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Friday, August 12, 2022

NNPC Ltd: FG to Halt Funding as National Oil Company Transforms to Commercial Entity

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As the NNPC transitions to a full commercial entity today, the federal government would henceforth halt all forms of funding for projects and sundry purposes in contrast to what has obtained in the last 45 years of the national oil company’s existence.

Also with the NNPC officially transitioning into a private entity that would be regulated in line with the provisions of the Companies and Allied Matters Act (CAMA) from today, the Group Chief Finance Officer (Group CFO) will be expected to shoulder additional responsibilities of not only ensuring the liquidity of the group but efficient allocation of capital to businesses based on rate of return and business/project priorities.

In the new structure of the NNPC, the Group CFO would have to work closely with the Group Chief Executive Officer (Group CEO) of the company to ensure profitability of the company.

The new NNPC Limited structure which was launched by President Muhammadu Buhari today, is in line with the Petroleum Industry Act (PIA) 2021.

The Corporate Affairs Commission had on September 21, last year completed the incorporation of the NNPC Limited in accordance with the provisions of the PIA 2021.

The PIA was signed into law by President Muhammadu Buhari on 16th August, 2021, following its passage by the National Assembly in July of the same year.

Specifically, Section 53(1) of the Petroleum Industry Act 2021, requires the Minister of Petroleum Resources to cause for the incorporation of the NNPC Limited within six months of the enactment of the PIA in consultation with the Minister of Finance on the nominal shares of the Company.

With the registration by the CAC, the NNPC Limited was floated with an initial capital of N200 billion making history as the company with the highest share capital in the country.

From when the PIA was signed into law last year, the management of the NNPC has taken proactive steps to prepare it for the July 1 take-off as a CAMA company.

However, while the structure of the senior management team of the NNPC Limited would change with its new status, its Board would remain as inaugurated by Buhari.

Group Managing Director of the NNPC Ltd, Mr. Mele Kyari, recently explained: “On 1st of July, we crossed over to the NNPC Limited both technically and financially on every aspect. Not only that, on the 19th of July, I’m inviting all of you to be present. Mr. president will unveil the NNPC Limited to all of us on the 19th of July, and I’m inviting you.

“The meaning of this to our industry is that you’re going to have the partner of choice, the partner that will support you, the partner that will be the largest capitalised company in Africa. Not only that, a partner that will be born of best practice, of everything that you can think of because we’re going to be a CAMA company. We are going to be another Shell, decision making would be easy, finances will also be easy.”

Meanwhile, as the NNPC transitions to a full commercial entity today, the federal government would henceforth halt all forms of funding for projects and sundry purposes in contrast to what has obtained in the last 45 years of the national oil company’s existence.

The new NNPC which would now operate as a limited company, the Group Chief Executive Officer, Mallam Mele Kyari, disclosed last night, would be completely set for an Initial Public Offer (IPO) by June 2023 to boost its capital base.

Speaking on Channels Television, Kyari boasted that with a N200 billion initial capital outlay as well as $5 billion initial debt funding, the new NNPCL would be one of the most efficiently run entities globally.

He also said the Dangote refinery would commence operation in the first quarter of next year, which according to him would positively impact Nigeria’s foreign exchange supply situation.

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