NNPC Ltd: MOMAN, other stakeholders say new national oil company now open to public scrutiny –

Solomon Ezeme

The Major Oil Marketers Association of Nigeria (MOMAN) and  critical stakeholders in  the Nigerian oil and gas industry have expressed cautious optimism in the ability of the new  Nigerian National Petroleum Company Limited (NNPC) Limited to end the long years of corruption and inefficiency that have ravaged the defunct Nigerian National Petroleum Corporation.

They made this known in  conversations with EnergyDay on the sideline of the unveiling of the new national oil company by President Muhammadu Buhari on Tuesday in Abuja.

According to them the under performance of  the old NNPC has given way for a potentially profitable and accountable state-owned oil company, that may likely share common outlook with the likes of Saudi ARAMCO and PETROBRAS, Brazilian multinational Corporation and its Malaysian counterparts

They stated that the move by the NNPC to commence operations as a fully privatized entity is an iconic achievement long awaited by well-meaning Nigerians, particularly stakeholders in the nation’s oil and gas sector who have at various occasions called for a break in the Federal Government’s monopoly of the sector.

Speaking with EnergyDay in a recent chat, Clement Isong, the Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), said that the expected commercial viability of the new NNPC will encourage more investors to invest in the oil and gas sector, as the company will be operating based on the expectations of shareholders.

He said. “The NNPC will cease to be a drain on the national treasury, forced to make commercial decisions and will no longer be used as a social tool. The national oil company(NOC) will instead  contribute to the Nigerian economy in a sustainable manner, with a minimum standard of  recovering operational cost.

“The political class has over the years put the old NNPC under a lot of pressure. But with the new transformation, NNPC Ltd would be compelled to operate under international Corporate Governance. This would  put the company under a pressure to meet a minimum standard of transparency.

“ As soon as it starts selling shares to Nigerians, the company will be subjected to greater scrutiny and more professional financial matters. Its  decisions would be less political and operating in a sustainable business manner. The company would be required  to make enough money to pay investors and shareholders. Investors would be left with choices to decide where to put their money.

Isong said that the NNPC has transited to a corporate firm under the Companies and Allied Matters Act (CAMA), adding that that action there make it a stand-alone business entity expected to generate revenue in compliance with the provisions of the new Petroleum Industry Act 2021 (PIA) from which the new company itself was created.

He stressed that the company must be prepared to compete with other players in the petroleum industry, in terms of profitability, transparency and feasibility, to guarantee its sustainability, since the Federal Government will no longer directly fund it.

The ES of MOMAN stated that he is looking forward to when the company’s Initial Public Offering (IPO) to interested investors will take place, this according to him would pave the way for private individuals to take equity in the company.

He explained that, besides contributing to the national purse, the NNPC Ltd. will be compelled to make sufficient profits to fund its projects.

“This transition puts NNPC Ltd under a lot of pressure to meet minimum standards of transparency and feasibility,” Isong said.

Using the success of the Saudi ARAMCO as a case study, he noted that the new business approach of the NNPC will make it more efficient, profitable and committed to delivering value to shareholders and customers alike.

He noted that the aim of the Petroleum Industry Act (PIA) in ensuring the establishment of the NNPC was to take political bottlenecks off its operations, to aid quick decision making and timely execution of projects.

He said, “We have all agreed that a sustainable business is one that recovers its cost and then rewards capital.

“If you get your capital from the bank, you have to make enough money to repay. If you got it from shareholders, you need to make enough money to pay the investors,” he noted.

Olawunmi Olatunji, Chief Executive Analyst, Brockville Investments Africa, an energy and natural resource/asset development manager, in a chat with EnergyDay, said that the transition of the NNPC into a corporate firm, has ended the era of subsidizing petroleum products with state funds.

She said the new PIA has given room for significant changes to the legal and governance framework, administrative processes, regulatory and fiscal terms, and host community engagements, among other burning issues in the country’s oil and gas industry.

She also said stakeholders in the country’s oil and gas space would expect to see a NNPC that is accountable to Nigerians and transparent in its operations, providing the general public with timely details about its activities, to reduce the tendency of drawing back the nation to the era when its operations were enshrouded in near secrecy.

She said, “The change is in line with the PIA and we expect it to help in stimulating investments in the oil and gas industry since the NNPC can now attract shareholders, declare dividends to its shareholders and retain some profit.

“We would expect clarity on the status of NNPCs existing assets and liabilities in order for it to run as a fully commercial entity.

“Although the federal government aims to provide energy security to Nigerians, we do not think petroleum products subsidy can continue for much longer under this new NNPC status.

“With a focus on profitability, the petroleum products that NNPC imports would have to be sold in commercially viable terms, therefore we would expect subsidy removal and petroleum products would be sold to Nigerias at a global market parity, sooner rather than later,” Olatunji said.


Dr. Boniface Chizea, MD/CEO at BIC Consultancy Services in a chat with EnergyDay said, the transition of NNPC to a Limited Liability Company is a welcome development for a Corporation which has not lived up to its billing in terms of its contribution to the overall development of the Nigerian economy.

He added that taking the initial first important step to the assumption of a private sector led entity automatically signals the fact that the profit motive would be the overriding basis for taking decisions going forward.
Dr Boniface said, “Hitherto, the NNPC was considered as a cesspit for corrupt enrichment and for the peddling of favours to family,  friends and cronies of those in government.

