There are indications that the planned restructuring of the National Petroleum Investment Management Services (NAPIMS), an investment arm of the NNPC, will set the Federal Government in collision course with the labour unions in the nation’s oil and gas sector with the attendant implications to the economy.
One of the unions INDEPENDENT learnt, has threatened to mobilise its members nationwide to down tool in the event that the Federal Government go ahead with the planned restructuring of NAPIMS
Findings showed that the Federal Government may not bow to the renewed threat of the oil workers as it is bent to get the agency restructured, as part of its cost cutting measures in the oil and gas industry which was contained in the new petroleum policy.
The Federal Government explained that its latest action is aimed at achieving further reduction in the cost of managing oil and gas investments in Nigeria, which the new Petroleum Policy has put at $200 million, which amounts to N61 billion yearly at the current exchange rate of N305 per dollar.
According to reports, officials of NAPIMS, NNPC, Department of Petroleum Resources (DPR) and the Ministry of Petroleum Resources have already held various engagements in Abuja to fashion out the module of the restructuring.
There are hints that the current 10 divisions in NAPIMS may be sliced to about seven at the end of the restructuring which would invigorate the agency with some vital units, including compliance and data management to enhance activities.
The government noted in the new petroleum policy that its investments are managed directly by NAPIMS, a Corporate Services Unit (CSU) in the Exploration and Production (E&P) Directorate of the Nigerian National Petroleum Corporation (NNPC).
NNPC’s representatives in the Operating Committees of the various joint ventures, it added, are seconded from Nigerian Petroleum Investment Management Services Limited, NAPIMS, which is a subsidiary company of NNPC. NAPIMS was established to manage NNPC’s interests in the various oil concessions.
Besides the government said all project proposals, joint venture (JV) budgets and key operating decisions in oil and gas projects are subject to NAPIMS approval.
“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 (Production sharing contracts) make some of the government equity interests in the joint venture unprofitable.
“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 there should be as 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 Corporate and the organisational structure is fractured.
“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 restructuring; a value-for-money audit, amongst others.
They also include: emphasis on sustainable Brownfield projects; standard commercial management practices to be introduced, including KPIs; asset wide budget monitoring introduced as a standard KPI objective; marine asset sharing in all its blocks introduced as compulsory measure; cost benchmarking data and system to be developed; NAPIMS will be limited to a pure asset management function whilst cost regulation will reside with the sector regulator; Data has to be shared amongst the key agencies, including: NAPIMS, MPR, MoF, NOCN, the Petroleum Regulator, NCDMB.”
It noted that the nation is blessed with an abundant and active private sector in the petroleum industry, including international Oil and Gas Companies (IOCs); international Independents; National Independents; Oil and gas service companies and Independent Power Plant companies (IPPs); Project Developers. The policy, which observed that the private sector is vital to the development of the Nigerian petroleum industry, added:
The policy said government’s agencies, corporations; international companies and national companies need to and will work together to meet the common vision of a dynamic, successful and profitable Nigerian petroleum industry.
It also stated that Nigeria will have a market driven oil and gas industry, structured to meet the vision of a nation where hydrocarbons are used as a fuel for economic growth and not simply as a source of income.
The policy disclosed that this means that “restructuring the government sector to one where efficiencies are introduced and there is a level playing field between the private and public sectors.”
According to the policy, clearly separating the roles of policy (Ministry), regulation (independent regulator) and operations (NNPC and successors); ensuring private investment across upstream, midstream and downstream segments of the value chain; moving away from Oil as a source of income to oil as a fuel for economic growth; Improving the whole enabling supply chain; move the Nigerian economy from a crude oil based exporter to a gas based industrial economy, enabling Nigeria to become a manufacturing and industrial nation; enabling effective refining and processing within Nigeria (whether public or private owned and/or operated).
Recently in Lagos, the Group General Manager of NAPIMS), Mr. Dafe Sejebor, stressed the need to for continuous cut in the cost of producing oil, adding that the country had saved a minimum of $3 billion per annum.
NAPIMS arrived at the figure after looking at the difference between the $78 and $23, which represent the old and new cost of production in relation to the present daily average production in the country.
The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), is not impressed with the ongoing moves by the Federal Government to restructure NAPIMS.
They also expressed disgust over plans to plans to strip the regulatory powers of the Nigerian Petroleum Investment Management Services Limited (NAPIMS) in the new petroleum policy approved by the Federal Executive Council recently
They said the development is a way of robbing peter to pay Paul by pushing the costing of projects to an independent regulator, which would emerge from the restructuring of the Department of Petroleum Resources (DPR).
The workers expressed that they will resist the move of stripping NAPIMS of its responsibility of regulatory costing of projects and using an independent consultant.
They also explained that they are averse to the current move because of the past failures of government restructuring and privatisation process of Power Holding Company of Nigeria and others.
‘’NUPENG states that it is a way of robbing peter to pay Paul by pushing the costing of projects to an independent regulator, which would emerge from the restructuring of the Department of Petroleum Resources (DPR)
’The Union reiterates that the move is self-serving, selfish, unjustifiable, not workable, uncalled for but met to serve the interest of the promoter and will do the oil and gas industry no good.
‘’The Union, therefore, calls for its stoppage forthwith or else may be forced to embark on an industrial action to reverse the trend. NUPENG believes that the process will not be transparent and can be teleguided.
According to the union, the Nigerian Petroleum Investment Management Services Limited (NAPIMS), was established to manage the federal government’s investments and interests in the upstream sector of the country’s oil industry had done well in its regulatory functions with all the ten divisions working and it should therefore not be used as a blackmail to score cheap political points.
‘’The Union therefore calls on the Federal Government to jettison the plan and not gazette it as it is meant to satisfy certain selfish interests and not for the sector to move forward.‘’NUPENG will not fold its hands and see any form of restructuring in NAPIMS that will lead to job losses, as it must be resisted’’.
One of the leaders of the oil workers, who pleaded not to be named, also said they are worried that the planned restructuring of NAPIMS would turn out to disable the agency of the duties it has performed excellently, adding that the union would not watch the situation helplessly.
Culled from the independent