Dr. Maikanti Baru is the Group Managing Director of the Nigeria National Petroleum Corporation. He tells FRANCIS KADIRI that the validity of oil and gas as a lucrative commodity in trade between countries is still relevant, despite the current fall of its price in the global market. He also speaks on the reason behind the corporation’s decision to turn down the sales of Nigeria Liquefied Gas shares, despite calls for same by several Nigerians. Excerpts.
With the global fall in the price of oil, do you think oil and gas will still be relevant in the next 50 years?
The quest all over the world to get some other fuel source cannot stop fossil oil exploration. For instance, gas is still relevant for other purposes than its traditional uses. If we find gas here in commercial quantity, we can deploy it to increase our capacity to generate electricity for our use, using turbines. We can also it use to produce fertilizer for our farmers. In any case, people must know the world will continue to depend on gas for its fuel needs for at least the next 50 years.
What is the position of NNPC regarding corporate social responsibility to communities where oil is derived?
As a company, we intend to take our Corporate Social Responsibility serious. We are looking forward to rehabilitate the schools in the areas, get them potable drinking water, and also enquire to know what their preferences are, so that we can provide as far as our resources can carry.
In recent time, there have been several calls by some experts in the country on the need to reform NNPC. Do you support this?
Actually, we are doing what we can in the NNPC, believing that any company that refuses to reform itself after sometime will definitely be outshined by development. We actually support the call for restructuring in NNPC, because we believe that it will bring about proper change in the company in other to promote the Nigerian economy.
There are also calls for sale of LNG shares by some people in the country, believing it will help the country and the corporation. What is your take on this?
On the call for the sale of LNG shares, I want to tell you that selling our shares in the LNG cannot solve our problems, and it is not a wise decision, as an investor. When I had the opportunity of speaking with Mr President, I reminded him that there was no other company where the country has much investment as the LNG.
For instance, the country invested $9.5 billion in the company, but by the end of 2015, Nigeria had gotten more than $15 billion in dividend. And with this, I believe that this business is worthwhile. Those calling for the sale of our shares in LNG should know that there is a clause in the memo of the company which says any shareholder who decides to sell his shares can only sell it to another shareholder in the company, and the worth of such shares, no matter the volume is just $1. So, if the argument is that we should sell our shares, so that we can bail the country out of recession, then our shares in LNG is not the appropriate one to sell. Moreover, this is a wrong time for us to think of selling our shares in any of the oil and gas companies. This is because such decision will only amount to selling them as scrap, which will not save the situation we are facing currently in the economy.
Looking at the state of Nigeria’s refineries, don’t you think this contributes to the problems the country is facing currently?
It is wrong to describe our refineries as obsolete. The state of refineries today reflects the quality of repairs we have carried out on them recently. As we speak, there are refineries which were put in place long before ours, but are still in good shape, because of the kind of repairs they get. They get upgraded as they go and they are still up and running. All we need to do to our refineries is to get them upg r a d e d and effect repairs as and when due.
If this is done, I don’t see anything wrong with our refineries. Would you say these refineries so far have generated the needed income for the country?
Let me tell you, the refineries in this country are not making any gain currently. This is because government has continued to dictate the pump price of PMS, and irrespective of how much we spent in refining crude, using our refineries, if it continues like that, the situation will always remain the same. And until we realise this in this country, things may not change for better.
There are reports that NNPC is currently having issues, when it comes to remittance of its revenue into the federation account. What is your reaction to that?
If I may frankly tell you, we don’t have any issue in respect of remittance of revenues into the federation account. It is purely an erroneous belief, held by some people who don’t understand how things are done here. Take a look at this for instance, when we sell our crude in the international market, the NNPC doesn’t see or even touch the money. The money goes straight into the nation’s account, domiciled with JP Morgan, an international financial powerhouse, in the USA. All we do, as a company, is to act as the salesman of the government, who authorises the quantum of oil to be sold to who needs it at the given price. We also make sure that all that we have agreed to be paid for certain quantity of crude is paid into the account with the bank. The money then leaves JP Morgan and goes straight into the federation account, domiciled with the CBN. So, we really do not see or touch this money before it gets to the government.
What about the allegation that the NNPC does not give full disclosure of the nation’s oil revenues?
My take on that is that those thinking that the NNPC is not giving full disclosure of the nation’s oil revenues may have been led to think that way, because the money they see eventually does not match their expectation. For instance, in about one and a half years ago, crude oil used to sell at an average of $100 to a barrel, but we now sell the same barrel for a little above $30. So, for those who do not understand that crude price now goes for a third of what it was worth about one and a half years ago, they may be led to believe the company is shortchanging the nation. But that is not the case.