President Muhammadu Buhari has unveiled the new Nigerian National Petroleum Company Limited (NNPC Limited), affirming that the company is mandated by law to ensure Nigeria’s national energy security is guaranteed.
Speaking Tuesday at the State House Conference Centre Abuja where the historic event was held, the president said Africa’s largest National Oil Company (NOC) would also support sustainable growth across other sectors of the economy as it delivers energy to the world.
At the event, which featured a special rendition of the Theme Song ”Energy for today, Energy for tomorrow, Energy for Everyone” by an Ensemble, the president recounted how God had used him to consistently play an important role in shaping the destiny of the country’s NOC in the last 45 years.
He expressed optimism that the NNPC Limited will sustainably deliver value to its over 200 million shareholders and the global energy community; operate without relying on government funding and free from institutional regulations such as the Treasury Single Account (TSA).
‘‘This is a landmark event for the Nigerian oil industry. Our country places high premium in creating the right atmosphere that supports investment and growth to boost our economy and continue to play an 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.
‘‘By chance of history, I was privileged to lead the creation of the Nigerian National Petroleum Corporation on the 1st July 1977. Forty-Four (44) years later, I was again privileged to sign the Petroleum Industry Act (PIA) in 2021, heralding the long-awaited reform of our petroleum sector.
‘‘The provisions of PIA 2021, have given the Nigerian petroleum industry a new impetus, with improved fiscal framework, transparent governance, enhanced regulation and the creation of a commercially-driven and independent National Oil Company that will operate without relying on government funding and free from institutional regulations such as the Treasury Single Account, Public Procurement and Fiscal Responsibility Acts.
‘‘It will, of course, conduct itself under the best international business practice in transparency, governance and commercial viability.
‘‘Coincidentally, I, on the 1st of July 2022 authorized transfer of assets from the Nigerian National Petroleum Corporation to its successor company, the Nigerian National Petroleum Company Limited, and steered the implementation leading to the unveiling of Africa’s largest National Oil Company today.
‘‘I therefore thank Almighty God for choosing me to consistently play an important role in shaping the destiny of our National Oil Company from the good to the great,” he said.
The president further assured stakeholders in the industry that Africa’s largest NOC would adhere to its fundamental corporate values of Integrity, Excellence and Sustainability, while operating as a commercial, independent and viable NOC at par with its peers around the world.
He said the company would focus on becoming a dynamic global energy company of choice to deliver energy for today, for tomorrow, for the day days after tomorrow.
He thanked the leadership and members of the National Assembly for demonstrating uncommon courage and patriotism in the passage of PIA that culminated in the creation of NNPCL.
Our pre-PIA loss -Sylva
Also speaking, Minister of State for Petroleum Resources, Chief Timipre Sylva, said “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.
‘‘From the onset of this administration, Mr. President never concealed his desire to create a more conducive environment for growth of the oil and gas sector, and addressing legitimate grievances of communities most impacted by extractive industries.
‘‘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 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.
‘‘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 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 vintages for partnerships.
He thanked the president for his unparalleled leadership, steadfastness, and unalloyed support towards ensuring that the country’s oil and gas industry is on a sound footing.
NNPC CEO
Speaking at the event, Group CEO NNPC Limited Kyari announced that the company had adopted a strategic initiative to achieve the mandate of energy security for the country by rolling out a comprehensive expansion plan to grow its fuel retail presence from 547 to over 1500 outlets within the next six months.
He assured stakeholders and the global energy community that the new company was endowed with the ‘‘best human resources one can find anywhere in the industry.’’
‘‘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 said.
Reactions
Meanwhile, experts and the generality of Nigerians have continued to react to the rebranding of the giant oil firm.
While some of those who spoke Tuesday to Blueprint are of the view that the new NNPCL would guarantee energy security, others believe nothing would change until the underlying factors hindering effective policy direction in the industry were addressed.
In his view, an economist, Mr Friday Efih, said the increase in the price of fuel from N165 to N185 would only bring temporary relief.
He insisted that until the underlying issues were resolved, Nigerians would still continue to suffer fuel scarcity.
