The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu disclosed that the Nigerian National Petroleum Corporation, NNPC, would return to profitability by July 2016, the first time the company would be making profit in 15 years.
Speaking at the Oloibiri Lecture Series and Energy Forum, organized by the Society of Petroleum Explorationists, SPE, Nigeria Council, in Abuja, Kachikwu also stated that within the next one week, the overhaul of the NNPC would commence, which would see the NNPC unbundled into about five companies, while the sub-sets of the NNPC would be unbundled into about 30 companies.
Kachikwu noted that over an average of six to seven months, the NNPC had been able to move from an average loss position of N160 billion every months, but by January 2016, the loss had dropped to N3 billion. According to him, the corporation is moving in a direction now where by June, July, for the first time in about 15 years, it will be profitable.
He said: “I am happy that we are getting the cooperation of everybody within the system, that is the only way we can guarantee work for those who work there and career paths that are sustainable.”
Kachikwu, who is the Group Managing Director of the NNPC, maintained that the expected return to profitability would be just a tip of the iceberg, noting that when the NNPC and its subsidiaries were unbundled and when the more than 30 companies come on stream with their own managing directors, the country would be able to compete effectively in the global oil industry.
He said: “That is just a tip of the iceberg because by the time these 30 companies are unbundled and the Managing Directors will set programmes, you are going to meet us in an active world. It means we are all going to compete, we are going to make these things work.”
He explained that the overhaul of the NNPC and its subsidiaries, which would be the first in about 20 years, would eliminate titles such as ‘Group Executive Directors’ and replace them with chief executive officers and other people who were expected to take responsibility for their titles.
Kachikwu also disclosed that the Federal Government and the NNPC were concerned about issues of financing and cost and had set a benchmark to cut capital expenditure (CAPEX) by 30 per cent and operating expenditure (OPEX) by 20 per cent.
He said: “We are achieving those in some areas, in some areas we are not. But at the end of this year, as we get into being able to raise the finances abroad, the sheer reality of oil industry competition would force down those prices. Because the reality is that if you are not able to bring a barrel of oil at a competitive price into the market place, you are dead on arrival. Unfortunately also, the market is becoming very much challenged.”
Speaking in the same vein, Speaker of the House of Representatives, Yakubu Dogara, promised that the National Assembly would expedite the passage of the Petroleum Industry Bill (PIB).
Dogara, who was represented by the Chairman, House Committee on Gas Resources, Mr. Agbedi Frederick, said the passage of the PIB would enhance the restructuring and deregulation of the downstream sector.
According to him, the PIB will enhance competition in all segments, including open access to the pipeline as well as providing a robust tariff mechanism for all players.