Divergent views have continued to trail the “new” Nigerian National Petroleum Company (NNPCL) Limited, following its unveiling by President Muhammadu Buhari on Tuesday. The transition from Nigerian National Petroleum Corporation to NNPC Limited is in accordance with the Petroleum Industry Act (PIA) 2021. In accordance with the Act, NNPC Limited will run a commercial and profit-focused organisation under the Company and Allied Matters Act (CAMA). What hope for the new firm?
What will change?
Stakeholders are concerned that the new NNPC may not just be a window dressing considering that the old NNPC underperformed over the years because of the structure of its operations and because it was an appendage of the Ministry of Petroleum Resources.
However, the Managing Director, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, is convinced that what will likely change now is that this new NNPC will not be an appendage of the ministry as it is likely to be insulated from political interference and interference from the bureaucracy.
“We are having a company now that we can properly ascertain its value like its assets value, the opportunities and every other thing. Once we are able to put the value on the table it will be easy to attract investments. Going forward, what we expect to see is a dilution of ownership so that we don’t have a company that is just 100 per cent owned by the government,” Yusuf said.
He explained that from the period of this PIA, all the effort the NNPC Managing Director, Mele Kyari has made about transforming the company, speaks a lot of what he believes and has a vision to transform this company and to ensure that it is decoupled from politics, politicians and bureaucracy. He however, noted that this cannot happen immediately, explaining that what is now on ground is “a work-in-progress” to the beginning of a transition to a company that will be more private sector driven.
Concerns
While some are convinced that the new arrangement will spin more investment for the firm, others maintained that it is not cherry news yet as the arrangement in the firm has not changed from when it was government run, meaning it remains a mere change of nomenclature.
For instance, Secretary General, Conference of Nigeria Political Parties (CNPP), Willy Ezugwu, in a statement he signed on behalf of the party, said that the unveiling of the new NNPC Limited amounts to “rebranding and reinforcing corruption.”
It said: “It is difficult to understand the reason for presenting the NNPC Limited as a commercially driven company. It is instructive to note that before now, the NNPC has a history of non-remittance of revenue to the Federation Account and there have been allegations that the management has been engaged in backdoor crude swap as part of the subsidy scam in the corporation over the years.”
The CNPP queried that the transmutation of the old NNPC to its new status means that the firm has been freed from the Treasury Single Account (TSA) policy among others and wondered what would happen to the unremitted funds in its kitty.
“Since the NNPC is no longer Nigerian National Petroleum Corporation but Nigerian National Petroleum Company Limited and the same Mallam Mele Kyari is now transforming from Group Managing Director (GMD) of the old corrupt NNPC to the Group Chief Executive Officer (GCEO) in a government controlled company, it amounts to rebranding corruption and reinforcing it,” the CNPP said.
It further argued that “If Mr. President wants the new NNPC to work, he must sack all the management of the old NNPC, order a thorough investigation into all the unresolved allegations against the Group Managing Director of the old NNPC and his management team, then appoint fresh hands and relaunch the NNPC Limited. Without this, all efforts at incorporating an NNPC Limited without first cleaning up the old NNPC amounts to rebranding and reinforcing corruption by Mr. President without realising the impact of the action on the anti-corruption posture of his administration in the eyes of the international community,” the CNPP stated.
But Yusuf disagreed. “It’s a transition; the new NNPC is in transition phase and you cannot from the beginning sack everybody, especially the key drivers of the firm and put new persons. Who are you going to appoint? Is it not the same government? But for you to get it to a place where you will dilute ownership you will get the value; get more investors; get it listed in the stock exchanges locally, domestically,” he said.
According to him, once the new NNPC is able to get to this stage, the balance of power will begin to change in the co-operation. But for now, it has to be well packaged to ascertain the value and those who will invest will have to sit as a going concern.
“This is what will attract the investors and the more you have investors the more you are able to dilute ownership, then you can now begin to alter the structure of management; the structure of the board will also have to change, but this is just the start of it its work in progress,” Yusuf, who is also an economist, said, adding that the effort should be commended because it is a major step towards a major transition of a very important organisation which promises a more profitable venture if we get it right.
He assured that the type of revenue that will be derived from the new NNPC- if it is gotten right, will almost equal to all the taxes the country is getting currently.
