NNPC Implements Bold Cost-Cutting Strategy: Merges Subsidiaries to Boost Profitability

In a strategic move to streamline operations and enhance profitability, the Nigerian National Petroleum Company Limited (NNPCL) has taken significant steps to restructure its subsidiaries.

Amidst the evolving landscape of the global oil and gas industry and the recent passage of the Petroleum Industry Act (PIA), the company has merged several subsidiaries to achieve cost-cutting objectives.

Reliable sources within the industry report that not less than six subsidiaries have been affected by this major shakeup, and stakeholders have expressed their support for the decision, recognizing its importance in the current economic climate.

Two of the company’s global oil shipping firms, NIDAS Shipping Services and Nikorma Shipping Services, which were established in 2008 for LNG shipping and marine logistics, have now been amalgamated to form NNPC Shipping Company.

In another development, Data Services Limited, NNPC Oil Field Services, and Frontier Exploration Services have also been consolidated to create NNPC Services Limited (EnSERV).

To optimize operations and reduce overhead costs, the former refining and petrochemical directorate has been merged with the downstream division, resulting in an improved, cost-effective structure.

The ongoing rehabilitation of the three refineries will lead to their eventual transfer to a reputable third party with relevant experience in their operation and maintenance.

Energy expert, Henry Adigun, has hailed the move, emphasizing that it will enable the organization to cut costs and operate more efficiently. “It is a good signal,” Adigun stated, adding, “They are moving towards profitability and efficiency, and this is exactly what we need.”

Despite similar attempts in the past, Adigun believes that this current initiative will yield positive results, setting the stage for improved performance.

Renowned energy scholar at the University of Cape Coast, Ghana, Prof. Wunmi Iledare, has also praised the company’s decision. He stated, “Anything an organization does to enhance its economy of scale is laudable. Collapsing units is one of the ways an organization can reduce costs without compromising effectiveness.”

With the restructured subsidiaries and renewed focus on efficiency and profitability, NNPC is poised to navigate the challenges of the dynamic oil and gas industry with a more robust and resilient approach.