Kachikwu, Labour tango over oil, gas reforms

Stakeholders in the nation’s oil and gas sector are now at war with the Federal Government over recent attempts to commence reforms that government claims would

reposition the industry for efficiency and profitability comparable with similar institutions across the globe. Some of the reforms are contained in the Draft National Oil Policy released recently by the Ministry of Petroleum Resources.

The policy document for instance, proposed the scrapping of the Nigerian National Petroleum Corporation (NNPC), Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA), among others.

The first among the dissenting voices against the reform was the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), and its counterpart, the National Union of Petroleum and Natural Gas Workers (NUPENG).

The two labour centres claimed that the reforms would lead to the massive retrenchment of their members working in NNPC and its subsidiary companies.

On the other hand, the Federal Government may equally be on a collision course with the Nigerian populace over moves to increase the pump price of petrol, a claim the NNPC has consistently denied, saying it lacked the powers to do so.

The need for reforms

The Draft National Oil Policy document explained that the existing institutional regulatory framework was weak, largely ineffective and inefficient, arising from a number of single-issue agencies, overlaps in regulation, gaps in regulation, mixture of policy, regulation and operations and ineffective regulation.

“Although the agencies generally work well together, their roles, sometimes, overlap and there are significant information gaps within the government as, sometimes, one institution is unaware of what the other is doing.

“At the same time, policy making capacity has been weak, resulting in NNPC and its subsidiaries setting policy and regulation as well as conducting operations in the petroleum sector. The result is an ineffective and inefficient institutional environment in the petroleum sector in Nigeria.”

The draft policy, equally proposed to consolidate Nigeria’s oil industry regulatory authorities into a single agency to be known as Petroleum Regulatory Commission (PRC), while scrapping all other regulators, including NNPC, DPR and PPPRA, among others.

According to the document, the new regulator will incorporate the activities of the existing petroleum regulatory authorities and also cover some new regulatory activities not currently covered.

Labour kicks

But PENGASSAN and NUPENG have warned the Federal Government against the reforms.

PENGASSAN, last week, raised the alarm that it was in the dark as regards plan by Ministry of Petroleum Resources to scrap some regulatory agencies, including the NNPC, among others.

The association’s position was contained in a statement signed by its National Public Relations Officer, Mr. Emmanuel Ojugbana.

“While it is important to note that a wholesome reform in the oil and gas industry is desirable and proper, it is equally unadvisable to contemplate any sort of restructuring without the buy-in of the very persons such action will directly or indirectly impact.

“It is curious to note that a critical aspect of organisational reforms like the workforce would be overlooked in the current contemplation,’’ the statement stated.

But PENGASSAN stated that it is not aware of any known channel other than the National Assembly with powers to either repeal or enact laws on existing corporations and agencies duly set up by law.

On its part, NUPENG vowed to resist any attempt to sell or scrap the NNPC by Federal Government. It has also declared its intention to adopt all necessary steps to ensure that there was no fuel hike in the country during and after the Yuletide.

National President of NUPENG, Mr. Igwe Achese, disclosed this while fielding questions from journalists at the memorial thanksgiving service of his late mother in Ogoloma, Okrika, Rivers State.

Achese noted that there were rumours and media reports about the scrapping of NNPC, wondering why the rumour kept coming up. He warned that if the Federal Government takes such step, NUPENG would oppose it.

He, however, said that NUPENG was not aware of any plot by the NNPC to increase fuel price, pointing out that the timing for such increase was wrong considering the current recession being experienced in the country.

The NUPENG boss pointed out that none of the promises as palliatives made by the Federal Government during the last fuel increase in May have been fulfilled.

NNPC, World Bank, Kachikwu’s position

The Minister of Petroleum Resources, Mr. Ibe Kachikwu, in defence of his reforms, said since assumption of duty in August last year, a lot of reforms ranging from the first phase of restructuring and the recent restructuring have served as enablers for the introduction of new business models that have drastically reduced the losses recorded by the NNPC in the past.

“We first started with the softer issues, which were transparency issues, governance, restructuring and that was going well when we went straight into the business model. For example, when we came in, the NNPC was recording huge losses and we have been able to reverse that trend and if we continue with that sort of trajectory, then we should be able to record profit in the near future,” Kachikwu noted.

The World Bank has equally commended the Ministry of Petroleum Resources on reforms and transparency brought so far into the operations of the NNPC and the entire oil and gas industry in Nigeria.

The World Bank Managing Director, Sri Mulyani Indrawati, during a recent official visit to the Minister in his office in Abuja, lauded the series of reforms.

Indrawati said the 20 fixes introduced by Kachikwu to the NNPC business models have gone a long way to reform the corporation for profitability.

“The bank is ready and available to offer the Ministry of Petroleum Resources technical support, advice and funding, sound policy thrust is key in the areas of fiscal direction, gas flare out and gas to power,” Indrawati had said.

Group Managing Director, NNPC, Mr. Maikanti Baru, had stated that the ongoing reforms have helped the corporation to achieve some progress in the implementation of the 12 Business Focus Areas.

