The problematic management arrangements within the KPC can be seen if one considers the case of the Minister of Oil. Since the KPC is owned by the state, the state appoints the individual who will manage the KPC. This individual takes the position of the Minister of Oil. The Minister of Oil possesses both executive and political powers. Besides being the Chairman of the Board, the Minister of Oil also handles the appointment of staff within the various subsidiaries of the corporation.
Ideally, the Minister of Oil’s function is to serve as the linkage between the HPC and the KPC and its subsidiaries. Within this context, the HPC stands as the body responsible for the formation of the policies and strategies to be implemented by the oil industry in the form of the KPC however due to the combination of the political and executive powers of the Minister of Oil, it was possible for the Minister to bypass the HPC as well as the members of the Board in the formation of decisions for the KPC.
An example of this can be seen during the instance when the Minister of Oil prevented the sale of the Rotterdam refinery despite the members of the Board’s agreement regarding the matter. The problematic management arrangements within the KPC can thereby be seen in the conflict that arises if one considers the power hierarchies within the corporation in relation to the state [e. g. the Minister of Oil’s executive and political power as it stands in conflict with the Board Members of KPC].
In addition to this, besides the problem in the hierarchical structure within the KPC along within the management arrangements within the corporation in relation to other state agencies such as the HPC, another problem with the KPC within the same vein can be traced to the instability and lack of continuity of leadership within the company. Since its initial formation, the KPC has had nine Ministers of Oil wherein each Minister was merely able to handle the company within two years.
Most of these Ministers were appointed as a result of a political favor as opposed to their skill, knowledgeability, and experience with the oil industry. This shows the routine and bureaucracy within the KPC. The lack of specification of the KPC’s relation and function in relation to the HPC is evident, as was stated above, in the conflict between the executive role of the Minister of Oil and the members of the HPC’s role in relation to the formation of policies and strategies to be implemented by the KPC.
Given the executive role of the Minister of Oil, the strategies and policies provided by the HPC may not be followed as a result of the Minister’s executive power. The combination of this factor along with the lack of experienced and knowledgeable members in the KPC’s consulting committee (and the Minister of Oil himself) for the assessment of the internal arrangements and decisions in relation to the oil industry within the KPC as well as the instability and lack of continuity in the leadership of KPC have led to the internal decline of the company.
What follows are possible solutions for the aforementioned problems within the KPC. The internal problems experienced by the KPC can be solved by adhering to the following: (1) amendment of the responsibilities of the Minister of Oil, (2) complete independence the KPC, and (3) establishment of a consulting committee knowledgeable in the management of the KPC. It is important to note that these three possible solutions all aim for the redefinition and reformation of the internal management structure within the KPC along the redefinition of the roles of those in the hierarchy of power within the corporation.
Amending the responsibilities of the Minister of Oil will enable the specification of power to the Minister which will enable the balance of powers within the KPC and the state or the HPC. This can be done by delimiting the power of the Minister of Oil to the powers of the Chairman of the Board. Another possible solution to the problem involves enabling the complete independence of the KPC from the state or from the HPC. Within this scenario, the Minister of Oil will be elected from the Board Members of the KPC wherein membership within the Board is to be determined by the companies and subsidiaries of the KPC.
This process will ideally eradicate the instability and lack of continuity in management within the KPC since the members of the Board will be the ones to circulate the position of the Minister of Oil among themselves. Furthermore, it will ensure the knowledgeability and experience of the Minister of Oil with the affairs and issues within the oil industry. Such an internal arrangement also necessitates the establishment of an independent consulting team for the policies and strategies to be implemented by the KPC.