He said: “How do you solve the issue of lack of local refining capacity, foreign exchange challenges, oil market volatility, and oil theft. All these are not what one can wish away just because NNPC Ltd was unveiled today. The Presidency needs to do more than that.”
Also, a taxi driver who simply identified himself as Usman, said he bought fuel at N175 per litre, noting that the scarcity would only reduce not disappear.
“This increase by the NNPC to between N175-N185 per litre is not the problem. Many of my friends who drive tankers say with the high cost of diesel, it would be difficult to be transporting fuel to the various filling stations,” he said.
Also, a development researcher, Mr. Adefolarin Olamilekan, said on the surface, the president’s statement was very encouraging considering some of the initiatives the government put in place to stop energy poverty in Nigeria.
He noted that the failure of the government to ensure local refinery of crude as opposed to importation of all PMS, kerosine, diesel and other petroleum products would not make the statement a reality.
Olamilekan said “the poor policy direction of this administration in allowing the four national refineries to still be moribund; as well as the failure of the NNPC to sell crude to modular refineries, do not help the course of the government.
“With the administration less than 10 months to handing over, ending energy poverty is going to be a herculean task. Nevertheless, we also need to acknowledge the president’s statement is directly in relations to the unveiling of the NNPC Limited as part of the PIA’s objective of making the oil and gas sector transparent, responsible and accountable.
“NNPC must feed local modular refineries with crude for them to refine for local consumption. Lastly, there are issues of corruption, policy reversal and challenge of oil thief and pipeline vandalism. These issues must be dealt with if Nigeria truly wants to end energy poverty.”
Also weighing in, an economist, Mr. Gideon Ekukinam, said: “The only way the new Nigerian National Petroleum Company Limited (NNPC Limited) can guarantee sufficient fuel at filling stations across Nigeria is when it is given free hand to operate. Government has no business running any business. The petroleum downstream sector is a huge business that should be weaned off government control.
“Crude oil accounts for over 70 percent of government revenue, but that doesn’t mean the government should continue to dictate what happens in the sector. A country where the Nigerian National Petroleum Corporation (NNPC) still imports petrol for everyone, is not a serious country. The NNPC doesn’t even have the capacity or the storage facilities to continue with this herculean endeavor. Why then don’t we allow private firms to venture into the business, import petrol and sell as the market dictates?
“Petrol is a product. Economics says if Mr. A, B, C and D all sell the same product, competition will someday make Mr. C sell at a lower price to beat Mr. A. It’s called market forces. Demand and supply are what drive any economy, not government regulation.
“Yes, petrol pump prices could spike initially in a deregulated market, but someday, competition could force pump prices of petrol down like every other product in the market.”
Businessmen, civil servants
Also in his intervention, an Abuja-based businessman, Mr Abubakar Yusuf said: “Change of name does not equal the availability of products. As long as our refineries are moribund, we will continue to have long queues in our filling stations. Show me any country that exports crude oil and imports the finished product. We have refineries in Warri, Port Harcourt and Kaduna that can’t cater to our domestic needs because corruption has made them comatose.
“In any case, the refineries are probably so outdated right now that even a turnaround maintenance can’t bring them to life. To get out of this perennial fuel scarcity, Nigeria has to begin to produce and refine the petrol it consumes. It’s not rocket science.
“The reason we have scarcity now is because NNPC imports petrol. So, the product is sometimes inadequate or remains at sea for God knows how long, or is subject to the whims and caprices of the international market.
“Our refineries have to start working. Nigeria has to refine its petrol and not sell its crude and import the same. Private firms should be handed licenses to run modular and standard refineries alongside government ones.”
Also responding, a civil servant who stays at Mararaba in Nasarawa state but works in Abuja, Mrs Favour Chinwo said she is now having to spend close to double of the usual amount he spends on transportation, to and from his work place.
“Transportation cost has become increasingly high in the past few days and we are having to spend more than usual. Nothing concerns the Abuja conductor and how much you earn as salary. They are opportunists, always taking advantage of situations. I used to spend N900 to 1,000 before the increase in pump price but now I ensure to budget like double the amount when setting out these days to avoid being embarrassed.
