Adopting NNPC NAPIMS JV Model To Boost Tech Innovation In Nigeria

Nigeria does showcase sparks of brilliance though, most times, it rarely remembers to replicate the best things. In one entity, National Petroleum Investment Management Services (NAPIMS), Nigeria demonstrated that it is indeed a nation of great people. Nigeria designed a great structure that made it possible for it to unlock value despite apparent lack of technical and financial capacities.

The National Petroleum Investment Management Services (NAPIMS) in the Exploration & Production (E&P) Directorate is the upstream arm of NNPC that oversees the Federation investment in the Joint Venture Companies (JVCs,) Production Sharing Companies (PSCs) and Services Contract Companies (SCs).

NAPIMS is, therefore, set up to earn margin arising from investments in the JVCs, PSCs, SCs, with the multinationals and also protect the nations strategic interests in the JCVs [sic].In addition, NAPIMS engages in frontier exploration services in basins where the multinationals hesitate to venture, like the Chad Basin.

Simply, NAPIMS is the investment arm of the Nigerian people since oil & gas dominates our foreign exchange. As elegantly noted in its mission statement – “to be a world-class oil investment management outfit” – NAPIMS ensures that Nigeria gets value in strategic partnerships with Shell, ConocoPhillips, Eni, Mobil and other major (upstream) oil companies. Through NAPIMS, Nigeria runs many joint ventures with these energy companies, working to maximize Nigerian returns.

Why I like NAPIMS Model

The NAPIMS model is very unique and there is no other structure like that in Nigeria. In short, Nigeria got NAPIMS right, but failed to replicate a really great working system in other areas. I like the structure of NAPIMS because of the following key reasons:

• It makes sure Nigeria is de-risked in oil & gas business. Through the JV, NAPIMS makes money only after the energy companies  have taken the risks and succeeded. In other words, if they go there and lose money, NAPIMS will not lose. But when they make money, they have to share with the Nigerian people.
• Through NAPIMS, Nigeria does not need to have technical capabilities before it can unlock values in its upstream energy business.The global energy giants are responsible for developing and utilizing their technical know-how to unlock the crude oil value in the nation.
• With the NAPIMS Model, Nigeria does not need to have the cash before oil mining can happen. The global partners will be responsible for the financial investments.

Sure, I do agree that if Nigeria should develop the necessary technical and financial capacities, the nation would be creating more value from its oil and gas reserves. But expecting Nigeria to do that will miss the point. We did not run electricity well, we failed in telecommunications, and we continue to struggle in clean water supply. So there is nothing that can support the thesis that if there were no Shell, Mobil etc that Nigeria would be an oil producing country. That we have allowed the energy entities to make money seems to be the only pragmatic model, because in other simpler things, we could not deliver. So, NAPIMS formation was a clever way to overcome Nigeria’s stasis in execution.

FIIRO DG updates Nigeria’s former President Obasanjo on the parastatal’s works (source: Fiiro)

Yes, with NAPIMS, we avoided the problems of inefficient Water Boards, NEPA (or its incarnates), and NITEL and delivered a top-class upstream energy business that has funded Nigerian budget for decades. That is the beauty of NAPIMS; very ingenious.

NAPIMS Model for Government Research Institutes

Nigeria funds many research institutes including Electronic Development Institute Awka (ELDI), Federal Institute of Industrial Research, Oshodi (FIIRO) and Raw Materials Research and Development Council (RMRDC).. While we may not have invented computers, some of these government agencies are actually inventing. However, they do not innovate because they have nothing (of value) commercialized. (Innovation = Invention + Commercialization). Without the element of sales/commercialization, they are merely filing up government shelves with ideas. That is the nation’s weak link: inventing without any plan to innovate.

I have a suggestion, Nigerian government should work to liberate these agencies by deploying the same model it has used effectively in NAPIMS. This is what I suggest:

• Establish a new unit, not a new agency or commission, within Nigeria Export Processing Zones Authority(NEPZA) to coordinate how inventions from these government agencies can be commercialized through joint ventures with private companies. The unit will represent the Nigerian people as it negotiates with the investors. Call this unit National Research Outcome Investment Management Services (NROIMS).
• NROIMS will coordinate with all government labs and research institutes to collect new research outcomes which are ready for commercialization. It will then package them, closing deals with private sector where possible. It will hold small equity, only activated on profit-sharing since it will not invest any money in new ventures. We suggest NROIMS will take 10% profit for ten years. Government has to make the JV terms very palatable for the partners while requiring that they must commercialize under defined terms or they will lose their rights to the inventions.

NAPIMS model will unlock value in the country by providing a vehicle for private companies to explore research outcomes which can be commercialized. NROIMS will work to market and promote the inventors locally and internationally to ensure Nigeria does not end its research policy at discovery, without any element of commercialization.

Case Study: Unlocking FIIRO

FIIRO is a federal government parastatal with the mission “to conduct and promote market-driven research and development (R&D) for the industrialization and socio-economic development of the country”. Over the years, it has created many technologies with most of them not commercialized. Though it has a technology transfer office, a nationwide consolidated system will help bring efficiency in cases where complementary technologies can be integrated from other national institutes.For example, ELDI Awka could have developed an embedded electronics technology which could be used with FIIRO Fruit Washer, to improve its efficiency.

FIIRO Fruit Washer

Rounding Up

Nigeria should not just focus on discovery, neglecting commercialization as it works to redesign its economy through diversification. Our science and technology policy rarely gets up to the level of taking ideas to markets. Our nation has to correct that issue for us to make progress. Yes, we are good in sending satellites in the space before we even plan what to do with the downlink signals. We budget money for research with no apparent strategy on what to do with the outcomes. If we can borrow a model that actually worked, the NAPIMS model, we can redesign our science and technology research for market impact. Now is the time for Nigeria to think seriously about commercializing the little efforts we are making. The Nigerian people are looking for the products in our markets.

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