PIB, NOCs and the New World Petroleum Order (2)

(By Francis Onyilo)

The benefits of a National Mandate Execution Policy for the proposed NOC is that it will clearly articulate how the nation, as a collective entity, wishes its most strategic resource and mainstay of the economy to be managed. It will further provide clarity to lawmakers and the general public and engender a sense of participation in shaping the country’s economic future. One may further add that it would form a “charter” between a people entrusting a valuable national resource to the care of an entity and a means of assessing the leadership of such entity over time.

Continued from yesterday

FOR liabilities, the answer is more obvious as it will have to abide by the terms and conditions of the various agreements it has taken up. For the assets, however, there is no indication that they will be managed differently from how the NNPC currently manages them. Indeed, it will be difficult for the Bill to contain detailed business strategies as they are not meant to do so. However, it will be instructive for members of the National Assembly, who will be responsible for the passage of this Bill, and the general public for that matter, to have a sense of how the proposed NOC will improve the management of the nation’s petroleum resources which will come under its care. Given that petroleum revenues play so pivotal a role in the nation’s economy, it would be in the nation’s interest to have a “National Mandate Execution Policy” detailing how the proposed NOC will administer the petroleum assets and how the company itself will be managed.

  The PIB already provides a few pointers, albeit general ones. These include the fact that the proposed NOC should be a public limited company, up to 30 per cent of the shares should be divested to the public within six years, be subject to the Governance Rules of the Securities and Exchange Commission, and the NOC itself governed in accordance with its Memorandum and Articles of Association. These are, however, not different from how any public company limited by shares in Nigeria may be managed.

  What is missing and which could be addressed by such a policy, is the nature of the company to be set up. Will it be an oil company, a gas company, an upstream company, an integrated petroleum company? Will it invest in other energy aspects such as renewables, power? Will it drive engineering technology, invest and acquire internationally energy assets? Will it help drive foreign policy and Nigeria’s standing in the global community; improve the country’s negotiating power?

  The benefits of a National Mandate Execution Policy for the proposed NOC is that it will clearly articulate how the nation, as a collective entity, wishes its most strategic resource and mainstay of the economy to be managed. It will further provide clarity to lawmakers and the general public and engender a sense of participation in shaping the country’s economic future. One may further add that it would form a “charter” between a people entrusting a valuable national resource to the care of an entity and a means of assessing the leadership of such entity over time.

   As already pointed out, there has been a shift in the global petroleum industry and developing countries (emerging markets) increasingly hold more sway. Indeed, the International Energy Agency (IEA), the energy think tank for the OECD, in its 2012 World Energy Outlook, suggests that the foundations of the energy system is shifting and that this “changing outlook for energy production and use may redefine global economic and geopolitical balances”. The facts point in that direction. OPEC controls 81 per cent of global reserves, some 1.2 trillion barrels of oil, with 66 per cent of this in the Middle East alone. Furthermore, 90 per cent of new supplies will come from developing countries, NOCs in developing nations are becoming stronger and IOCs are increasingly finding it more difficult to discover significant crude oil deposits in the developed world.

  It becomes imperative therefore, that any proposed NOC in Nigeria must not only “manage” the “assets and liabilities held by the NNPC on behalf of the Federal Government” (PIB S.152 (1)), but compete internationally and be able to benchmark itself against the leading NOCs around the world.

Concluded.

francisonyilo@yahoo.com

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