“The Corporation at a time became an albatross that was sinking the ship of State. There was so much lack of transparency, it is unbelievable. The volume of crude that was exported, even what was forcefully diverted, the volume of refined products that was consumed daily in the country galloped at such a worrisome and alarming pace that it was difficult to rationalize, the worrisome ill-advised  payments of subsidies were all shrouded in secrecy. The corruption that was found in this Corporation stank to high heavens.

“Therefore, any step that will change this extant scenario to prevent the narrative is a solid legacy worthy of celebration. With the registration of the company with the Corporate Affairs Commission, it means that the company now has its Memorandum and Articles of Association, which as we know is a blueprint that will guide the Company’s operations going forward.

“The rebranded Corporation has an initial shareholding of 200 billion Naira which for now is evenly held by the Ministry of Finance and the Company. It has 11 shareholders with Mele Kyari retaining his position as the Group Managing Director with Senator Mary Okadigbo as Chairman.

“The Company is expected to go to the market by middle of the year 2023 to raise money from the public, which opportunity will of course initially be dominated by Nigerians. it will be good to court International investors to give the Organisation desired International outlook to underscore the fact that best practice would be the order of the day.

“But realistically International investors will be forced to be adopting a wait and see attitude. We must face the facts that we have not conducted ourselves in a manner that will give confidence to would be foreign investors particularly from the perspectives of macro economic instability which has been the bane of our economy for a very long time now and made Nigeria an unattractive investment destination.

“Already complaints have been raised with regard to the spread seen in the Composition of existing shareholders. All that will change as soon as the Company goes to the Capital Market to raise money.  Investors reserve the rights to nominate those who will represent their interests.

“We expect that Nigeria would reserve a sizable interest, maybe the equivalent of not more than 49% adopting the LNG template. Saying the obvious, the new company must be private-sector managed without Government interference in any way.
“Otherwise it might be difficult to attract private funds. Once these steps are taken, we should expect to see a company that lives up to its tremendous promise of impactful contributions to the treasury.

We expect that preparatory to taking the company to the market that proper evaluation will be professionally undertaken to determine the actual net worth of the Company.

“If we have to pinpoint one aspect of our operations that has contributed more than its fair share to the continued lackluster performance of the Nigerian economy; NNPC has the cake in this respect,” the MD  of BIC Consultancy Services said.

Dr. Boniface therefore urged President Buhari to leave a legacy of taking the NNPC to the market before the expiration of his tenure. He added that Nigeria can no longer afford the luxury of the inevitable delays that will be consequent upon leaving an unfinished business in this connection as it will amount to costly waste of time.


He also noted that transition to a Limited Liability Company is a panacea with great potential to unlock the potential of the Nigerian economy which has been bottled up for so long to the chagrin and pain of all Nigerians.

Prof. Nuhu Obaje, a Geologist and the Director, Centre for Applied Sciences and Technology Research (CASTER), in a chat with EnergyDay, said that the transformation of the NNPC to NNPC Ltd is the concluding phase of the reform processes and the PIA, describing it as “a good omen.”

He noted that the financing of joint venture(JV) arrangements with different oil companies by the NNPC through cash calls gotten from the Government, will cease to exist as the NNPC Ltd is expected to generate its own revenue and fund its operations and existing projects, starting with its initial N200bn share capital.

“The corporation has been operating mainly in joint venture arrangements with companies that will now become its competitors. The JVs will be managed in a different arrangement and NNPC Ltd will go solo.

“In the joint ventures, NNPC had about 60% equity with Shell, Chevron, Exxon-Mobil, Total, Eni/Agip in which it was not the operator but backed up joint ventures with cash calls paid for by the government. This will be no more. It will be on its own. It will now be an operator in the upstream. No cash calls.

“It may still go into joint venture arrangements but as it may wish for the advancement of its business. Such decisions will be taken by the Board and not the government.

“NNPC had its own direct exploration in the NPDC and the FES. It may wish to now expand these units as its upstream arms but all in line of business and profitability,” he said.

Speaking on its commercial viability, he said that the NNPC Ltd and rival oil companies will now compete in the oil and gas market, make profit and pay taxes to the Federal Government while distributing dividends to their shareholders.

“It will be looking for money aggressively, anywhere and any business that will keep it afloat and enable it to meet its obligations,” he said.

In line with the position of the Ministry of Finance, through the office of the Ministry’s Permanent Secretary during the unveiling, Obaje said that the NNPC Ltd is expected to explore more crude oil, natural gas, coal, and other petroleum resources, particularly in the frontier basins.

“It can now freely explore more oil in the Benue Trough, Anambra Basin, Bida Basin, Sokoto Basin so long as it focuses on investment and profit. It can have a field day in the Niger Delta buying its own acreages. It can go to Ghana or the North Sea or the Middle East. All will be business.

“It is a national but independent oil company and it has similarities (national oil companies operating independently) to draw lessons from, Statoil (Norway), Saudi Aramco (Saudi Arabia), Petrobras (Brazil), Petronas (Malaysia), amongst others,” he noted.

Obaje further stated that the national oil company, which was previously responsible for the payment of fuel subsidies to various operators in the Nigeria oil and gas sector, may now find it difficult to cope once the Federal Government completes the ongoing process of phasal fuel subsidy removal.

“It can operate the refineries on a profitable basis. Only that I don’t know how it will do that with the subsidy burden. But I believe it will find a way around it if it is the one still doing the subsidy,” he said.

However, EnergyDay is quick to observe that the rules contained in the Petroleum Industry Act and CAMA demands for Management Performance Reports that should be available in the public domain.