POLITICS - One cautious but significant appointment by the President

Monday’s story (in The Punch newspaper) that President Muhammadu Buhari intends to run the Ministry of Petroleum Affairs himself for 18 months tells us everything that we already knew about his government. Although he has stated that a cabinet will appointed in September, it is clear that he prefers to fly solo. 

Since his inauguration Buhari’s priorities – to judge from reports – have been dealing the terrorist organisation Boko Haram (which we will write about later this week) and sorting out the Nigerian National Petroleum Corporation (NNPC), an organisation he founded and ran 1976-8.

The NNPC is effectively the main revenue-generating arm of government, since revenues from oil account for c.70% of government income. Government is short of money (see CSL Nigeria Daily, 13 July and 29 July). The NNPC stands accused by a former Governor of the Central Bank of Nigeria, Lamido Sanusi (now Emir Muhammadu Sanusi II of Kano) of failing to account for US$18.5bn in remittances due to government during a 19 month period 2012-13;  and he has argued that an investigation by PricewaterhouseCoopers substantiates his allegations (see Financial Times, 14 May 2015).

When oil prices were above US$100.0/bbl  (Brent averaged US$110.4/bbl 2012-13) would have been a better time to have sorted out the NNPC than now (Brent has average US$57.0/bbl year-to-date).  Yet it appears that money – it is difficult to say with precision whether this is more money than usual – is flowing from the NNPC (recently from its gas subsidiary, in dividends) into government coffers. It is possible that close supervision of the NNPC is resulting in improved government revenue generation, and an increment in foreign currency reserves.

In this context, the appointment of a new Group Managing Director (GMD) of the NNPC, Dr Emmanuel Kachikwu, might appear to be of secondary importance, because one would expect any new government to replace the GMD of the NNPC.  However, Kachikwu has an interesting private-sector background, as Executive Vice-Chairman and General Counsel for ExxonMobil in Nigeria, and, rather than having had an entrepreneurial career, has headed a number of professional organisations. He hails from the South East of the country, and therefore solves part of the problem of regional representation since the President comes from the North and his Vice-President, Yemi Osinbajo, comes from the South West.  The appointment of the GMD of the NNPC is almost as significant as that of a minister.