Published On: Mon, Aug 17th, 2015

NNPC taps private sector for top ranks

The new group managing director of Nigerian National Petroleum Corporation (NNPC), Mr. Emmanuel Kachikwu, has tapped the private sector as part of an overhaul of senior ranks intended to clean up the entity at the heart of the country’s economy.
Emmanuel Kachikwu was appointed this month by President Muhammadu Buhari, who tasked the former ExxonMobil executive with rooting out corruption and mismanagement at NNPC.
Kachikwu said his hiring strategy was intended to “refocus and sharpen” the company. He will also review all production-sharing contracts and joint venture agreements as part of the extensive restructuring.
About a dozen of the appointments made last week included direct hires from Total, Statoil and Royal Dutch Shell. While some of the new recruits have private sector backgrounds, like Kachikwu himself, most are individuals who have spent much of their careers inside the company that he aims to turn round.
Both Kachikwu and President Buhari are grappling with the same dilemma as the latter seeks to govern Nigeria with more transparency and accountability than his predecessors.
Repair of state entities, such as NNPC, must take place without so thoroughly purging them as to remove all institutional experience and upset the fragile political balance that underpins Africa’s most populous country and its vast bureaucracy.
NNPC was at the heart of the industrial scale theft of Nigeria’s resources that took place with government complicity, and resulted in many billions of dollars in oil revenues failing to make their way into state coffers. President Buhari — who was elected on an anti-corruption ticket — and his inner circle, have made the institution’s root and branch reform a priority.
Days after taking the helm, Kachikwu dismissed NNPC’s top brass, appointed a leaner executive board and reduced the pool of senior managers (by a third to 88).
Kachikwu wanted to appoint more people with private sector backgrounds but “had to manage the corporate and country politics”, said a source in the Nigerian oil industry, who works for an international oil company.
“Too many outsiders all of a sudden would not have been a good strategy,” he said, adding that the state-owned company “will almost certainly bring in more as time goes on”.
NNPC has said that it aims to create a leaner and more efficient organisation and restructure the company from being a government-focused body towards “a profit-driven business”.
“Over the next five to six months, you will begin [to] see emerging a new NNPC,” Kachikwu told reporters in Abuja last week. Reforms are expected to cover corporate governance to revenue retention, which has become even more important amid lower oil prices
The administration has to strike a delicate balance when appointing the critical managers who oversee and regulate the activities of Nigeria’s most lucrative industry. The oil and gas sector provides more than 70 percent of government revenues.
Rolake Akinkugbe, head of energy and natural resources at FBN Capital Limited, said the leadership had to be comprised of “those who are more technocratic and those who are more politically savvy”, who can negotiate and deal with bureaucratic obstacles.
“It’s possible there could be further changes,” she said, but for now “maintaining people who understand political navigation” is essential.
The challenge of installing the right mix of people has been evident this summer as Nigerians, foreign investors and governments await the announcement of Buhari’s cabinet. He has said this will be in September, more than three months after he took office.
The president has already rejected several recommendations for important government postings on the grounds that they were not of the right calibre and were too familiar with the previous president’s practices, one person familiar with the matter said.
“[Mr] Buhari has a difficult political situation to navigate when it comes to the composition of key government bodies,” said Jean Herskovits, a research professor who has written on Nigerian politics for more than 40 years. “He shouldn’t underestimate how difficult this reform is going to be.” (FT)

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