Nigeria: After 44 Years of Birthing Old NNPC, Buhari Unveils New NNPC Limited

Forty-four years after inaugurating the Nigerian National Petroleum Corporation (NNPC) in 1977 as a colonel in the Nigerian Army and Minister of Petroleum Resources, President Muhammadu Buhari, yesterday, made history again, when he unveiled the Nigerian National Petroleum Company Limited (NNPCL), an exercise, which saw the NNPC officially transit to a limited liability entity in line with the provisions of the Petroleum Industry Act (PIA).

With the change in structure, the company would be regulated in line with the provisions of the Companies and Allied Matters Act (CAMA) from today,

At the event, which took place in Abuja, President Muhammadu Buhari, who performed the unveiling at a colourful ceremony, disclosed that with the historic development, the NNPC going forward would no longer qualify for government funding since its independence is now guaranteed.

The president noted that henceforth the new NNPC would compete favourably with its peers globally and unhinged from the traditional government-owned organisations’ regulatory inhibitions.

He affirmed that the company was more than ever, now mandated by law to ensure certainty in Nigeria’s national energy security as well as operate in an environment of transparency and accountability.

“NNPC Limited will operate as a commercial, independent and viable National Oil Company (NOC) at par with its peers around the world, to sustainably deliver value to its over 200 million shareholders and the global energy community, while adhering to its fundamental corporate values of integrity, excellence and sustainability.

“NNPC Limited is mandated by law to ensure Nigeria’s national energy security is guaranteed to support sustainable growth across other sectors of the economy as it delivers energy to the world,” he stated.

Aside not relying on government funding , the president reiterated that the new company shall be free from institutional regulations such as the Treasury Single Account (TSA), Public Procurement and Fiscal Responsibility Acts.

According to him, the provisions of PIA 2021, have now given the Nigerian petroleum industry a new impetus, with improved fiscal framework, transparent governance, enhanced regulation and the creation of a commercially-driven NOC.

“It will, of course, conduct itself under the best international business practices in transparency, governance and commercial viability,” he added.

Buhari recalled that he had on July 1,2022, authorised the transfer of assets from the NNPC to its successor company, the NNPC Limited and steered the implementation leading to the unveiling of Africa’s largest NOC.

He added that the new company would focus on becoming a dynamic global energy company of choice to deliver energy for today, for tomorrow and for the days ahead.

Describing the event as historic, Buhari noted that the country places high premium in creating the right atmosphere that supports investment and growth to boost the economy and continues to play on important role in sustaining global energy requirements.

“We are transforming our petroleum industry, to strengthen its capacity and market relevance for the present and future global energy priorities,” he assured.

In his remarks, an elated Minister of State for Petroleum Resources, Chief Timipre Sylva, who later confessed while appearing on Arise television that the historical unveiling of the new NNPC gave him goose bumps, said the delay in signing the PIA into law had cost the nation a whopping $50 billion in investments.

According to him, with the new law, the international and local oil companies are now assured of adequate protection for their investments, with the nation’s petroleum industry no longer rudderless.

“While the country was waiting for the PIA, Nigeria’s oil and gas industry lost about $50 billion worth of investments. In fact, between 2015 and 2019, KPMG states that only 4 per cent of the $70 billion investment inflows into Africa’s oil and gas industry came to Nigeria even though the country is the continent’s biggest producer and the largest reserves.

“We are setting all these woes behind us, and a clear path for the survival and growth of our petroleum industry is now before us,” he said.

Sylva described the unveiling of NNPC Limited as a new dawn in the quest for the growth and development of the Nigerian oil and gas industry, opening new vistas for partnerships.

The NNPC Limited, he said, would operate as a profitable commercial entity and declare dividends to its shareholders as well as demonstrate higher level of performance and accountability.

In an interview after the event, the Group Chief Executive Officer of the NNPCL, Mallam Mele Kyari, who was responding to a question on what the fate of the monthly Federation Account remittances would be stressed that it has stopped going forward.

