After 46 years of corporate operations, the Nigerian National Petroleum Business Limited (NNPCL) has acquired the assets of the country's oil company (NNPC).
The final ceremony that formally declares the creation of NNPCL was held at the corporation's towers in Abuja.
In accordance with section 54 (3) of the Petroleum Industry Act (PIA) 2021, the corporation changed into a company whose operations would be governed by the Companies and Allied Matters Act when the company assumed control after meeting all legal conditions within the allotted 18-month period (CAMA).
In a historic move that transformed the oil corporation from a totally state-run organisation to a commercial oil company limited by shares, President Muhammadu Buhari presented the new Nigerian National Petroleum Company Limited in July 2022.
A new Petroleum Industry Act-based legal transition went into force on July 1.
A few weeks after President Buhari signed the PIA into law, in September 2021, the NNPC finished the process of incorporation.
Then with an initial capitalization of N200 billion, NNPC Limited was floated, becoming record-breaking as the corporation with the greatest share capital in the nation.
The new organisation is anticipated to develop into a national petroleum corporation that is profit-driven and commercially focused, but which is still owned by the government. It will undergo a yearly audit.
Timipre Sylva, the Minister of State for Petroleum Resources, stated in a statement on Friday that NNPCL is anticipated to be a competitive and commercially focused business as a result of the federal government's reforms.
“To get to this desired end, deliberate effort must be made to implement the law in a manner that best achieves the stated objectives in line with the yearnings and aspirations of Nigerians whose lives will be impacted by the consequences of our decisions and actions.
“As part of the commitment to achieve a viable National Energy Company, the PIA put a long stop date of 18 months from the effective date of the Act as the timeline within which full transfer of assets, interest and liabilities must be completed,” Sylva said.
In order to ensure that there are no justifications for failure, he continued, the PIA empowered NNPC Limited to function like every other private corporation in Nigeria with immunity from the Fiscal Responsibility Act, Public Procurement Act, and TSA.
“In return for this empowerment, the PIA expects a strong commercially oriented National Energy company with an obligation to operate profitably and deliver dividends to shareholders.
“NNPC Limited is positioned to lead Africa’s gradual transition to new energy, by deepening natural gas production to create low-carbon alternatives and change the story of energy poverty at home and around the world,” he said.
The NNPCL Group Chief Executive Officer, Mele Kyari, stated earlier that the new firm, which has assets worth over $60 billion, would aim to increase its profit from the $2 billion that the oil corporation has already declared for 2021 operations.
According to Kyari, the corporation experienced issues with its operations prior to the changeover.
“Now everyone can see that we are a large company.
"There’s no company with $60 billion in assets. It doesn’t exist in this country.
“So, we are the largest company in this country.
"We are also the largest company in Africa. Let me be frontal about it, our past structures were designed around individuals and geopolitical zones. It’s no longer so.
"Today we have a slim management structure which recognises only our ability to deliver,” he said.
He noted that while the law provides that the NNPC could decide to leave a certain class of assets, the NNPC Limited has resolved to take over the entire assets and liabilities of the defunct corporation.
“But you will ask me, so what do I want to do with the assets?
"The assets are the overall joint venture assets and other businesses that the company has got.
"The shareholders have transferred all the assets to us, so no asset is left outside.
“The law provides that we can potentially leave some of them behind.
"By today’s counting, every asset of the corporation, including its liability has been transferred to the NNPC Limited and I repeat that the liabilities are far less than the assets that we have. So, it’s a very comfortable situation,” he said.
With the new law, he claimed, the company's finance operations are now clearly defined, including the retention of some dividends and 30% of oil earnings from Production Sharing Contracts (PSCs).
He pointed out that NNPCL had a strong brand and can attract investment for its enterprises, guaranteeing that the company would provide the Nigerian people with energy security while earning money for the nation.
“By fiscal 2020, we returned this company from 43 years of loss to a profit position of N287 billion and by 2021 we came to a profit level of N674 billion.
"We believe we will do better in 2022 despite all the challenges.
“But I must also add that this is not an N674 billion company.
"By the way, this is less than $2 billion. We’re not a $2 billion profit company.
"You can’t do $2 billion with $60 billion in assets. So we can still do better.
“We have seen our peers who have maybe 50 per cent of these assets, and they have declared close to $9 billion.
"It’s possible in this business and we will catch up,” Kyari said.
“So how do we catch up? First, we will reduce our costs.
"We are driving down costs substantially because when your cost is high, you run into trouble and you cannot make profits.
“We are growing our production. With all these challenges we will grow our production because many of the things today you can call force majeure but even force majeure is created by something and we are responding to that something that is creating the force majeure situation and we are dealing with it.
“And that’s why in July 2022, we went down to as close as one million barrels per day of crude oil and condensate combined.
"That was pathetic, unfortunately. But I dare say that maybe it was avoidable and we responded to it. Today, as of yesterday, we have crossed 1.6 mbpd.
“This is not rocket science. And we have a line of sight to recover to the budget level of 1.8mbpd,” he added.
The Gambia National Petroleum Company (GNPC) and the NNPCL signed a cooperative agreement for the oil and gas industry on Friday.
According to the corporation, the memorandum of understanding (MoU) covers cooperation between the two businesses on frontier exploration, potential for the expansion of the crude oil market, and technological transfer in the pursuit of greater energy security.
At the NNPC headquarters in Abuja, the deal was signed.
“Areas of interest include new frontier exploration; crude oil market expansion opportunities and transfer of technology towards the quest for more energy security for both countries and the West African sub-region,” the oil firm said.
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