The widespread incompetence within Nigeria’s national oil company’s (NNPC) up-stream subsidiary known as NPDC is slowing down oil production growth and power output in the country.
NPDC is involved in 38 Concessions (31 oil mining licenses OMLs & 7 OPLs) and claims to be the 5th largest oil producer in the country with output of about 205,007bopd.
However industry stakeholders say the firm outsources most of its fields because it lacks the technical knowhow to operate them.
“NPDC management of IOC divested assets has led to significant underperformance of the upstream sector,” a senior executive in an international oil major told BusinessDay on condition of anonymity.
A good example is the recent Shell asset divestments in OML 26, 38, 4, 41, 42, 30, 40 and 34, where NPDC now owns a 55 percent equity stake.
NPDC outsourced the operation of four of the blocks (OML 26, 38, 4 and 41) to Lagos and London listed Seplat Petroleum Development Corporation, while it kept the rest to itself.
The assets being operated by Seplat have seen significant production growth by an average of 150 percent, while the NPDC operated OMLs (42, 30, 34, and 40), have had production rise by less than 30 percent between 2010 and 2012, documents seen by BusinessDay show.
The dysfunction at the NPDC also extends beyond production to allegations of management of finances and non- remittance of funds into the Nigerian national treasury.
An audit of the finances of NNPC by accounting firm PricewaterhouseCoopers LLP (PwC) found that NPDC had unpaid self assessed taxes and royalties of $470 million and an additional $1.75 billion in unpaid signature bonus for divested assets it acquired.
“Total amounts estimated to have been withheld by NPDC on assumption of a sale of the divested assets is $5.11 billion,” PwC said in its report.
Nigeria which is the world’s fourth-biggest exporter of liquefied natural gas, and holder of Africa’s biggest gas reserves of more than 180 trillion cubic feet, is struggling to meet local demand for gas to feed power plants used to generate at least 70 percent of the country’s electricity needs.
The country needs to attract investment of the region of fifty five billion dollars if it is to resolve the persistent local shortages of fuel for the country’s thermal power stations, Nigerian Gas Association President Bolaji Osunsanya said recently.
NPDC which runs the Trans – Forcados oil and gas pipeline has been unable to expand it and anytime the TFP is down gas supply is constrained, stakeholders tell BusinessDay.
“With NPDC management of the TFP the lines uptime has declined,” another source said.
When NPDC is not indirectly hurting the economy from sub-optimal management of crucial national infrastructure and assets it engages in actions that directly sabotage Nigerians and their businesses.
Three weeks ago BusinessDay reported that staff of NPDC (possibly in collusion with management) embarked on a bizarre strike action that engulfed Nigeria in near total darkness for at last four weeks.
The strike began as a tussle for supremacy over who would manage the OML 42 which holds significant gas reserves and straddles the vital gas pipeline linking the nation’s power plants.
NPDC says on its website that it aims to be Nigeria’s leading E & P Company, profitably operating a global business but it has consistently failed to achieve any of these key objectives.
Since the party manifesto of Nigeria’s new president Muhammadu Buhari, says it will unbundle NNPC, stakeholders tell BusinessDay they hope the NPDC will be a target for major overhaul and possible privatisation.
PATRICK ATUANYA