Can the new NNPC lead the change?
The Minister of State for Petroleum Resources, Timipre Sylva, said that with the signing of the PIA, which assures international and local oil companies of adequate protection for their investments, the nation’s petroleum industry is no longer rudderless, revealing that while the PIA was yet to be signed, the country had lost about $50 billion worth of investments. In fact, between 2015 and 2019, KPMG states that “only four percent 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,” Sylva noted.
Kyari is hopeful that the 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.
Yusuf agreed that the transmutation is a positive development for the country. This, he said, is because it will unlock the oil and gas sector to a lot of investment opportunities in the oil and gas sector especially now that the company will be independent and operate in line with the companies and allied matters Act, which will empower it to seek investment and investors both within and outside the country.
The former Lagos Chamber of Commerce and Industry Director-General is hopeful that the new NNPC will function like its counterpart in Saudi Arabia and Brazil. “Saudi Aramco today is the most valuable company in the world; it is a national oil company. So if Saudi Aramco can be the most valuable company with a value of $2.4 trillion, then why not in Nigeria because here is a company that has a lot of assets- very valuable asset,” Yusuf explained. Saudi Aramco is the privately run Saudi Arabian oil firm founded in 1933. Saudi Aramco, as of 2021, is one of the largest companies in the world by revenue which is put at $359.2 billion, employing about 66,800 people as at 2020. Yusuf agreed that the new development will also ensure better professionalism in the firm, while the country’s oil sector and general economy will be the better for it.
A Professor Emeritus in Petroleum Economics and Executive Director, Emmanuel Egbogah Foundation, Prof. Wumi Iledare, in a statement also agreed that the newly unveiled NNPC Limited needs new manpower development and deployment strategy that is completely different from the old practice to achieve stakeholders’ expectations. He also said the opportunities for the company was huge in terms of creating value for stakeholders with the amount of gas and oil resources at its disposal
Professional competence devoid of political expediency is required to maximise stakeholders value!
“The other challenge is how NNPC Ltd. will consciously come to terms with the fact that the agency role can no longer be in its radar. Development was a new beginning for the Nigeria oil and gas industry in many ways.
He, however, noted that the new dawn in the oil and gas space in Nigeria and the NNPC Limited in particular, comes with challenges and opportunities in this Petroleum Industry Act (PIA) 2021 era.
“First, NNPC Ltd. is a commercial entity now with mission and vision to maximise stakeholders’ economic value, just as Shell, TotalEnergies and Chevron do.
“Unlike the old NNPC, which basically tends to maximise public policy in-kind value, PIA 2021 expects less agency roles for NNPC Ltd. if not even zero agency roles,” Iledare said.
Audit
A major factor that has remained shrouded in secrecy is the staff strength of the NNPC under the old regime. According to a report by Platforms Africa, an online publication, an erstwhile Chief Operating Officer, NNPC Ventures, Dr. Babatunde Adeniran, in 2018 put the staff strength of the old NNPC at over 79,000 across its subsidiaries in the country and across the World. The official number of staff on the payroll of NNPC has, prior to this, not been made public till date.
Iledare said the NNPC Ltd. must be aware that the expectations of stakeholders now was for the company to be obedient to the laws of Nigeria as Shell, TotalEnergies, Mobil and Energia do to maximise value.
He said: “The opportunities are huge in terms of creating value for stakeholders with the amount of gas and oil resources at its disposal. The human resources are huge as well, but governance mentality has to change to harvest these resources effectively, efficiently, equitably with optimal professional ethics.”
Yusuf revealed that under Kyari’s leadership, the old NNPC began to publish its account regularly- a sharp contrast from what used to obtain. “This is good for transparency, so I think it is a journey we need to encourage, we don’t have to pull it down should encourage him and the process. Luckily we are going into political transition because we need to remove and get away those parasites that are living on this kind of parastatal; we should get more value from it for the country just as we are getting value from NLNG. The difference between NLNG and this one is private sector driven and there is a dilution of shares- with the government having only 49 percent. So let us push this to that point there we will ascertain the value where we ensure the firm is doing well then we begin to offload the shares and completely remove the hand of government in the direct management. But in order to ensure that we actually get value, we need to encourage the process and the team now,” he submitted.
