The Federal Executive Council (FEC) has approved a new petroleum policy, restructuring the Nigerian Petroleum Investment Management Services Limited (NAPIMS) and stripping it of its responsibility of regulating costing of projects.
Projects costing would now be done by an independent regulator, which would emerge from the restructuring of the Department of Petroleum Resources (DPR).
NAPIMS would now be a pure asset management agency while cost regulation would reside with the sector regulator.
The content of the new policy christened the National Petroleum Policy, which is awaiting gazetting by the federal government, indicated that the Ministries of Petroleum Resources and Finance had been given the nod to restructure NAPIMS using a competitively procured global level consultant.
NAPIMS, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), was established to manage the federal government’s investments and interests in the upstream sector of the country’s oil industry.
It specifies minimum expenditure during oil exploration; reviews and approves contractor’s annual work programme, budgets, and costs; as well as creates the data bank for benchmarking and cost estimation in hydrocarbon projects in Nigeria.
However, it has been repeatedly fingered as being corrupt, inefficient and easily manipulated by political influences, especially at its tasks. For instance, the agency told the Senate in March 2017 that it spent $9 million to transfer and resettle its staff within a year.
It was similarly fingered in the $289,202,382 allegedly collected in 2015 and housed in Ikoyi by the National Intelligence Agency (NIA). Investigations into the cash deposit had subsequently resulted in the suspension of NIA’s Director-General, Ambassador Ayodele Oke.
Buttressing these claims against NAPIMS, the petroleum policy in its description of the agency and need for its shake-up, stated that: “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, make some of the government equity interests in the joint venture unprofitable.”
It added that: “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 should be 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 Corporates and the organisational structure is fractured.”
It noted on the proposed reform: “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 the restructuring; a value-for-money audit; enable faster contracting cycles (3-6 months); priority focus on low-cost oil operations ($9-10/bbl); NAPIMS will be limited to a pure asset management function whilst cost regulation will reside with the sector regulator,” it stated. It also explained that NAPIMS would be made to share data with other relevant sector agencies to ensure transparency and efficiency.
