President rejects report on oil sector reforms

No Comments » April 10th, 2008 posted by // Categories: Energy Development Project

President rejects report on oil sector reforms
By Yakubu Lawal, Deputy Energy Editor
Guardian Tuesday, April 08, 2008

AN interim report on the sweeping reforms in the oil and gas sector announced by Federal Government last year has been turned down by the Presidency.

The report was produced in February this year by the Oil and Gas Reforms Implementation Committee (OGIC) headed by the Honorary Adviser to the President on Energy and Strategic Matters, Dr. Rilwan Lukman.

The Guardian learnt that President Umaru Musa Yar’Adua rejected the report because of the duplication of offices that emerged from the new firms and regulatory agencies created out of the Nigerian National Petroleum Corporation (NNPC) and other government-owned companies in the industry.

Under the restructuring announced by the government, the National Petroleum Directorate (NPD) replaces the Ministry of Energy, the NNPC transforms to National Oil Company (NOC) while the Department of Petroleum Resources (DPR), the industry regulator, becomes Petroleum Inspectorate Commission (PIC), an autonomous body.

Also, the Pipelines and Products Marketing Company (PPMC) will operate as Petroleum Products Distribution Authority (PPDA). A significant aspect of the reforms was the creation of a National Oil and Gas Assets Holding Company. The committee, which was inaugurated in September last year, was given six months to submit its report.

According to industry sources, Yar’Adua refused to endorse the report and present it to the Federal Executive Council (FEC) for consideration on account of bloated positions and structures in the emerging firms.

To ensure a thorough job, the President was said to have directed the committee to address the duplication of positions and functions in the new companies, which he noticed in the report to avoid waste of resources.

The President allegedly asked the Lukman panel to trim the positions in the structure for each of the new firms for better performance.

Yar’Adua reportedly faulted the recommendations of the committee after the members held the weekly briefing with him.

It was said that the President wanted to know why the new firms should have up to seven executive directors as well as other senior managerial positions.

The source said that the President insisted on a slim but robust institution instead of creating empires for people to feast on.

“The President has refused to assent to the interim report, which would have been circulated to FEC for consideration. He is not happy with the new structures and the positions created by the committee. He wants the committee to look into that,” the source said.

The official explained that the report, which ought to be ready before the end of March was being reviewed, adding that the committee members were expected to visit some oil producing countries like Norway, Qatar and one other in Asia before presenting its submission to the government.

The panel’s visit to foreign countries is to enable it study how their oil sectors are run and incorporate their findings in the final report.

“It is sad that what we are seeing now is shopping for people that would be where no body is addressing the creation of a viable structure for the industry, we cannot continue to run government around personalities rather we should have institutions first, “the source said.

But the Minister of State for Energy, Mr. Odein Ajumogobia, in a chart with The Guardian at the weekend, said though the report was delayed, the final document would be ready for government’s consideration.

He said the document would still go through legislative process after the Executive would have been satisfied that the report when implemented could transform the industry.

Lukman had last February said that the committee adopted universal standards in the industry in preparing its report.

He said that the framework constituted the basis for setting up the two regulatory agencies: the PIC and the PPDA, which have been included in the National Oil and Gas Policy.

The Acting Group Managing Director of NNPC, Abubakar Lawal Yar’Adua, had also disclosed that the corporation was preparing to implement the report of the committee.

Yar’Adua explained that part of the move is the development of key performance indicators (KPIs) for the corporation’s strategic business units and divisions/departments.

These key performance indicators are expected to measure the achievements of the corporation’s strategic objectives and they have been developed and approved for use.

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