“We can now deliver crude to our refineries, we have stabilised fuel supply across the country, Frontier Exploration Services and Integrated Data Services Limited have mobilised to the Benue trough and will soon resume activities in the Chad basin,’’ he said.  And in ensuring that the reforms translate into efficiency and robust public perception, the corporation recently announced the appointment and redeployment of 109 management staff across board in a major exercise designed to reflect operational realities and ensure sustained performance and profitability.

The appointment included veteran journalist, Mr. Ndu Ughamadu, as Group General Manager, Group Public Affairs Division, replacing Mr. Muhammed Garba Deen, who had been functional in that capacity since March 2016.

Ughamadu was coming back as NNPC’s spokesperson, 13 years after working in similar capacity in the organisation.

Defending the latest changes, Baru had said that they were informed by the desire to consolidate on the restructuring exercise through realigning jobs with requisite competences and experiences in line with international best practices while taking deliberate measures to ensure fairness and equity as well as the capacity to deliver.

The management of Ikeja Electric (IE) says it has invested about N11 billion on infrastructure upgrade since taking over as core investors three years ago.

The investment figure was disclosed by the Acting Chief Executive Officer (CEO) of IE, Mr. Anthony Youdeowei, at a media roundtable for Energy Editors in Lagos.

The IE boss explained further that the N11 billion investments cover total hardcore expenditure including asset mapping, statistical metering, trading point metering, consumer metering and Advanced Metering Infrastructure (AMI), among others.

He regretted that IE spends about 50 per cent of maintenance budget on replacement of vandalised equipment, saying this was taking a toll on its operational expenses.

On metering, he said consumers should bear with the firm over its inability to meter them, due to the rising cost of procuring meters occasioned by the fluctuations in exchange rate.

He explained that the company has concluded arrangements to meter all trading points from the feeder to distribution transformers and down to consumers.

The idea, he stressed, is to determine the power supplied to a particular area and then bill customers based on consumption.

Already, he said about 700,000 consumers have been enumerated to be under its network, adding that the agreement with the regulator was to meter all consumers within five years.

‘‘But the challenge is, as you are trying to close the metering gap, more communities are opening up. And we have a responsibility to meter them all,’’ he said.

“We have forex constraints but we are still ordering meters but the pace is slow. Single phase meter landing cost is about N100,000 and maximum return is 10 per cent and it takes about seven years to recover cost of a meter.”

Also speaking, the firm’s General Manager, Commercial, Folake Soetan, explained that estimated billing is not illegal, stating that the firm has come up with an acceptable billing formula for non-metered customers.

According to Soetan, from energy supplied to the distribution transformer, the company calculates the recharging limit of metered customers within the period and bill unmetered customers about 30 per cent of such consumption.

She said the formula had been submitted to the regulator, Nigerian Electricity Regulatory Commission (NERC), and is adjudged to be fair enough considering all the parameters put in place to arrive at such, which is excited with the parameter.

NDPHC commissions 330kv switch station in A’Ibom

The country’s transmission capacity may have received the required boost as the Niger Delta Power Holding Company Limited (NDPHC), owners of the National Integrated Power Project (NIPP), says it has commissioned the 330kv switch station in Akwa Ibom State.

A statement issued by the General Manager, Communications and Public Relations of NDPHC, Mr. Yakubu Lawal, which quoted NDPHC Managing Director, Mr. Chiedu Ugbo, as saying that the switch station will wheel all the power to the grid via the 330kv double circuit lines to Ugwuaji, New Haven and the rest of the grid connecting Makurdi and Jos in the North Central Zone of the country.

Ugbo said the project, which started in 2006, was disrupted as a result of NIPP funding constraints in 2008, adding that the numerous community and right of way issues, some of which dragged into  protracted court cases, delayed the completion of the project.

He, however, said the strong political will of the Federal Government paved the way for the completion and commissioning of the project.

“The robust interventions of NDPHC management coupled with the strong support and assistance from both our board Chairman,  the Vice President and the Minister of Power, Works and Housing are reasons why we have been able to successfully resolve all issues surrounding the project, which eventually culminated in the  commissioning.

“When fully completed, Ikot Ekpene 330kv switch station and these lines will jointly deliver 2,400MW to the grid, adding that the current capacity remained at 1,200MW. The NIPP generating stations of Calabar and Alaoji with a combined installed capacity of over 1,100MW are now connected through this corridor to the grid,” he said.

Ugbo stressed that the switch station and the interconnecting lines have three critical benefits to the entire transmission networks in the country, which include increased reliability of the national grid as other heavily loaded lines will be relieved and made more stable; more exchanges between parties in the energy market will now become possible due to availability of new transmission paths while the lack of generation in the North will now be alleviated leading to a more equitable distribution of energy for the Nigerian people.

NDPHC, under the current management, recently signed Partial Risk Guarantee Pact between the Federal Government, World Bank and Seven Energy in Abuja to facilitate operation at its Calabar power station located in Essien Udim / Ikot Ekpene LGA of Awka Ibom State.

The commissioning was witnessed by the Deputy Governor of Awka Ibom State, Mr. Moses Frank Ekpo, Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola, Ugbo, Executive Director, Finance and Administration, NDPHC, Mallam Babayo Shehu.

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