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What you need to know about the new CEO of Nigeria's oil company NNPC

Nigerian President Bola Tinubu appointed former Shell executive Bayo Ojulari to lead the Nigerian National Petroleum Company. This appointment has raised hopes for a much needed overhaul of the state-owned company and an increase in oil production.

NNPC, Nigeria's golden goose for so many years, has seen its finances deteriorate in recent times due to corruption, opaque deals and high-level politics meddling. The new leadership will have to tackle these issues if it wants the company – and the economy – back on track.

What you need to know about NNPC operations

Why is NNPC important?

Nigeria's economy depends on oil. Oil accounts for 90% exports, and usually half the revenue that funds its national budget. The performance of NNPC is therefore critical to the economic wellbeing of Africa's largest nation.

Kelvin Emmanuel, an energy analyst based in Abuja, said: "No Nigerian President can move the needle on the economy unless he addresses the long-standing hydra-headed problems that have turned the state oil corporation into a cesspool of malfeasance over the past decades."

Nigeria produces approximately 1.75 million barrels per day of oil, mainly through NNPC joint ventures with international partner Shell, ExxonMobil TotalEnergies Chevron Eni and Eni.

NNPC, Nigeria's biggest refiner of fuels and also its largest importer, reported last year that the company had assets worth $161 billion.

RESTRUCTURING NNPC

Analysts said that Ojulari's biggest task, as a veteran of the industry with 24 years experience, is to restructure NNPC in order to make it more efficient.

This could include cutting the workforce by over 5,700 people and selling some of NNPC’s assets, including petrol stations and struggling refineries, to focus on oil production.

Analysts said that any major changes could be met with resistance from politicians who have influence over the appointments made at NNPC, and also benefit from contracts signed by the company.

Jeremiah Enoch is an associate with the consultancy firm J.S. Held said that Ojulari will also need to navigate "the persistent problem of ethnic politics in the organization," referring to the way ethnic identity can make careers or break them in Nigeria.

TRANSPARENCY

NNPC is accused of being opaque for a long time. After four decades, it only began publishing financial results in the year 2021.

After months of denial, the company finally acknowledged in September that it was under financial stress and owed gasoline suppliers $6 billion.

NNPC also has not revealed how much of future crude revenue is earmarked to repay loans, although local media reports that the figure could reach billions of dollars.

Clementine Wallop of political risk consultancy Horizon Engage said that Ojulari is facing a difficult challenge in order to maintain recent production gains, which many believe will support Nigeria's economic recovery.

She said that "he will need to use all of his skills in order to face some serious challenges for NNPC. The company has been going through a rough financial time over the past year."

A senior official at the company said that restructuring and transparency will also prepare NNPC to launch its planned IPO, which is expected in 12-15 months. This IPO could provide a valuable injection of new capital. $1 = 1,532,3880 naira (Reporting from MacDonald Dzirutwe, Ben Ezeamalu, and Ope Adetayo, in Abuja; editing by Joe Bavier).

(source: Reuters)