On July 7, 2019 when Mallam Mele Kyari assumed the position of Group Managing Director of the now-defunct Nigerian National Petroleum Corporation (NNPC), the corporation was in a near comatose state. It was laced with many challenges ranging from grievous oil pipeline vandalism, corruption, incessant oil thefts, low production levels and lack of transparency and huge operational losses.
For instance, a 2010 joint report by Transparency International and Revenue Watch Institute found that the NNPC which it was then had the poorest transparency record out of 44 national and international energy companies examined.
These scenarios fundamentally put Kyari on the spot. Kyari’s appointment which, however, came as a game-changer was with a clear mission – to revitalize the struggling corporation which it was known for then and send an unequivocal message that the corporation’s lukewarm governance narratives of the past are gone for good.
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There was a lot of mess to clear particularly in the area of operational losses, but Kyari was ready and he came in with his sleeves rolled up and expectedly, he didn’t disappoint.
Within days of his appointment, Kyari unveiled his “Roadmap to Global Excellence” anchored on the TAPE Agenda. TAPE represents Transparency, Accountability and Performance Excellence, the concept was hitherto unknown in the company. He led NNPC from a loss-making company to a profitable one in the year 2020 when, for the first time in its 44 years history, NNPC declared a profit after tax of N287bn. This went up to N674bn Profit After Tax in 2021.
With a vision boldly anchored on the principle of Transparency, Accountability, Performance and Excellence (TAPE), Kyari, under the defunct NNPC, demonstrated a fundamental grasp of what fossil energy means and the imperative of effective governance of the giant national oil company.
In June 2020, for the first time in 43 years, the Kyari-led NNPC released the 2018 Audited Financial Statements, and subsequently 2019, to the public for scrutiny, earning plaudits for the corporation from members of the public.
Significantly, in August 2021, the NNPC declared a N287bn Profit After Tax (PAT) for 2020, for the first time in 44 years. Kyari’s magic wand played out as the corporation reduced its losses from N803bn in 2018 to N1.7bn in 2019, and the eventual declaration of a net profit in 2020. By the financial year of 2021, the corporation’s profit grew to a profit level of N674bn. Until this period, NNPC has been a loss-making entity, renowned for anomalies, undue political interference, and shades of burden.
Amidst the challenging operating environment which tested the resilience of institutions and businesses globally, the NNPCL weathered the storm again by posting the N674.1bn profit in the 2021 financial period.
In spite of a tough and volatile operating environment, the NNPC Group’s investment strategy under the leadership of Kyari proved resilient and enabled the National Oil Company to deliver favourable outcomes as shown by the 2021 financials.
The 2021 financial year made it the fourth consecutive years that the NNPCL will be making its Audited Financial Statement public. This was one of the innovations made by Kyari when he took over the helms of affairs of the National Oil Company.
In 2018 when the NNPC first made public its Audited Financial Statement, it made a loss of N803.9bn.
But with the reforms implemented by the NNPC Boss, the loss position was reversed in the 2020 financial period when the NNPC posted its first profit in 44 years of N287bn.
Since then, the Company has bounced back to reckoning with impressive financial performance of N674bn in 2021.
The rise in profit is mainly occasioned by significant increase in revenue and less proportionate increase in cost of sales resulting to 1,556.9 per cent increase in gross profit.
The NNPCL in 2022 continue to show resilience by increasing its profitability despite the harsh operating environment that has constrained many businesses in Nigeria.
Specifically, the audited financial statement for the year ended December 2022 showed that the NNPC Limited total assets rose to N58.65trn.
This is an increase of about 260.47 per cent when compared to the N16.27trn which the total asset was in the 2021 financial period.
A breakdown of the total asset figure of N58.65trn showed that non-current assets was N37trn while the company’s current assets stood at N21.59trn as of the end of 2022.
During the period under review, the NNPCL also increased its revenue profile by 37.2 per cent from N6.42trn in 2021 to N8.81trn.
In terms of profitability, the Financial Statement revealed that the company recorded Profit After Tax of N2.52trn, representing about 274 per cent increase when compared to the N674bn it recorded in 2021.
The NNPCL’s auditors noted that for the 16-month period ending December 2022, they had no doubt that the NNPC could continue as a going concern without fear of going bankrupt.
The Auditors wrote in the account, “The financial statements have been prepared in accordance with the going concern principle under the historical cost convention.
“Nothing has come to the attention of the directors to indicate that NNPC will not remain a going concern for at least 12 months from the date of these financial statements. At this time, no significant events after the reporting date that may have an impact on going concern have been noted.”
Since the assumption of office of Mele Kyari as the NNPC Boss, the fortunes of the company have experienced remarkable progress.
