NNPC Limited, Nigeria’s Catalyst for Growth?
By Kate Da Costa
Although Nigeria is the continent’s biggest oil producer and has the largest reserves, the industry suffers from persistent investors’ apathy, due to unattractive fiscal regime, lack of transparency and potholed policy. According to KPMG, between 2015 and 2019, the country managed to attract only 4 percent of the $70 billion investment inflows into Africa. International oil majors are leaving the country in droves. It is no overstatement that the Nigerian oil industry is beleaguered.
Hence the conversion of the Nigerian National Petroleum Corporation (NNPC) to a limited liability company is being welcomed with euphoria by policy makers and stakeholders, in anticipation that the industry will flourish now that it is no longer under state control.
In tandem with the Petroleum Industry Act 2021, the National Oil Company will operate independently without any recourse to government’s purse and it will be excluded from institutional control, such as the Single Treasury Account, Public Procurement and Fiscal Responsibility Act. In effect it has been weaned off officialdom that has stymied most government owned enterprises in the country. The National oil company to be known as NNPC Limited will be run as a standalone commercial entity in line with the country’s Companies and Allied Matters Act (CAMA). It will be publicly listed and will have all the paraphernalia pertaining to a public enterprise.
NNPC Limited Group Chief Executive Officer, Mele Kyari has indicated that the Initial Public Offer (IPO) will happen mid-2023. “We are convinced that by the middle of next year, the company will be IPO ready, which means that you have the system, the process and a company that is accountable to its stakeholders and shareholders,” Kyari told journalists after the unveiling ceremony in Abuja. With an expected initial share capital of N200 billion and net assets of more than $59 billion, the national oil company is poised for a resurgence. There are high hopes that it will be profitable like other NOCs around the world; engender investors’ confidence by strict adherence to best international business practice in transparency, governance and commercial viability.
It is also anticipated that strong linkages would be established across the exploration and production value chain. More importantly, Nigerians expect to see an improved downstream sector that will deliver local refining capacity and ultimately put an end to the importation of petroleum products into the country. Kyari has already set a new mileage for the company, saying that in line with the strategic initiative to achieve energy security, he will implement a comprehensive expansion drive to grow the company’s fuel retailing centres from 547 to 1500 within the next six months.
“NNPC Limited is positioned to lead Africa’s gradual transition to new energy by deepening natural gas production to create low carbon activities and positively change the story of energy poverty at home and around the world,” he further stated. Nigeria’s Minister of State for Petroleum Resources, Timipreye Sylvia believes the national oil company is well positioned to rake in investments into the nation’s petroleum industry, flowing its commercialization.
The industry is poised for growth as the commercialization of the NOC will open new vestiges for partnerships for the industry, he enthused. NEITI’s Executive Secretary, Dr. Orji Ogbonnaya Orji sees the rebirth of the national oil company as a catalyst for sustainable national development and energy security. “Nigeria needs a business oriented NNPC to deliver the country’s energy needs, energy transition, energy security, diversification of its economy and the building of a sustainable energy future for the country,” he added.
