NNPC Merges Select Business Units to Cut Overhead Costs, Tackle Headwinds

*Reorganises shipping, data services SBUs for optimum performance

Emmanuel Addeh in Abuja

The Nigerian National Petroleum Company Limited (NNPC) has continued its in-house reorganisation in its efforts to meet the new operational demands as a commercial entity, with the rationalisation of a number of its Strategic Business Units (SBUs).

Insider sources with deep knowledge of the workings of the national oil company told THISDAY on Thursday that the move which affected its data services unit, shipping departments and refineries management, among others was in line with the firm’s recent halt of its operations as a corporation.
Previously perceived as wasteful, the oil company had recently disclosed that it was repositioning itself as a commercially driven entity under the new Petroleum Industry Act (PIA).

In February this year, NNPC Limited officially  took over the assets of the corporation after 46 years of its operations in that status after attaining legal requirements within the stipulated 18 months, in line with section 54 (3) of the PIA 2021.
It has now transitioned into a company whose operations will be regulated by the Companies and Allied Matters Act (CAMA), prompting the leadership to take a rash of decisions to reposition the company.

Aside the recent change of nomenclature of the NNPC’s top officials, it was gathered that the rationalisation of the departments affected the former refining and petrochemical directorate which has now been merged with downstream operations.

In addition, to curb inefficiency brought about by unwieldy units, the three refineries which are currently undergoing rehabilitation are currently being managed as rehabilitation projects supervised by a refinery coordinator.
In November 2018, the firm under a separate management disclosed that it would shut down its business units that were not performing according to set standards at the time.

It noted that this was to ensure that all its Autonomous Business Units (ABU), and Strategic Business Units (SBUs) align with the new standards. But nothing much was heard about the move after then.
However, in line with the new direction of the company, the source stated that cutting costs and inefficiency within the NNPC was inevitable if it will meet its new status as a major competitor within the oil and gas industry.

“Yes, in a bid to optimise and reduce overhead costs, a couple of companies were merged and others were optimised for better operability and profitability.
“The former refining and petrochemical directorate was merged with downstream for better alignment with an improved cost effective structure.

“The three refineries are currently undergoing rehabilitation and are managed as rehabilitation projects supervised by a refinery coordinator. Once completed , the plan is to hand the assets over to  reputable third parties with experience to operate and maintain them,” it stated.
Besides, THISDAY learnt that NNPC’s shipping companies, Nikorma Shipping Services Ltd., NIDAS shipping services as well as Marine Logistics have been merged so as to cut inefficiencies within its shipping operations.

“To streamline our shipping operations, three entities: NIDAS , NIKORMA and Marine logistics were merged to become NNPC shipping company.
“ But the most notable merger of all is that of the Integrated Data Services limited (IDSL), NNPC oil field services, and Frontier Exploration to become NNPC Services Limited (EnSERV) with a focus on exploration, seismic data management, and general oilfield services,” the insider source noted.

This, it said led to the strengthening of the unit which has recently recorded  feats with exploration activities in Kolmani in Gombe state, Ebenyi in Nasarawa and Wadi B in Maiduguri within the past one year.
On the allegation of non-remittance and discrepancies in payments to the federation account, the source responded that President Bola Tinubu had recently set up a panel to sort out the differences and that the committee is currently at work.

“NNPC has called for reconciliation of finances. The claims are subject to reconciliation with federal agencies as approved by the presidency. Preliminary investigations showed that NNPC is owed N4.2 trillion in terms of subsidy and gas to power debts. NNPC owes government N2.8 trillion, thus giving a net figure of N1.3 trillion being owed to NNPC by the Federation,” it added.

The company’s minders have recently been playing up the new status of the NNPC as  a commercial and competitive player and would henceforth become a competitor to the International Oil Companies (IOCs) and other indigenous players in the industry.