NIGERIA’S state oil company will be broken up into 30 separate companies in the coming weeks as the country seeks to transform Africa’s largest oil producer into a profit-making venture.
The loss-making Nigerian National Petroleum Company (NNPC), which has been embroiled in allegations of corruption for years, will be divided into operational subsets including upstream, downstream, midstream and refining, and then further into individual businesses.
“For the first time, we are unbundling the subset of the NNPC to 30 independent companies with their own managing directors, said Nigeria’s oil minister Ibe Kachikwu. “At the end of the day, the CEO of an upstream company must deliver an upstream result.”
He added that by the end of the year the operations should start making a profit. The company’s monthly losses have been reduced to US$15m from US$800m six months ago.
The scale of the problems within the country’s energy sector were brought to the fore in 2012 when a leaked report detailed the government was losing US$6bn/y as a result of oil theft, and that US$29bn had been lost in the space of a decade due to a natural gas price-fixing scam.
Kachikwu, who worked as a senior executive at ExxonMobil, was installed as oil minister last year after President Muhammadu Buhari came to power vowing to stamp out corruption in Nigeria.
The minister said there are plans to “rapidly review the contracting cycle of projects from two years to six months” for upstream activities and that efforts are already under way to review existing production-sharing agreements with private oil companies working in the country, noting the work is “long overdue”.
Kachikwu added that the government is focussing on developing the country’s natural gas resources to help diversify the economy. He also applauded efforts by politicians to create a Petroleum Industry Bill which he said would “go a long way to promote the efficiency in the governance structure of the industry”.
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