June 22, 2024

NNPC unveils new identity, sticks to old agenda

Olubunmi Martins

The Nigerian National Petroleum Company Limited (NNPC) Limited has made preliminary announcements on its future  business outlook as President Muhammadu Buhari ceremonially handed over  the company to the Nigerian public, following its exit from the previous status as a government instituted corporation.

In a sneak view of the company’s future plans, Mele Kyari, Group Managing Director(GMD) of the newly incorporated company,  disclosed that the NNPC Ltd, will maintain the controversial regime of fuel subsidies and regulated pricing, contrary to industry expectations for the complete deregulation of the downstream section of the country’s petroleum industry.

President Buhari, on Tuesday, during the unveiling , presented the NNPC as a Limited Liability Company, having fulfilled all conditions required by law for the company to commence business transactions with obligations and responsibilities governed by the new Petroleum Industry Act and the Corporate Affairs Corporation.

The NNPC Limited, until now, operated as a government funded utility company with the primary goal of providing services to the Nigerian public under such terms that are unguided by commercial rules for business success,

In an earlier announcement, the new NNPC said that it has achieved a share capitalization of N200 billion, thus emerging as the largest capitalized company in Africa.

Mele Kyari, who is continuing in office as Group Chief Executive Officer (GCEO), stated that the NNPC’s Initial Public Offering (IPO) to investors will be conducted within three years of its transition to a limited liability company.

This implies that investors, particularly Nigerians, may have sufficient time to observe the performance of the new company before taking a stake as shareholders.

 

President Muhammadu Buhari  and the Minister of Finance have effectively ceased control over the assets , interests and liabilities of the old corporation and have relinquished all other instruments of ownership to the newly incorporated NNPC.

 

EnergyDay learnt that President Muhammadu Buhari  signed out of the old NNPC and consented to the instrument of transfer last week in preparation for the formal unveiling of the NNPC Ltd on July 19.

 

This is consistent with Section 54 of the PIA, which states that bonds, hypothecations, securities, deeds, contracts, instruments, documents, and working arrangements pertaining to assets, interests, or liabilities transferred to NNPC Limited or any of its subsidiaries under subsection (1) are effective and enforceable against or in favor of NNPC Limited.

 

Specifically, Section 54 of the Act stated that “The Minister (of Petroleum Resources) and the Minister of Finance shall within 18 months of the effective date determine the assets, interests, and liabilities of NNPC to be transferred to NNPC Limited or its subsidiaries, and upon such identification, the Minister shall cause such assets, interests and liabilities to be transferred to NNPC Limited.”

The assets, interests and liabilities of NNPC not transferred to NNPC Limited or its subsidiary under subsection (1), shall remain the assets. interests and liabilities of NNPC until they become extinguished or transferred to the government.

Six months following the determination under section 54 (1) of this Act, the Minister, the Minister of Finance and the Attorney-General of the Federation shall develop a framework for the payment of the liabilities not transferred to NNPC Limited and if such determination of which assets, interests and liabilities to be transferred has not been concluded within the stipulated period of 18 months. all the assets, interests, liabilities of NNPC is deemed to be transferred to NNPC Limited after 18 months from the effective date.

 

NNPC shall cease to exist after its remaining assets, interests and liabilities other than its assets, interests and liabilities transferred to NNPC. Limited of its subsidiaries under subsection (1) shall have been extinguished of transferred to the government.”

 

The legislation added that any pending action of proceeding brought by or against NNPC before the transfer date with regard to assets, interests or liabilities transferred to NNPC Limited under subsection (1) may be enforced or continued by or against NNPC Limited as the successor of NNPC.

 

The NNPC LTD on July 1, fully transformed into a Company whose operations will be regulated under the Companies and Allied Matters Act following the implementation of the Petroleum Industry Act.

 

The Corporate Affairs Commission had, on September 21 last year, completed the incorporation of the NNPC Ltd in accordance with the provisions of the Petroleum Industry Act 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. With the registration by the CAC, the NNPC Ltd was floated with an initial capital of N200bn making history as the company with the highest share capital in the country.

 

Between when the PIA was signed into law in August last year and now, the management of the NNPC Ltd had taken proactive steps to prepare it for the take-off as a CAMA company.