The appointment of a new leadership team at the Nigerian National Petroleum Company Limited, NNPC Ltd., has sparked fresh hope. However, history teaches us that leadership changes in Nigeria’s public institutions is often not a guarantee for remarkable positive changes. Each transition is seen as a potential turning point, yet the cycle of inefficiency, corruption and mismanagement persists.
This time, however, there is a distinguishing factor—NNPC Ltd. is now led by a technocratic board predominantly composed of industry professionals. This shift signals the possibility of meaningful change, but only if these experts can resist personal and corporate interests and genuinely serve national priorities. Will this be a turning point or another wasted opportunity?
As Nigeria’s national oil company, NNPC Ltd. wields significant influence, managing the country’s vast oil and gas resources. Its efficiency, or lack thereof, has far-reaching implications for government funding, economic stability, foreign exchange reserves, currency valuation, job creation, and investor confidence. A well-managed NNPC Ltd. could serve as the backbone of economic revival, while inefficiency could lead to economic crises.
Globally, state-owned oil companies have been instrumental in their nations’ economic development. Saudi Aramco is the most profitable company in the world, surpassing tech giants like Apple and Microsoft, with a net income of $161.1 billion in 2022. Petrobras in Brazil has driven economic expansion through strategic investments and governance reforms, generating $35.7 billion in net profits in the same year. Equinor in Norway used oil revenues to establish a sovereign wealth fund valued at over $1.4 trillion, ensuring long-term economic stability.
While these national oil companies fuel economic prosperity in their respective countries, NNPC Ltd. has struggled with inefficiency, corruption, and chronic under-performance. NNPC Ltd. has the potential to match these achievements, but only if it undergoes serious structural and operational reforms.
A technocratic board raises expectations of professionalism and efficiency but also presents risks. Many board members have vested interests in private oil and gas companies, creating a high risk of conflict of interest and policy decisions that serve personal gains over national development. Transparency International has consistently ranked Nigeria’s oil sector among the opaquest in the world, with corruption and vested interests undermining effective governance.
To dispel these concerns, the new leadership must demonstrate an unwavering commitment to transparency, accountability, and ethical governance. Key questions must be addressed: Will their private interests precede national interests? Can they implement policies that might negatively impact their business associates? How will transparency and accountability be maintained in the decision-making process? The ability of this leadership team to separate personal gain from national duty will be a defining factor in its success or failure.
Nigeria’s oil production costs, from 2023 data, are among the highest in the world. Saudi Arabia and Iraq produce oil at $10 per barrel, Russia and Norway at $20-$21 per barrel, while Nigeria produces at between $40 and $48 per barrel. Besides, Nigeria has consistently failed to meet its OPEC production quotas due to large-scale oil theft, pipeline vandalism, community conflicts, and inefficiencies in NNPC Ltd’s operations and management.
NNPC Ltd. is notorious for delays in making Final Investment Decisions, FID, due to bureaucratic red tape, layers of embedded interests and political interference, and over-reliance on joint venture models where NNPC Ltd. expects international oil companies to finance projects. A prime example is the stalled Brass LNG and Olokola LNG projects.
Also, despite spending trillions of Naira on refinery maintenance, Nigeria’s four state-owned refineries remain non-functional. Between 2000 and 2020, according to House of Representatives investigation committee reports, NNPC spent over $25 billion on refinery repairs without tangible results. By today’s estimate, that money can be used to build two new refineries with a capacity of 225,000 bpd. NNPC has the most inefficient refinery operations and expensive turnaround maintenance costs.
Nigeria has 203 trillion cubic feet of natural gas reserves, yet these remain largely untapped due to a lack of critical infrastructure and poor pricing policies that deter investment. How did other nations do it to earn optimally from gas resources? Qatar became the world’s largest LNG exporter, generating over $100 billion annually from gas sales. Trinidad and Tobago built a robust petrochemical industry using gas resources. Norway used gas revenues to develop a $1.4b sovereign wealth fund.
These success stories demonstrate the transformative potential of natural gas when it is strategically managed and leveraged for comprehensive national development. Nigeria can draw valuable insights from these experiences to unlock the full potential of gas resources. Investing in gas infrastructure development, reforming pricing policies to attract investors, and developing a clear gas commercialisation strategy are essential steps toward unlocking Nigeria’s gas potential.
To ensure long-term sustainability, NNPC Ltd. must optimise asset utilisation, especially in crude oil exploration and refinery operations, prioritize profit-driven decision-making over political interference, and streamline bureaucratic processes to boost efficiency. The company has attempted an Initial Public Offering, IPO, three times between 2018 and 2023, failing each time due to a lack of political will and transparency issues.
Listing NNPC Ltd. on a foreign stock exchange such as New York or London could attract investors and strengthen corporate governance, following the examples of Saudi Aramco, Petronas, and Petrobras. Fast-tracking the promised Initial Public Offering, IPO, on major stock exchanges is essential.
NNPC stands at a critical crossroads. With exemplary leadership and reforms, Nigeria’s economy can be transformed, global investment can be attracted, and the potential of its vast oil and gas resources can be maximized. However, if these necessary reforms are not implemented, history will repeat itself, and Nigeria will continue to suffer from inefficiencies and corruption.
The responsibility now lies with the new leadership: Will they seize this opportunity or squander it? Will this new leadership deliver, or will history repeat itself? That NNPC needs a serious course correction is no brainer. The coming on board of a new leadership is the right time to do a reset. The choices made today will define Nigeria’s economic trajectory for decades.
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