The Federal Executive Council (FEC) has approved a new petroleum policy, restructuring the Nigerian Petroleum Investment Management Services Limited (NAPIMS) and stripping it of its responsibility of regulating costing of projects.

Projects costing would now be done by an independent regulator, which would emerge from the restructuring of the Department of Petroleum Resources (DPR).
NAPIMS would now be a pure asset management agency while cost regulation would reside with the sector regulator.

The content of the new policy christened the National Petroleum Policy, which is awaiting gazetting by the federal government, indicated that the Ministries of Petroleum Resources and Finance had been given the nod to restructure NAPIMS using a competitively procured global level consultant.

NAPIMS, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), was established to manage the federal government’s investments and interests in the upstream sector of the country’s oil industry.
It specifies minimum expenditure during oil exploration; reviews and approves contractor’s annual work programme, budgets, and costs; as well as creates the data bank for benchmarking and cost estimation in hydrocarbon projects in Nigeria.

However, it has been repeatedly fingered as being corrupt, inefficient and easily manipulated by political influences, especially at its tasks. For instance, the agency told the Senate in March 2017 that it spent $9 million to transfer and resettle its staff within a year.
It was similarly fingered in the $289,202,382 allegedly collected in 2015 and housed in Ikoyi by the National Intelligence Agency (NIA). Investigations into the cash deposit had subsequently resulted in the suspension of NIA’s Director-General, Ambassador Ayodele Oke.

Buttressing these claims against NAPIMS, the petroleum policy in its description of the agency and need for its shake-up, stated that: “NAPIMS’ cost of managing government’s interest is significantly higher than it ought to be. An expenditure of over $200 million per year is unjustifiable in the current oil price environment. These costs, when applied across the JVs and PSCs, make some of the government equity interests in the joint venture unprofitable.”

It added that: “NAPIMS has 10 divisions but only three are operational (JVs, PSCs, Gas). There are no written rules, procedures or policies to guide its activities; institutional capacity (management and staff capability) is weak; there is no compliance unit, which should be a given; costs per barrel within operations under its supervision are unacceptably high; there is poor data management, information asymmetry both internally and with NNPC Corporates and the organisational structure is fractured.”

It noted on the proposed reform: “The petroleum policy considers that NAPIMS is incapable of reforming itself because of the internal organisation. Effective NAPIMS reform can only come from fundamental restructuring with commercial discipline, and reform must come from outside NAPIMS.
“NAPIMS will be substantially restructured and may ultimately become independent and with full autonomy from the (National Oil Company of Nigeria) NOCN.”

“The restructuring and reform process, to be led jointly by the Ministry of Petroleum Resources and the Ministry of Finance will include: a global level management consultancy to be hired to help with the restructuring; a value-for-money audit; enable faster contracting cycles (3-6 months); priority focus on low-cost oil operations ($9-10/bbl); NAPIMS will be limited to a pure asset management function whilst cost regulation will reside with the sector regulator,” it stated.
It also explained that NAPIMS would be made to share data with other relevant sector agencies to ensure transparency and efficiency.

Meanwhile, the Vice-Chancellor of the University of Maiduguri (Unimaid), Prof. Ibrahim Njodi, has described as an act of God, the recent ambush and murder of a team of explorers involved in NNPC’s search for commercial hydrocarbon deposits in the Bornu axis of the Chad Basin.
Njodi also stated that the 48-man team, comprising the staff of the university and NNPC, military and civilian security personnel sacrificed their lives for the economic well-being of Nigeria.
He added that while the university grieved its deaths, it would not give up on NNPC’s search for oil in the basin.

He said these in a statement in Abuja by the Group General Manager, Public Affairs of the NNPC, Mr. Ndu Ughamadu, which explained that a delegation of the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and the NNPC led by its Chief Operating Officer, Gas and Power, Mr. Saidu Mohammed, were in Maiduguri, capital of Borno State, at the weekend to sympathise with the state and the university over the development.

Njodi said the university was distraught by the incident, but could not ‘chicken out’ from doing what it was supposed to do when eventually the NNPC re-organises and returns to exploration work in the area.
He said the school’s partnership with NNPC started some 12 years back when the corporation restarted the Chad Basin exploration activities, adding: “The situation, painful as it might appear, must be seen as a necessary sacrifice for the development of the country.”
He also called on the NNPC to stand firm with the university and families of the bereaved and provide support to overcome the setback.

Responding, the statement quoted Mohammed to have told Njodi that the corporation would support the university and the families of the victims of the attack.
“We have been great partners with the University of Maiduguri for many years and certainly when losses like this happen and under these circumstances, we cannot abandon our partners to their fate,” Mohammed said.

SOURCE

themetrolawyer.com

01 August, 2017

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