You need to active Javascript on your
BusinessDay
Nigeria's leading finance and market intelligence news report.

New NNPC, ownership structure and board appointments

The Nigerian National Petroleum Company (NNPC) Limited has come into being as provided for in the Petroleum Industry Act (PIA) 2021. President Muhammadu Buhari has, consequently, caused the incorporation of the new company.

Following the incorporation, which is in line with Section 53(1) of the PIA, the president has also made appointments into the board of the company, leading to the emergence of its chairman and members.

While Ifeanyi Ararume, a frontline politician from the South Eastern part of Nigeria, has been appointed Chairman of the board, Mele Kolo Kyari and Umar I. Ajiya are Chief Executive Officer, and Chief Financial Officer, respectively.

Other members are Tajudeen Umar (North East); Lami O. Ahmed (North Central); Mohammed Lawal (North West); Margaret Chuba Okadigbo (South East); Constance Harry Marshal (South South); and Pius Akinyelure (South West).

The new PIA under Section 59(2) gives the president the power to approve the appointment of the Board and Management of the NNPC Limited, with effect from the date of incorporation of the Company. This gives nobody any grounds on which to question the propriety or otherwise of the president’s choices and decisions in that connection.

Again, from the composition of the board, the appointment seems to be representative enough of the six geopolitical zones of the country and so, we commend the president for that new consciousness that appears to be nationalistic contrary to what the present government is known for.

Read Also: Rebirth of NNPC best legacy of Buhari’s administration – Group

But we are worried that the president did not look far away from his political constituency in making the appointments, especially the chairmanship of the board. We see everything wrong in the president’s choice of politicians as board members.

We expected the president to appoint technocrats into the board, given the kind of purpose the company is set out to serve and Nigerians’ expectations from it

We expected the president to appoint technocrats into the board, given the kind of purpose the company is set out to serve and Nigerians’ expectations from it and its board and management. The chairmanship of the board, in our view, should have looked in the direction of technocrats who are not in short supply in the country.

Many of the former managing directors and executive directors of the old NNPC are still very much around and would have been fit-for-purpose for that job given their wealth of experience, insider knowledge and sense of proper direction for the new company.

We expected that the new NNPC should be a clean break away from the old amorphous and money-guzzling entity that was seen more as federal government private estate or its Automated Teller Machine (ATM) than an enterprise with public purpose and national interest.

The ownership of the new NNPC is yet another source of worry to some Nigerians and we are not insulated to that worry. Though the Nigerian Governors Forum (NGF) supports the unbundling and commercialisation of the company, it faults the aspect of the PIA provisions that places its ownership on the federal government.

The forum would rather that the company is owned by Nigeria Sovereign Investment Authority (NSIA). We can’t agree more for obvious reasons.

As it is now, the ownership of all shares in the incorporated NNPC are vested with the government, and the Ministries of Finance and Petroleum hold the shares on behalf of the government and these shares are not transferable.

The NGF reasons that, given that the three tiers of government own the corporation, the new incorporated entity, that is the NNPC Limited, should be owned by a vehicle that holds the interest of the three tiers of government. That vehicle, according to them, is the NSIA.

Though, characteristically, the Nigerian governors would always come up with, or support propositions that are heavily tainted with selfish interests, in this particular instance, their reasoning appears to be not only logical, but also in public interest. And we share in that reasoning.

Like other well meaning Nigerians, we have our expectations not only from the new NNPC, but also from the PIA which gave it life. In our view, though the PIA is coming about 20 years behind expectations, there are still so much that could be achieved with the Act if properly implemented.

In the case of the new NNPC, the unbundling and commercialization of the old horse is expected to provide jobs and other commercial and economic opportunities that will impact the economy positively through the creation of activities that will improve household income and institution’s bottomline.

It is on the strength of that we urge President Buhari and his government to do all in their power and muster enough political will to see that both the PIA and the new NNPC succeed. If there are any particular changes or amendment that could be made, especially in the present structure of the new NNPC, to enable it to succeed, we are all for it.

Get real time updates directly on you device, subscribe now.