It is time for NNPC to rival its peers

July 2022 was a watershed for the Nigerian National Petroleum Corporation (NNPC) as it transitioned into a profit-driven commercial entity, now to be known as NNPC Limited. As a limited liability company, it will be governed by the Companies and Allied Matters Act (CAMA). It has activities locally and internationally, especially the exploitation and exploration as well as financial reporting.

It is a dream come true for individuals and civic organisations that have canvassed for the new status NNPC Limited now enjoys. To the proponents that wanted NNPC Limited to be commercially oriented, they see no reason why Nigeria’s NNPC Limited cannot rival the likes of Saudi Arabia’s Aramco; Brazil’s Petrobras; Russia’s Gazprom, or Malaysia’s Petronas.

In 2019, Saudi Aramco sold 1.7 percent of its stake to global investors, and succeeded in the process to raise $29 billion. At the end of the first quarter that ended in March 2022, Saudi Aramco reported a net income of $39.5 billion, up from $21.7 billion in the comparable period in 2021. This firm has overtaken Apple as the most valuable company across the globe.

Now that the NNPC has transited to NNPC Limited, with listing target set for mid-2023, it is now time for the management of the enterprise to open its book for public scrutiny

Petrobras of Brazil is among the largest producers of crude oil and gas in the world. It is engaged in exploration, production, refining, and energy generation and trading. As of March 2022, the publicly traded Petrobras had a market value of $93.3 billion. It is listed on Sao Paulo Stock Exchange and New York Stock Exchange with over 815,000 shareholders and ADR holders.

The ownership structure of Petrobras is not in ambiguity. The Brazilian Federal Government controls 28.67 percent; BNDES/BNDSPar owns 7.94 percent; Brazilian individual investors through Sao Paulo Stock Exchange own 18.21 percent. Other foreign investors on the Sao Paulo Exchange control 24.70 percent, while the New York Stock Exchange controls 20.48 percent.

Petrobras’ ambitious strategic plan for 2022-2026 aims to keep debt under control, focus on resilient assets, refining modernisation and quality products, new frontier equatorial margin, and net zero ambition and governance for profitable diversification, among others.

Gazprom is Russia’s state-owned company and one of the biggest crude oil producers in the world. In 2021, the company reported a net profit of $29 billion, up from $1.84 billion in 2020. The huge profit reported was driven by higher crude and gas prices.

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In terms of ownership structure, the Government of Russia controls 38.37 percent stakes, according to Statista. AO Rosneftegaz 10.97 percent; AO Rosgazfikatsiya, 0.89 percent; ADR Holders 16.71 percent, and other registered holders, 33.06 percent.

Petronas is Malaysia’s oil and gas corporation that is into upstream, downstream, gas business, new energy, among others, and has presence in over 50 countries of the world. In 2021, the company realised $10.69 billion as profit after tax, up from a loss after tax of $4.63 billion in 2020. In the first quarter of 2022, Petronas realised $5.14 billion as profit after tax.

From the above, it is clear that all the NNPC’s peers across the world are doing well profitably. They are also spearheading the technological innovations that will improve their top and bottom lines as well as for a sustainable future. Petronas organises tech challenges with a view to crowdsourcing game-changing technology solutions for its complex operational challenges.

Now that the NNPC has transited to NNPC Limited, with listing target set for mid-2023, it is now time for the management of the enterprise to open its book for public scrutiny. This will allow likely future investors to know what is at stake, and be able to make informed decisions about the commercial enterprise when the time comes.

The public should also be well sensitised to know that it is no longer business as usual. This is necessary because the success of a programme like this requires public support for successful implementation.

Ownership structure of the enterprise should be well-diversified, taken into consideration of the different economic and ethnic blocs in the country. Just as foreigners can get the ownership structures of those foreign petroleum exploration companies across the world, NNPC Limited should not be different.

The recent transition is commendable as it is a step in the right direction. The Federal Government should ensure the project is successfully completed from having an NNPC Limited that is run by professionals resulting in an enterprise that will rival Gazprom, Petrobras, Petronas, in a not too distant future.