A new oil company and agencies have been formed by President Muhammadu Buhari in response to the clamour that the Nigerian oil industry be reformed. President Buhari will be exchanging shares for cash, a bill sent to the National Assembly disclosed.
The new company created is Nigerian National Petroleum Company Limited, the agencies are named Nigerian Upstream Regulatory Commission, as well as Nigerian Midstream and Downstream Petroleum Regulatory Authority.
President Buhari created the NNPC Limited to replace Nigerian National Petroleum Corporation, while the agencies are expected to replace the industry regulator, Petroleum Products Pricing Regulatory Agency (PPPRA), this was disclosed in the Petroleum Industry Bill 2020 Buhari sent to the National Assembly.
About The Company: The new company and agencies are expected to be created within six months after the bill has been passed into law. The bill will ensure NNPC and PPPRA are phased out within the period, with assets and liabilities of these government agencies transferred to the new company and agencies created.
The assets and liabilities that will be transferred will be determined by the Minister of Petroleum and Finance Minister, according to the Section 54 (1, 2 and 3 ) of the bill, “The Minister (of Petroleum) and the Minister of Finance shall determine the assets, interests and liabilities of NNPC to be transferred to NNPC Limited or its subsidiaries and upon the identification, the minister shall cause such assets, interests and liabilities to be transferred to NNPC Limited.
"Assets, interests and liabilities of NNPC not transferred to NNPC Limited or its subsidiary under subsection 1 of this section shall remain the assets, interests and liabilities of NNPC until they become extinguished or transferred to the government.
“NNPC shall cease to exist after its remaining assets, interests and liabilities other than its interests, assets, and liabilities transferred to NNPC Limited or its subsidiaries under subsection 1 of this section shall have been extinguished or transferred to the government.”
The bill further stated that the Minister of Petroleum shall “within six months from the commencement of this Act, cause to be incorporated under the Companies and Allied Matters Act, a limited liability company, which shall be called Nigerian National Petroleum Company (NNPC Limited)."
About The Agencies: According to Section 4 of the bill, the NURC will have the authority to acquire a property and do as it pleases, “There is established the Nigerian Upstream Regulatory Commission (the Commission) which shall be a body corporate with perpetual succession and a common seal.
“The commission shall have the power to acquire, hold and dispose of property, sue, and be sued in its own time. The commission shall be responsible for the technical and commercial regulation of upstream petroleum operations.”
Also, Nigerian Midstream and Downstream Petroleum Regulatory Authority, which will be known as ‘The Authority’, "shall be responsible for the technical and commercial regulation of midstream and downstream petroleum operations in the petroleum industry.” according to Section 29 of the bill.
The bill states that the Minister of Petroleum will be in charge of the transition - note that while Timipre Silva is the Minister of State for Petroluem, President Buhari is yet to appoint a Minister of Petroleum, as Buhari still manages the portfolio. So President Buhari will determine the assets, interests and liabilities transferred to NNPC Limited, NURC and NMDPRA.
President Buhari as the Minister of Petroleum, "shall be at the incorporation of NNPC Limited, consult with the Minister of Finance to determine the number and nominal value of the shares to be allotted which shall form the initial paid-up share capital of the NNPC Limited and the government shall subscribe and pay cash for the shares.
“Ownership of all shares in NNPC Limited shall be vested in the government at incorporation and held by the Ministry of Finance incorporated on behalf of the government,” the bill discloses.
The scrapping of NNPC and PPPRA is expected to cause a rejig of the workforce in both agencies, as the new company and agencies are expected to get new leadership considering the extent of the reform. This will affect jobs in both NNPC and PPPRA, but the job loss is expected to be minimal.