At Nigerian National Petroleum Company Limited (NNPCL) on Friday took over the assets of the national oil company (NNPC) after 46 years of operation as a company.
The final ceremony which officially marked the birth of NNPCL took place at the corporate tower in Abuja on Friday.
The company took over after obtaining legal requirements within 18 months determined in accordance with section 54 (3) of the Petroleum Industry Act (PIA) 2021 and the company transferred to a company whose operations will be regulated by the Companies and Allied Companies Act ( CAMA).
President Muhammadu Buhari has in July 2022 opened the new Nigerian National Petroleum Company Limited, a landmark development that officially changes the oil company from an all-state entity to a commercial oil company, limited by Shares.
The legal transition, based on the new Petroleum Industry Act, takes effect July 1. NNPC completed the merger in September 2021 weeks after PIA was signed into law by President Buhari.
NNPC Limited was later floated with an initial capital of N200 billion making history as the company with the highest share capital in the country.
The new entity is expected to be a commercially oriented and profit-making national petroleum company independent of the government, although government entities will remain shareholders. It will be audited annually.
Speaking on Friday, the Minister of State for Petroleum Resources, Timipre Sylva, noted that with the reforms implemented by the federal government, NNPCL is expected to become a competitive and commercially oriented company.
“To achieve our desired goals, deliberate efforts must be made to implement the law in the best possible way to achieve our stated goals in line with the wishes and aspirations of Nigerians whose lives will be affected by the consequences of our decisions and actions.
“As part of its commitment to achieve a viable National Energy Company, PIA has set a stop date of 18 months from the effective date of the Act as a timeline in which the full transfer of assets, interests and liabilities must be completed,” Mr. Sylva said.
He added that PIA empowers NNPC Limited to operate like every private company in Nigeria with exemptions from the Fiscal Responsibility Act, Public Procurement Act and TSA to ensure that there is no excuse for failure.
“In return for this empowerment, PIA expects a commercially oriented National Energy company with an obligation to operate profitably and deliver dividends to its shareholders.
“NNPC Limited is positioned to lead Africa’s gradual transition to new energy, by expanding natural gas production to create low-carbon alternatives and change the story of energy poverty at home and around the world,” he said.
Speaking before the Chief Executive Officer of the NNPCL Group, Mele Kyari said that the new company with assets of more than $60 billion will increase its profits from the current $2 billion announced by the oil company for its 2021 operations.
New Dawn
Mr. Kyari said that before the transition, the company had challenges in its operations.
“Now everybody can see that we are a big company. No company has $60 billion in assets. No one in this country.
“So, we are the biggest company in this country. We are also the biggest company in Africa. Let me be frontal about this, our past structure was designed around individuals and geopolitical zones. That is no longer the case. Today we have a management structure that thin that only recognizes our ability to deliver,” he said.
He noted that the law provides that if NNPC may decide to abandon certain classes of assets, NNPC Limited has decided to take over all the assets and liabilities of the dormant company.
“But you will ask me, so what do I want with these assets? These assets are the assets of the overall joint venture and other businesses that the company owns. The shareholders have transferred all the assets to us, so there are no assets left outside.
“The law provides that we have the potential to leave some. According to the current count, every asset of the company, including its liability has been transferred to NNPC Limited and I repeat that the liability is lower than the assets it has. So, the situation is very satisfactory, “he said.
With the new law, he said there is now a clear line on the company’s financing operations, including the retention of the 30 percent share of dividends and oil profits from the Production Sharing Contract (PSC).
He noted that NNPCL has a strong brand and is able to attract funding for its business, assuring that the company will provide energy security to the people of Nigeria while making money for the country.
“By the fiscal year 2020, we have brought this company from 43 years of losses to a profit position of N287 billion and by 2021 we have achieved a profit level of N674 billion. We are confident that we will do better in 2022 despite the challenges.
“But I must also add that this is not a N674 billion company. By the way, it is less than $2 billion. We are not a $2 billion profit company. You cannot do $2 billion with assets of $60 billion. So we can still do better .
Also read: Fuel subsidy now above N400bn monthly – NNPCL
“We have seen friends who have 50 percent of the assets, and have declared almost $ 9 billion. It is possible in this business and we will get it,” said Mr. Kyari.
“So how can we catch up? First, we’re going to cut costs. We’re cutting costs because when your costs are high, you’re going to have problems and you can’t make a profit.
“We increase production. With all these challenges, we will increase production because many things now you can call force majeure but even force majeure is created by something and we respond when something creates a force majeure situation and we overcome it.
“And that’s why in July 2022, we’re down to one million barrels per day of combined crude oil and condensate. That’s pathetic, unfortunately. But I dare say it’s avoidable and we’re responding. Today, until yesterday, we’ve exceeded 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 said.
agreement
Meanwhile, NNPCL on Friday signed an agreement with Gambia National Petroleum Company (GNPC) to collaborate in the oil and gas sector.
The memorandum of understanding (MoU), according to the company, includes collaboration between the two companies in frontier exploration, crude oil market expansion opportunities and technology transfer in search of greater energy security.
The signing of the agreement took place at the NNPC headquarters in Abuja.
“Interesting areas include the exploration of new frontiers; opportunities for crude oil market expansion and technology transfer in search of greater energy security for both countries and the West African sub-region,” the oil company said.
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