Nigeria plans global investment roadshow ahead of NNPC IPO

A few weeks after the state-oil firms said it has secured the president’s consent to proceed with offering NNPC’s shares to the public, the oil sector regulator says it will soon commence an international investment roadshow for investors, at a conference in Lagos, on Monday.

In a speech at the Society of Petroleum Engineers (SPE) Conference, Gbenga Komolafe, head of the Nigerian Upstream Petroleum Regulatory Commission, (NUPRC), through a representative, Gabriel Nsa, said the roadshow will help investors see the vast opportunities available in Nigeria’s oil and gas sector.

“The Commission will in the weeks ahead organise its maiden Nigeria Upstream International Investment and Financial Roadshow that will provide an opportunity for new asset awardees and upstream industry players to network, exchange ideas, and chart strategic pathways for innovative financing structure,” said Komolafe.

An investment roadshow is a series of presentations made in various locations leading up to an initial public offering (IPO). The Roadshow is a sales pitch or promotion made by the underwriting firm and a company’s management team to potential investors before going public.

Nigeria’s state-oil firm, the Nigerian National Petroleum Corporation (NNPC) Ltd, became a commercial venture company on July 19, 2022, after the Petroleum Industry Bill became law the previous year. Mele Kyari, Group CEO of NNPC, had previously said the company would be ready to launch an IPO by mid-year in 2023 during a transition ceremony.

The NNPC was expected to be ready for an IPO by the end of the second quarter, according to the NNPC Ltd’s quarterly report but this is yet to happen. The corporation is yet to publish its audited accounts for 2022 and its books require thorough cleaning after years of subsidising petrol and intervening in various sectors of the economy.

At an oil and gas conference in Abuja on July 12, the NNPC boss assured a roomful of oil experts and operators that the corporation’s IPO plan has gotten the backing of the president,

“We will go to the market and this is going to happen soon. This is the new direction, and I can confirm to you that Mr President is completely committed,” Kyari said.

The international investment road show announced on Monday by the oil regulator seemed to indicate that plans are advancing along.

An initial public offer process can be a long and complex one for any company but for the NNPC Ltd which published its first audited accounts after four decades of operation and who since then has struggled to keep the books in order, the process becomes quite complicated.

Analysts say the NNPC Ltd has to strengthen it financials in order to attract investors. This means having a positive cash flow, a low debt-to-equity ratio, and a growing revenue stream.

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The state-owned oil firm would also need to clean up its image and improve on corporate governance practices. Having long operated like a regulator, the NNPC Ltd would need to convince its partners and would-be investors that it would shun its cavalier approach when dealing with them and pay its own share of costs in oil development plans.

“As an incorporated entity, NNPC Ltd could position for an IPO, but this is unlikely before 2024 at the absolute earliest,” said analysts at Tellimar Insights in their note.

Nigeria’s oil regulator in his speech said the country was turning its focus on gas after declaring a year of gas in 2020 and a decade of gas from 2021 – 2030.

Consequently, Nigeria was ramping up gas supply to 12 BCF daily from the current 8bcf with projects like the Akk pipeline, NLNG Train 7, the Trans Sahara pipeline among others key to unlocking the plan.

The Commission also said it was accelerating other key imperatives to guarantee energy security and sustainability through the instrumentality of the PIA 2021.

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These imperatives include hydrocarbon value optimisation, greenfield development, peaceful and harmonious co-existence between operators and host communities, cost monitoring and benchmarking, and decarbonisation.

This is to help unlock energy access for Nigeria and Africa where millions lack access to energy even as the continent’s energy demand is increasing rapidly due to population growth, urbanisation, and an increase in economic activities.

This indicates that the continent requires a significant uptick in energy supply to meet the energy gap and meet the United Nations Sustainable Development Goals, he said.