“I cannot put the blame on these drivers but on the government that is driving back and forth on the decision to adjust the pump price of PMS while commuters bear the brunt.
“Imagine if you spend N1, 000 daily on transport fares to and fro and now witness an average of 25% increment. You know what that translates into when you check it out for the monthly and annual expenditure of the individual,” she said.
Another civil servant, Ibrahim, resident in Kubwa of the FCT, said the high expectations Nigerians had of the present administration since inception had failed.
He said: “For me, the situation on fuel drama has come to stay and it will keep increasing until we think inside the box and make a U-turn for a positive change and not this kind of change Nigeria has suffered.”
Also, Gbeminiyi, also a Kubwa resident, said the government had failed Nigerians beyond imagination.
The businessman said he would get his PVC and cast his votes when the time comes in order to get the right person to change the economy for good.
“Madam, Nigeria as a nation has suffered long. For us to change the political narrative, we must take the bull by the horn or else it will be same story come post-election 2023 and I know that at this point, no Nigerian is interested in such madness, or are you?
“For this issue, whatever will be will be and we even heard rumour that it will still increase and suffer scarcity. The only good thing I see now is that there is fuel without much queue, which they would have done long ago to avoid the scarcity and tough time we faced as a nation. We have this oil and supply neighboring countries but yet the nation is in lack of what it produces. I don’t want to talk because I have better areas to channel my feelings,” he said.
Dispatch rider
And to a dispatch rider, Ezekiel Sambo, the recent fuel scarcity affected his business and expressed satisfaction with the new rate if the commodity would be in regular supply.
“The recent fuel scarcity affected our business negatively. We wasted a lot of time at the filling station looking for fuel. Time is of essence in our business. When customers make an order, they expect you to make delivery almost immediately. However, due to the fuel scarcity, we couldn’t meet the delivery request from our client. We lost a lot of business, some even see us as unserious. So, I don’t mind buying fuel at 185 as long as it would be available.”
Transition to halt arbitrariness Cowry Assets
However, some experts from Cowry Assets Management said the transition of the NNPC to NNPCL would bring to an end the arbitrariness and control of the company by the government and lead the company to the path of profitability in future.
They also said the heavy-handed government control in the company would become a thing of the past as the company ultimately becomes and operate as an independent private entity.
The analysts said the “Nigeria’s oil and gas sector is on a global footprint to deliver energy security to Nigerians and the international community with the desired expectation, bring about more emphasis on transparency and accountability in the company as its government-subsidized operations will come to a halt.”
Explaining further, they said “there’s room for corporate governance principles to influence board decisions and actions, it will propel the NNPC Limited into becoming a publicly traded company on the Nigerian Stock Exchange and any other major exchange where dividends will be paid to shareholders,
propel it into new investment opportunities while also attracting more investments into the company as well as into the oil and gas sector.”
The NNPC transited into a limited liability company as incorporated by the Company and Allied Matters Act (CAMA) and in line with the provisions of the Petroleum Industry Act (PIA) signed by President Buhari August 16, 2021, after 2 decades.
Consequently, the PIB was passed and assented to by the lawmakers and one of the dividends from the bill was the rebirth of NNPC Limited.
The president had July 1, 2022, ordered the transfer of the assets of NNPC Group to NNPC Limited, its successor company.
The assets transfer paved the way for the transition into a private entity which is expected to imbibe the culture of a private-sector-led business with a major focus on profit-making.
However, the path to profitability and delivery of long-lasting dividends to its over 200 million shareholders is hinged on the adoption of the principles of corporate governance which must be allowed to influence actions and decision -making in the company.
The NNPC plays a critical role in the regulation of the oil and gas sector and as noted by Nigeria’s President Buhari at the unveiling, the Petroleum Industry Act (PIA) provisions has given the petroleum company the new power to help run without government funding and working in line with the public procurement and fiscal responsibility act.
Considering the assets available currently to the limited liability company combined with the fiscal regime, it is set to become Africa’s biggest energy company.