“We are now a private company. Would MTN go to FAAC? We will pay our taxes, we will pay our royalties and we will deliver dividends to our shareholders,” he maintained.

With the new status, Kyari said the NNPC Limited would now be a smarter, more responsive and much more accountable company that must act within the premises of all the regulations that are in the country for private companies.

“And more than anything, it must also meet the standards of best practices in in the industry, in terms of governance in terms of making sure that all regulations are complied with and beyond this, our shareholders are expecting us to deliver value to them,” he stressed.

Promising to deliver value to its shareholders, Kyari stated that with its huge asset base, the company won’t be needing any sovereign guarantee because lenders only ask for sovereign guarantee if they are not sure of the company’s asset base.

“Today the assets are in our books, they are in our records and they have been transferred to us. Therefore, that’s what the banks are looking for,” he assured.

Also speaking on the Arise News yesterday after the official unveiling and ceremony, the Chief Financial Officer of NNPC Limited, Umar Ajiya, said with NNPC’s net assets in the region of over $60bn, the new company, has positioned to grow its retail outlets from 547 to 1500 in six months.

Ajiya, who also hinted at the subsidy regime, when asked if anything would change, however, said nothing could be done at the moment until the 18 months window provided by the PIA lapses.

NNPC Must Adopt Class-A Corporate Governance Policy to Attract International Financiers, Attain Profitability, Says Analyst

Meanwhile, policy analyst and Managing Director of KSBC Knowledge Resources Limited, Mr. Chika Mbonu has stressed the need for the NNPC Limited to adopt a Class-A corporate governance policy in order to win the trust and support of international financial institutions.

Speaking to THISDAY in a phone chat, Mbonu, said if the new NNPC Limited wants to attain the heights of Saudi Arabia’s Aramco or Brazil’s Petrobras and also be able to raise funds from the international markets, it must have strong corporate governance policy and structure.

“NNPC is on a journey. If NNPC wants to be like Petrobras or Aramco, to be able to raise money from international financiers to finance its own projects, there are minimum expectation of disclosures and corporate governance structures, which it has no choice but to comply.

“So, if it wants to achieve its objectives and become Aramco or Petrobras and be able to raise money from the international market, it must be transparent.

“Corporate governance must be Class-A. Recruitment policy must be the best people. The opaque policy where everything is hidden has to go. Contracts must be on the transparent commercial terms,” he said.

Going forward, Mbonu stated that NNPC would be run like the Nigeria Liquefied Natural Gas (NLNG) Limited, where the best people and most competent would be hired and where nobody would interfere with its decisions and operations.

According to him, as a company driven for profit, “NNPC must hire the best risk manager, the best treasurer, the best financial controller, the best operations manager because it’s driven for profit.

“So, the era where you write names on envelope or card and say you must hire, is gone. It should be over in NNPC, because NNPC should be looking for the best people to turn it to profitability.”

Mbonu pointed out that, to avoid interference with its activities, it was expected that a non-political competent board be set up for the company.

In addition to having a new management team that has been reassessed and interviewed by top consulting firms, Mbonu insisted that the company’s corporate policy, recruitment policy, promotion policy among others must be certified Class-A.

He maintained that before the new NNPC can do any prospecting or project, such must be based on economics and other commercial considerations.

He, however, expressed some doubts about NNPC being able to operate and run a transparent business like its international peers without government’s interference.

Mbonu further said, “It is still owned by government even though it’s on behalf of the Nigerian people. The person who appoints the board is still President Buhari and the government in power. So will the the government allow it to run a transparent business that will compete with the international market?

“Will the freedom NNPC has now be sufficient to allow it to run superior corporate governance? Will they (government) allow it to be Class-A company?

“That’s what the issues is. Will it be like Nigerian Airways Limited? Or Nigerian Shipping Limited? They were all limited companies.”

He, however, backed the position of NNPC to retain its sole importer of petrol status as well as the subsidy, saying there was no need for worry as long as the company is doing it for the government at a cost.


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