For over 6 decades, the larger chuck of foreign exchange and national income for my country comes from crude oil. The natural mineral since it was discovered first in Oloibiri, Bayelsa state in 1956 has seen many governments come and go. In order to effectively manage the resources, the Nigerian National Petroleum Corporation (NNPC) was founded in 1977. The corporation naturally becomes and was of national ownership until some weeks ago.
The NNPC was basically tasked with doing the business of petroleum resources from drilling to sales. It had other subsidiaries which operate both on national and foreign soil on behalf of the government.
What Changed?
With the advent of the signing of the Petroleum Industry Act (PIA) into law, consequently, the NNPC which was a national corporation was now more or less converted into a private limited company. In as much as, the main functions of the institution were not changed but it has some other added to it including that of the executives.
There were some changes to the status quo. Now, the Federal Government will no longer be the sole source of funding for the NNPC. The company now has to source its capital by other means other than the government as a conventional company does. Also, prior to this time, individuals had no shares due to the fact that being a national entity was tantamount to it being the citizens' own. But now they can do so now without being a company or so, as long as you buy when this new PLC launches its sales of stocks.
How Does This Affect Governance?
As I said earlier, the NNPC remits the greater money in the FG accounts. The minor ones are the revenue from customs duties among others. Now, that getting capital is not solely from the government alone, there could be some lapses, I think because this is the first time they would be kind of going out to source for funding. This may in the long run affect the amount of money it is supposed to remit. This, in turn, could affect some states of the federation.
Besides, the price of crude oil has not been on the price for a long time now. And what's worse, there have always been re-occurring issues of scarcity of petroleum products. The prices are more than sky-rocketing over time. I know the price still may relatively be cheaper than it is in other countries but I say that it is not funny for a country that owns the once so-called black gold.
The kind of government that exists here is such that there is a central authority – the FG - vested with the most power above the states. In the area of revenue, each state sends a certain portion of its revenue to the FG's purse. Likewise, from the FG there are monthly allocations to the different states in a defined quota but unequally.
Now, this means some states who may have little to no productivity end up taking even more than they generate. The new update is definitely going to affect the monthly allocation and the states may be forced to look inwards in other to generate or develop more internal revenue. And I believe it is also going to expose the ones that have not been productive enough or are lazy about it. By the way, it is getting obvious already.
For The Common Man
In the previous weeks, locally, we have seen the issues of scarcity and subsequent high prices of petroleum products. Then, retailers took some laws into their hands and gave out different prices for products. It is of the good report now that prices have gone back to relatively normal but at a little higher price. In the same vein, it has not been confirmed whether the change in the structure of the NNPC caused the alleged sack of some employees which was denied of course.
In conclusion, there has been the occurence of two sides of the coin brought about by the structural and financial changes and hopefully in the long run it will be for the betterment of the national economy at large!
The image above is mine.