Explainer: What The New NNPC Limited Means And How Changes Will Affect Nigerians
On Tuesday, July 19, 2022, President Muhammadu Buhari unveiled the Nigerian National Petroleum Company Limited to replace the old Nigerian National Petroleum Corporation in a ceremony that took place at the Presidential Banquet Hall in Abuja.
The president, in his speech at the event, noted that, incidentally, he was one of those involved in the creation of the NNPC on July 1, 1977. 44 years later, Buhari said he is again leading a significant structural change in the NNPC.
The move from a corporation to a limited company transfers ownership of the NNPC from a state-owned and state-financed company to a private energy enterprise. The process began in 2021 when the Petroleum Industry Act (PIA) was signed by the president. PWC projected then that “If implemented diligently, the PIA will help facilitate Nigeria’s economic development by attracting and creating investment opportunities for local and international investors.”
Of what significance is the name change, and how does it affect the operation of the petroleum company. More importantly, how does it affect Nigerians?
With this new shift, the government will stop funding NNPC Limited. It will also not be under the Treasury Single Account, and Public Procurement and Fiscal Responsibility Acts regulations.
According to records, 2017 was the first time the NNPC officially declared profit since it was founded in 1977. It declared a profit of ₦111.59 billion.
It posted ₦803.14 billion and ₦1.7 billion losses at the end of 2018 and 2019 financial operations, respectively. The company said it made a profit of ₦287 billion in 2021.
The NNPC, over the years, has been embroiled in corruption allegations. In 2014, the former governor of the Central Bank of Nigeria accused the NNPC of failing to remit $49.8 billion to the government, which was the proceeds of product sales.
The new commercialised profit-oriented NNPC will be audited annually. Although it remains a national oil company, it will be independently managed.
NNPC is expected to be listed on the stock exchange. As sales of shares go public, NNPC will be answerable to shareholders and not to the government. The power of the minister of petroleum resources on the NNPC will be limited.
As the NNPC becomes a private sector enterprise, it is expected to live up to the level of Aramco of Saudi Arabia and Petrobras of Brazil in terms of transparency and profit generation. On May 11, 2022, Aramco became the largest company in the world by market cap, surpassing Apple Inc.
Shortly after the Abuja ceremony, there were reports that the NNPC had increased the pump price of petrol from ₦165 to ₦179. The spokesperson of the NNPC, Garba Deen Muhammad, in response, said: “The NNPC no longer approves pump price review. That is the work of the midstream and downstream authority. I have no idea. They are the ones that tell you what price regime the government has approved, not NNPC. NNPC has already exited all that situation. We are operating just like MTN now.”
Neusroom can confirm that the review of the petrol pump prices is the responsibility of the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
A check by Neusroom showed that the price of petrol has gone up, but the prices are not uniform. While some filling stations have retained the old price of ₦165 on their board while selling higher than that, others have already officially changed their pump price to reflect the new ₦170 pump price and above. The price of petrol is expected to be dictated by market forces going forward.
Former vice president and presidential candidate of the Peoples Democratic Party, Atiku Abubakar, in reaction to the new NNPC development, reminded Nigerians that he had promised ahead of the 2019 election to sell 90 per cent of the NNPC.
He wrote: “I am happy to note that the same government has taken a tentative step along the lines of the suggestions that I had made. It is a step in the right direction, but we are still far from what I had envisaged.”
