Muhammadu Buhari, Nigeria’s president, has removed the deputy oil minister from his joint role as the national oil company’s managing director and appointed a new board.
The decision to remove Emmanuel Ibe Kachikwu from the top job at the Nigerian National Petroleum Corporation is viewed by industry insiders as positive and long overdue.
Mr Kachikwu had, for more than six months, been running the oil ministry, though the president is officially the minister. This was regarded by many executives and analysts in Africa’s top energy producer as a conflict of interest.
The arrangement had meant that Mr Kachikwu oversaw regulation of the industry and other policy issues while also running a key commercial player in that industry: the state-run company that sells almost half of the country’s oil output.
“This is the right thing to do,” a former executive from an international oil company operating in Nigeria said. “Never in the history of Nigeria has the same person done these two jobs,” he added, suggesting the arrangement was “not tidy”.
Mr Kachikwu is to remain on the board as chairman. The new group managing director is Maikanti Kacalla Baru, a technocrat with years of experience at the NNPC. He was most recently in charge of the company’s exploration and production division but was removed from that role by Mr Kachikwu this year and transferred to the oil ministry.
“In terms of key decision makers [at the NNPC] it is a major shift but I don’t expect any short-term, immediate impact on the direction of the oil sector,” said Rolake Akinkugbe, head of energy and natural resources at FBN Capital in Lagos.
Abba Kyari, the president’s chief of staff, was named as a board member.
Mr Buhari won elections last year pledging to tackle corruption, particularly in the oil sector, which generates 70 per cent of the country’s income. When he took office, he said he had inherited near-empty federal coffers, despite the fact that oil prices had been above $100 a barrel for several years before they plunged in mid-2014.
Low prices have pushed Nigeria into financial crisis. Recent militant attacks in the main oil-producing region have slashed production, another blow to federal revenues.
Cleaning up the oil industry through reform of the NNPC is critical to attracted badly needed new investment. Nigeria’s oil output is expected to over the next decade because uncertainty over government reforms are keeping investment on hold.
Frustration is growing among oil majors operating in the country, however, because discussions intended to resolve disputes between the NNPC and its joint venture partners, including Royal Dutch Shell and Eni, have stalled. Mr Kachikwu, a former ExxonMobil executive, had pledged to reach agreement with the majors on outstanding disputes by mid-May. That deadline has passed with no agreements announced.
