Conversation with a friend on NNPC commercialisation, by Bashir Mahmoud Baffa
Ahmad: they said the Nigerian National Petroleum Company (NNPC) was commercialised not privatized as being speculated in some quarters. What does that mean?
I: It means that the government did not divest its interest or transfer its stake and control of the company, ie the company still remains the government’s own.
Ahmad: What is the difference between what it was and what is now since it still remains the government’s property?
I: The difference lies in the mode of operation or rather the motive of the business. Before it was more of a social service company in which the main driving force or motive wasn’t profit making but the citizen’s welfare – their ability to get fuel at subsidised rates and without much hassle. Now, it will be operated just like other private companies whose aim is to maximise profit and minimize cost and waste.
Ahmad: okay is it a good thing that it is commercialised then?
I: Well, it depends on from which angle you see it and with what lens.
If you look at it from the masses’ perspective and their standard of living, you may argue that they will be worse off because the subsidies and other social services they used to get from the company before, will no longer be available. The price of fuel will be such that it would have to yield the company a reasonable amount of profit after all deductions (amid other factors) which may be very high like what we have started seeing already.
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Suppose however you look at it from the government’s side. In that case, you may argue that it is a good thing because the government will now be relieved of the burden of spending billions to subsidise petroleum products and will also get revenue from taxes and profits, which it can use that for other developmental projects.
From the company’s perspective, it may also have both positive and negative impacts. From the perspective of the management, commercialisation is good for it will make the company to be more efficient (producing more with less cost and possibly within lesser time) which is necessary for growth, the employees, on the other hand, may be affected negatively through layoffs to reduce wastages and cost.
Ahmad: So based on what you said, all in all is commercialisation good or bad.
I: I can’t say that, what I have told you are only some of the good sides and bad sides of it, but the question remains “what will the government do with the monies from subsidy removal and the profits accrued therefrom? If it uses the money to provide infrastructure and other necessary and basic amenities like electricity, good roads etc. Then it is a welcome development and possibly the good sides of it may outweigh the bad sides of it. But if the monies end up in the pockets of selected few or some foreign personal accounts, then it is not a welcome development.
Bashir Mahmood Baffa is a lecturer of Business Administration at Federal University Dutse, Jigawa State.
Email:bmahmood03@gmail.com
Phone: 08038796815