Also, the enactment of the Petroleum Industry Act (PIA) 2021 had given birth to a new commercially-oriented National Oil Company that is governed by the Company & Allied Matters Act (CAMA) principles.
In September 2022, the NNPCL sealed the acquisition of OVH Energy making it to add to its assets reception jetty (ASPM) with 240,000MT monthly capacity, 8 LPG Plants, 3 Lubes Blending Plants, 3 Aviation Depots, and 12 warehouses.
Also, Oando’s 380 fueling stations have been added to NNPC’s existing stations making it the largest in Africa.
Through the deal, NNPC is leveraging on Oando’s coverage across Africa to become a leading energy company.
The acquisition, under the leadership of Kyari, shows his vision to make NNPC a force in the global energy market.
Kyari’s magic in growing crude oil production has also been commended by stakeholders in the oil and gas sector of the Nigerian economy.
The war against crude oil thefts and illegal refineries, have led to significant spike in oil production to 0ver 1.6 million barrels per day.
This has made Nigeria to regain its position as the largest crude oil producer in Africa, ahead of Algeria’s 1.021 million barrels/day and Angola’s 1.088mb/d.
With oil theft and pipeline vandalism overwhelming Nigeria’s oil business in recent weeks, the NNPC Ltd under the leadership of Kyari had adopted the Saudi Aramco’s model of using video surveillance to monitor its pipelines carrying crude oil from wells to flow stations in the Niger Delta.
The NNPCL in collaboration with security agencies have also put up a control centre to provide surveillance of all the country’s oil and gas assets in the Niger Delta.
The surveillance system is known as the Central Coordination, Data Integration and Activation Control Room. Just like the Saudi Aramco, the NNPC Data Control Centre uses video visibility to monitor the country’s Niger Delta pipeline networks, where more than 90 percent of the country’s crude is explored.
Beyond arresting crude oil thieves and shutting down illegal refineries, the NNPCL under the leadership of Kyari is expanding the frontiers for crude oil production. One of the most impressive accomplishments of Kyari’s stewardship at NNPCL was the flag-off of the Kolmani Integrated Development Project in Bauchi State in November 2022, marking the commencement of effort to commercially exploit oil in the Northern part of Nigeria.
It was deemed as one of the most massive projects. The Kolmani Oil Field, estimated to have a reserve of about one billion barrels of crude oil, OPL 809 and 810, lies in the Gongola Basin of the Upper Benue Trough, straddling Bauchi and Gombe States.
The project has the capacity to transport two billion standard cubic feet of natural gas daily to power plants in Abuja, Kaduna, Kano, and various gas-based industries, boosting the nation’s socioeconomic growth.
It is noteworthy that Kyari worked tirelessly to ensure the passage of the PIA, an initiative which is aimed at overhauling the country’s energy laws and creating a deregulated environment, freeing the oil sector from government control and unbundling the oil company.
The passage of the PIA gave birth to the new, refreshed, and rejuvenated NNPCL.
The birth of the NNPCL in 2021 wound up the Nigerian National Petroleum Corporation, NNPC, after 46 years of operation.
The PIA empowered NNPCL to operate like every private company in Nigeria with exemption from the Fiscal Responsibility Act, Public Procurement Act and TSA in order to ensure there are no excuses for failure.
Following this milestone, Kyari, initiated new investment benchmarks to further rejuvenate the once ineffective company.
The NNPC after the acquisition, became the biggest downstream company in Africa.
In the area of gas infrastructure, Kyari also led the NNPCL to achieve a $300m reduction in the cost of the AKK Gas Pipeline contract via contract renegotiation from the initial $2.8bn.
In December 2019, Kyari achieved the closeout of the Final Investment Decision of the multi-billion-dollar NLNG Train 7 Project that has been on the drawing board for over a decade. This was at a time that the Covid-19 was taking its toll on the global economy.
He also successfully renegotiated the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline contract. The AKK Gas Pipeline is an integral part of the Trans-Nigeria Gas Pipeline (TNGP) with a capacity to transport about 2.2 billion cubic feet of gas per day. The contract was renegotiated from the initial $2.8bn to $2.5bn, achieving cost savings of $300m in favour of the Nigerian government. Construction work on the project was flagged-off in June 2020.
He also led the signing of a $260m Financing Agreement for the Assa-North Ohaji South (ANOH) Gas Project with Seplat to deliver 300 million standard cubic feet of gas per day and 1,200 megawatts of electricity to the domestic market.
The last four years of NNPCL under Kyari have been momentous for the oil industry and for Nigeria’s economic wellbeing. Under him, NNPC transited to a commercial profit-making business entity and it is on the path of achieving its potential of leading Nigeria towards a future of energy sufficiency, while playing in the big league with other energy powerhouses of the world.