Nigeria’s new president, Umaru Yar’Adua abolishes Nigerian National Petroleum Corporation: sets up five new companies instead after $5.2 billion goes missing
Posted by gasweek on 10 October, 2007
The Nigerian National Petroleum Corporation, for decades a source of corruption and national shame, is to be abolished by Nigeria’s new president, Umaru Yar’Adua, and replaced by five new companies. The president, who will head a special oil council to oversee the changes, says he wants the reforms completed in six months. It would be an astonishing achievement if it happens and works. The industry has been very badly run for years. The new government, formed only two months ago, has been admirably quick to take action. It has awarded a contract worth $52m to fix damaged pipelines in the Delta region and promised to get refineries working again by December, reported The Economist, (29/9/2007), p. 48.
$5.2 billion AWOL: On September 21st a federal budget report said that the corporation had somehow failed to remit 647 billion naira (almost $5.2 billion) expected by the treasury last month. Production in June fell to 750,000 barrels a day, far below its capacity of 3m b/d. As well as incompetence, civil unrest has been to blame. Violence and pipeline sabotage have reduced output to a drip in the oil-rich Niger Delta, where Port Harcourt, the main city, has been under curfew for a month.
Shell, Chevron face constant disruption: Shell, Chevron and several other big companies have been forced to close their pipelines and sabotage has hobbled already decrepit refineries, which operated at only about one-third of their potential between 1999 and 2004. The Americans reckon that Nigeria has lost some $16 billion in export earnings in the past two years. Regulation has been equally erratic.
Regulation weak: Since the corporation was founded in 1977, its regulating arm, which was recently hived off into a new and supposedly independent body called the Department of Petroleum Resources, went in and out of company control. The new regulatory outfit is weak. Its cash-strapped employees still depend for various services, such as transport, on the oil companies they are supposed to monitor.
The Economist, 29/9/2007, p. 48