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The planned
commercialisation of the Nigerian National Petroleum Commission, NNPC,
is expected to increase the efficiency and effectiveness of the
corporation.

Some finance
experts believe that the move would aid the corporation, which is
presently a public organisation that manages government’s interests in
the Nigerian oil industry, while also generating funds for the
government.

“The
commercialisation of the NNPC should translate to a reduction in
regulatory controls on the NNPC – thereby opening it up to engage
freely in petroleum business activities,” Fola Onasanya, a petroleum
industry analyst at Ciuci Consulting, a management consulting firm,
said.

According to him,
this move should increase the efficiency and effectiveness of NNPC
operations – which would in turn improve the overall quality of service
it offers to all relevant parties (the federal government,
multinationals, and Nigerians).

“It is also
expected that this would promote the development expansion of the
nation’s oil and gas assets. This is especially in the building of
Greenfield refineries, pipelines, and other downstream infrastructure.

“It would also help
in increasing the value of the NNPC by making it not only
self-financing, but also a revenue generating corporation. According to
the PIB, a commercialised NNPC will pay the government royalties and
taxes like other oil companies,” Mr. Onasanya said.

The Petroleum Industry Bill is a merger of 16 different laws with very stringent guidelines for environmental remediation.

Fear of rise in commodity prices

Mr. Onasanya,
however, added that “Worker’s Unions (such as PENGASSAN) fear that the
move may lead to a significant downsizing of the corporation,
increasing unemployment.”

He further said
that there is also a concern that with the commercialisation (and
deregulation), prices of petroleum products (e.g. PMS, diesel and
kerosene) would rise – as they will be entirely determined by market
forces.

Which PIB is being passed?

Recently, workers
in the oil and gas industry, through the organised labour union,
PENGASSAN, called on the Federal Government, especially the National
Assembly, to engage relevant parties again before the passage of the
bill, to forestall industrial crisis in the sector.

Babatunde Ogun, the
spokesperson of the union, said the workers had made several
correspondences to the government and the National Assembly on the need
for further engagement on the PIB before its passage, but that the
legislative arm had bluntly refused to honour any of the letters.

He also raised
concerns that the union would like to know the version of the PIB that
is being passed, as there is every tendency that the original bill may
have been substituted.

“We have written
many letters on the need for the National Assembly to be transparent
and follow due process in the passage of the bill. Conducting just a
public hearing is not enough, more so when there have been so many
insinuations, including the Wikileak’s online reports, that the
National Assembly had substituted the original bill that had inputs of
all stakeholders,” Mr. Ogun said, adding that it is only proper for all
relevant parties in the nation’s oil and gas industry to have a final
look at the PIB.

Diezani
Alison-Madueke, the minister of petroleum resources, stated that the
expected passage of the all important oil industry reform legislation
will change the face of the petroleum industry in Nigeria.

Mrs.
Alison-Madueke, while confirming that the PIB will usher in a new vista
in the oil industry in the country, said she would not be able to
freely talk on the impact of the commercialisation of the NNPC since
the bill was already at the domain of the National Assembly.

She said it was
expected to be run as a normal company, in terms of royalties,
dividends, and taxes, adding that other benefits that would be derived
from the passage of the bill includes the availability of over 300, 000
jobs in the industry, the implementation of corporate social
responsibility, the discontinuing of gas flaring, among others.