Dr. Maikanti Kachalla Baru was appointed the 17th group managing director of the Nigerian National Petroleum Corporation (NNPC) in July 2016 – a position where the complexity of the oil and gas industry, particularly its political sensitivities usually require off-the shelf approaches to manage. The wide and direct impacts of the industry on the general public demand that somebody quite versatile and pragmatic in dealing with potentially crisis situations should occupy the GMD’s chair at NNPC.
System disruptions and failures in the functioning of the oil and gas industry easily irritate the public and quickly put both the NNPC’s CEO and the President on edge. Disappointments and anger easily spread like wide fire across the nation, destroying in a few moments past achievements that might have taken some years to accomplish. The performance of NNPC’s GMD, whether good or bad robs on the President directly.
NNPC’s GMD is therefore necessarily a right hand man of the President, dependable in terms of ability to deal with the many imponderables in the oil and gas industry expeditiously and thus prevent their political sensitivities from hurting government’s interests. Such an economic and political alliance seems to have been closely knitted between Baru and President Buhari, which is working well so far to ensure industrial peace the President needs for a re-election bid.
For over one year after his appointment, Baru made great strides in the downstream sector that established a period of stability in the supply of petroleum products. This was made possible by his efforts that yielded moderate gains in locally refined products, the revised direct sale of crude oil and direct purchase programme as well as re-commissioning of NNPC’s depots at Aba, Mosimi, Atlas-Cove and Kano.
The outbreak of fuel scarcity towards the end of last year posed a challenge to Baru that really tested and proved his ability to deal with an industry crisis that was both unusual and fundamental. The crisis easily over shadowed all the efforts and accomplishments that had strengthened key operational arrangements of NNPC.
Baru tackled the problem with a dogged determination to accomplish what looked like an impossibility – NNPC becoming the sole importer of petroleum motor spirit almost overnight. It did not appear to be a feasible option initially but it has worked.
For Baru and the NNPC, it is a tough mission accomplished to have solely stabilised fuel supply across the country, making good his promise to the nation. It is considered a model example of applying an off-the-shelf technique to craft a solution to a potentially intractable national problem.
Over the two years Baru has been in office at NNPC, he has attained a number of milestones in the upstream, midstream and downstream operations, leading to capacity improvements, operational stability and performance across the corporation’s value chain activities.
The upstream sub-sector has witnessed a production level exceeding an average of two million barrels per day in 2018. Production capacity building has progressed with the securing of a novel financing structure with Schlumberger for the NNPC/First E&P JV which is expected to deliver a peak production of 50kbopd and 120mmscfd by 2019. A major headway has also been made in the payment of cash call arrears with about $1 billion dollars already settled under a sustaining commitment to clear the $5bn indebtedness.
In the midstream, NNPC’s operations under Baru’s leadership have witnessed improved gas supplies to industries and to thermal plants in support of government’s gas-to-power initiative. The nation attained a record high of 5,222 megawatts electricity generation in December 2017 with gas fired plants accounting for 76 per cent of the output. A 614 kilometer Ajaokuta-Kaduna-Kano pipeline project planned to deliver gas to ongoing Abuja, Kaduna and Kano power plants has commenced, which is expected to add 3600 megawatts to the national grid.
The stability attained in the downstream operations is sustained by steps taken to keep on stream key infrastructures critical to effective distribution of petroleum products across the country. This is in spite of challenges of vandalism, sabotage and aging infrastructures. Despite the low operating states of refineries, they have continued to make a strategic contribution to petroleum products availability across the country.
Baru has a sound academic background that supports his deep understanding of the complexity of Nigeria’s oil and gas industry. He is a first class Honours mechanical engineer and also holds Ph.D in mechanical engineering. He is an alumnus of Harvard Business School, College of Petroleum and Energy Studies, Oxford, Columbia University Business School, New York and the Stanford University’s Graduate School of Business.
Baru has embarked upon a tough task of turning the corporate image of NNPC round about from a highly corrupt institution to one of the most transparent organizations in Nigeria. Last year, he began to publish the corporation’s financial reports monthly – the first attempt ever at opening up the secrecy in which its operations has been long shrouded. His leadership has injected a dose of transparency into the bidding process for crude oil term contracts as well as marine contracts.
The NNPC’s boss has worked for a number of governments and by his assessment, the last two years have been the golden years for the corporation so far. “We have not had the opportunity to put our cards on the table as we did in the last two years. I mean in terms of transparency of our transactions, validation of our activities, the unfettered, unobstructed participation of the secretary to the government, who has never asked us to do anything different”, he assured a visiting team from the Extractive Industries Transparency Initiative last May.
Looking forward, Baru is giving priority to reshaping NNPC into a globally competitive organization in order to ensure value addition to the nation’s hydrocarbon resources. His objective is to bring about a transition of the corporation from an integrated oil and gas company to an energy solutions provider. He plans to reconfigure the business model to stand it on a tripod of profitability, transparency and accountability.