NNPC Limited ends operations as govt corporation

The Nigerian National Petroleum Company Limited (NNPCL) on Friday took over the assets of the nation’s oil company (NNPC) after 46 years of its operations as a corporation.

The final ceremony that officially marks the birth of NNPCL took place at the corporation’s towers in Abuja on Friday.

The company took over after attaining legal requirements within the stipulated 18 months in line with section 54 (3) of the Petroleum Industry Act (PIA) 2021 and the corporation transitioned into a company whose operations will be regulated by the Companies and Allied Matters Act (CAMA).

President Muhammadu Buhari had in July 2022 unveiled the new Nigerian National Petroleum Company Limited, a landmark development that officially changed the oil firm from a wholly state-run entity to a commercial oil company, limited by shares.

The legal transition, based on the new Petroleum Industry Act, took effect July 1. The NNPC completed its incorporation in September 2021 weeks after the PIA was signed into law by President Buhari.

The NNPC Limited was then floated with an initial capital of N200 billion making history as the company with the highest share capital in the country.

The new entity is expected to become a commercially oriented and profit-driven national petroleum company independent of the government, although government bodies remain its shareholders. It will be audited annually.

Speaking on Friday, the Minister of State for Petroleum Resources, Timipre Sylva, noted that with the reforms introduced by the federal government, NNPCL is expected to be a competitive and commercially oriented company.

“To get to this desired end, deliberate effort must be made to implement the law in a manner that best achieves the stated objectives in line with the yearnings and aspirations of Nigerians whose lives will be impacted by the consequences of our decisions and actions.

“As part of the commitment to achieve a viable National Energy Company, the PIA put a long stop date of 18 months from the effective date of the Act as the timeline within which full transfer of assets, interest and liabilities must be completed,” Mr Sylva said.

He added that the PIA empowered NNPC Limited to operate like every private company in Nigeria with exemption from the Fiscal Responsibility Act, Public Procurement Act and TSA in order to ensure there are no excuses for failure.

“In return for this empowerment, the PIA expects a strong commercially oriented National Energy company with an obligation to operate profitably and deliver dividends to shareholders.

“NNPC Limited is positioned to lead Africa’s gradual transition to new energy, by deepening natural gas production to create low-carbon alternatives and change the story of energy poverty at home and around the world,” he said.

Speaking earlier the NNPCL Group Chief Executive Officer, Mele Kyari said that the new company with over $60 billion in assets would look to boost its profit from the current $2 billion declared by the oil corporation for 2021 operation.

New Dawn

Mr Kyari said that before the transition, the corporation had challenges with its operations.

“Now everyone can see that we are a large company. There’s no company with $60 billion in assets. It doesn’t exist in this country.

“So, we are the largest company in this country. We are also the largest company in Africa. Let me be frontal about it, our past structures were designed around individuals and geopolitical zones. It’s no longer so. Today we have a slim management structure which recognises only our ability to deliver,” he said.

He noted that while the law provides that the NNPC could decide to leave a certain class of assets, the NNPC Limited has resolved to take over the entire assets and liabilities of the defunct corporation.

“But you will ask me, so what do I want to do with the assets? The assets are the overall joint venture assets and other businesses that the company has got. The shareholders have transferred all the assets to us, so no asset is left outside.

“The law provides that we can potentially leave some of them behind. By today’s counting, every asset of the corporation, including its liability has been transferred to the NNPC Limited and I repeat that the liabilities are far less than the assets that we have. So, it’s a very comfortable situation,” he said.

With the new law, he said there’s now a clear line of sight on the company’s financing operations, including the retention of part of the dividends and 30 per cent oil profits from Production Sharing Contracts (PSCs).

He noted that NNPCL has a powerful brand and it’s able to attract funding for its businesses, assuring that the company would deliver energy security to the Nigerian people while making money for the country.

“By fiscal 2020, we returned this company from 43 years of loss to a profit position of N287 billion and by 2021 we came to a profit level of N674 billion. We believe we will do better in 2022 despite all the challenges.

“But I must also add that this is not an N674 billion company. By the way, this is less than $2 billion. We’re not a $2 billion profit company. You can’t do $2 billion with $60 billion in assets. So we can still do better.

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“We have seen our peers who have maybe 50 per cent of these assets, and they have declared close to $9 billion. It’s possible in this business and we will catch up,” Mr Kyari said.

“So how do we catch up? First, we will reduce our costs. We are driving down costs substantially because when your cost is high, you run into trouble and you cannot make profits.

“We are growing our production. With all these challenges we will grow our production because many of the things today you can call force majeure but even force majeure is created by something and we are responding to that something that is creating the force majeure situation and we are dealing with it.

“And that’s why in July 2022, we went down to as close as one million barrels per day of crude oil and condensate combined. That was pathetic, unfortunately. But I dare say that maybe it was avoidable and we responded to it. Today, as of yesterday, we have crossed 1.6 mbpd.

“This is not rocket science. And we have a line of sight to recover to the budget level of 1.8mbpd,” he added.

Agreement

Meanwhile, the NNPCL on Friday signed an agreement with the Gambia National Petroleum Company (GNPC) for collaboration in the oil and gas sector.

The memorandum of understanding (MoU), according to the company, covers collaboration between both companies on frontier exploration, crude oil market expansion opportunities and transfer of technology towards the quest for more energy security.

The signing of the agreement took place at the NNPC headquarters in Abuja.

“Areas of interest include new frontier exploration; crude oil market expansion opportunities and transfer of technology towards the quest for more energy security for both countries and the West African sub-region,” the oil firm said.