NNPC marks relaunch as limited company

Nigerian National Petroleum Corp (NNPC) has officially been rebooted as a limited liability company, following a presidential statement by Nigeria's Muhammadu Buhari on July 20.

Under the provisions of Nigeria's new Petroleum Industry Act, NNPC will operate without relying directly on government funding. It will also be exempt from public institution regulations such as public procurement laws, fiscal responsibility and the treasury single account laws, according to local media.

NNPC decisions were previously accountable to Nigeria's cabinet government structure, the Federal Executive Council. African industry observers argue the need for FEC approval effectively tied NNPC's hands due to public sector expectations, especially surrounding regulatory compliance, stakeholder engagement and accountability.

NNPC assets, such as equity, refineries and gas infrastructure, will now be held at arms length from the Nigerian treasury account by the ministries of petroleum and finance, Reuters said. Anti-corruption NGOs have long pursued greater transparency at the Nigerian oil and gas giant. Abuja's junior petroleum minister Timipre Sylva said July 19 that NNPC's new commercial structure would also enable it to declare dividends.

Nigeria has long struggled to overcome structural issues that have hampered the value it derives from Africa's largest oil and gas reserves. According to accounting firm KMPG, Nigeria attracted just 4% of the $70bn invested into Africa's oil and gas industry from 2015 to 2019, despite the fact that Nigeria is the continent's leading hydrocarbon producer.

Buhari's statement said NNPC Ltd. would emphasise corporate values of integrity, excellence and sustainability, while striving to become independent and viable, on a par with its peers around the world. Buhari added: "The provisions of PIA 2021 have given the Nigerian petroleum industry a new impetus, with an 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..." 

Coming 44 years after the establishment of NNPC, the switch to a limited liability commercial structure marks a watershed in the history of Nigerian oil and gas. It was welcomed by the African Energy Chamber (AEC), which said it "supports" and "congratulates" NNPC's official transition to a commercially-driven entity. 

NJ Ayuk, executive chairman of AEC, said: "This is the beginning of something new, Mele Kolo Kyari [NNPC's group managing director] and his team have done amazing job towards this implementation. The strategic importance of this transition will allow Nigeria's petroleum industry to uphold the highest levels of professionalism and innovation while allowing the company to operate in strategic engagements globally."

Mele Kyari told reporters in Abuja he felt NNPC could be "IPO ready" for a public listing of shares by the middle of next year, without confirming the corporation would be privatised. He said NNPC would have a "system" and "processes" indicative of a company ultimately accountable to its "stakeholders and shareholders".