $6m. We are at the
thresholds of finalising negotiations on that and I
think we should be almost at the point of sign-off in
the next one week.
“This will fundamentally change the upstream
business in terms of providing funds and it will
remove the delays we’ve had in terms of being able
to get upstream developments. And hopefully it will
inject 100 per cent performance in upstream and
hopefully increase your barrels from present 2.3
million barrels to upward trajectory of three million
barrels over the next few years.”
He said the corporation was able to contribute 100
per cent to FAAC two months ago, up from about
60/70 per cent, adding that the NNPC was able to
pay for the first time, 100 per cent cash call
contributions last month.
Kachikwu, who described the Niger Delta issues as
“a big elephant in the room,” stated that the
government was trying to devise a model that
would address the challenge in the region once and
for all.
He said, “We are trying to find a model that works
finally for this country on the Niger Delta issue. The
work is for everybody, it is not just solely mine, but
it is on my door-step and we need to find those
solutions so that we can have peace. It is key that
we get all the stakeholders in the region in order to
ensure development.”
While speaking on talks with militants in the region
on the sidelines of the event, the minister said, “We
are working on it and I need to meet with Mr.
President for I just returned and obviously there’s a
lot more engagement that is required. There are
gaps that seem to have developed and I need to
understand what issues warranted that. But we will
work towards closing those gaps.”
When asked to state when the Forcados crude trunk
line would become operational, he replied, “By the
end of July.”
Kachikwu promised to work with the new GMD and
thanked President Mohammadu Buhari for the
opportunity given him to manage the corporation.
He said, “It is surprising that in the 11 months, I’ve
managed to serve as GMD of NNPC, as Minister of
State for Petroleum Resources, as OPEC President,
as the President of APPA and I’ve just been
appointed the Chairman of NNPC board; all in 11
months. There are not many people in the world
who would have those opportunities within that time
frame or be given that opportunity by a leader. So
we all have the President to be very thankful to.”
On his future role as minister, he said he would
work on the Petroleum Industry Bill, gas terms,
restructuring of other parastatals and the country’s
upstream business.
He also said that he would look at the regulatory
overhaul of the entire sector, as many regulations in
the industry were outdated.
