The federal government has proposed in the Petroleum Industry Governance Bill (PIGB) which is currently before the Senate for legislative consideration that a tenured term of office be established and legalised in the bill for the Chief Executive Officer (CEO) of the National Oil Company (NOC) that is intended to emerge from the process to replace the Nigerian National Petroleum Corporation (NNPC).
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu in his address at the public debate on the PIGB in Abuja, disclosed this. The PIGB is a private member bill sponsored by Senator Tayo Alasoadura who represents Ondo Central in the Senate.
Kachikwu also said the government would want the office of the CEO of the NOC to be saddled with established annual Key Performance Indicators (KPIs) upon which the performance of its occupants would be evaluated for either a sack or continuation on the job.
He noted that since the NOC would be established as a holding company for an integrated operation that would be commercialised, it must therefore be insulated from political interferences and all its governance structures clearly stated to allow it begin to apply the corporate governance ethics of companies listed in the stock market even before its eventual listing in the exchange.
“With respect to government’s role on the commercial side, the reforms that we commenced earlier on in the year need to be sustained through legislation. The critical issues here are governance, funding, efficiency and accountability of the commercial entities,” said Kachikwu.
He further explained: “A National Oil Company (NOC) needs to be created as a holding company for an integrated operation that will operate on a fully commercial basis.
“A key plank of our reforms is to ensure that the national oil company is able to operate without recourse to the treasury such that funds that could otherwise be sequestrated for our upstream commitments can be deployed by the treasury to meet urgent needs in other social sectors. Ultimately, the national oil company needs to acquire an investment grade status if it is ever to achieve these objectives.”
The minister then stated: “This will require a new way of governance and a different type of national oil company than currently exists. For one, it must be insulated from political interference in its operations.
“It must also run commercially and efficiently if it is to be able to attract funding from debt and capital markets. The governance structure and terms of reference must therefore be clearly stated and legislation must provide it a pathway to independently and sustainably raise its own funding.
“Hence, our recommendation is that there should be an explicit provision in the bill that clarifies that the national oil company shall cease to be funded from the federation account and shall have the power to raise funding for its operations from the debt and capital markets.”
The NOC, he noted, “should be structured as a holding company to be chaired by the minister, the NOC to be an integrated holding company comprising semi-independent upstream, midstream and downstream with their own CEOs and board of directors, CEO/GMD of NOC to be appointed by the President upon the advice of the minister.”
“Position of CEO/GMD of the NOC to be tenured but subject to fulfilment of annual Key Performance Indicators (KPIs) and targets to be set by the board, the CEO/GMD of holding company may only be removed for failing to fulfill KPIs and for misconduct,” he added.
Kachikwu equally said the government was proposing that the CEO of the NOC must have no less than 20 years managerial experience, whilst other executive directors should have a minimum of 15 years senior management experience.
Source: This Day