What NNPC Transition Implies, By Kyari
Firm to float IPO in 2023
July 20, 2022
The Chief Executive Officer of Nigerian National Petroleum Company (NNPC), Mele Kyari, has explained some of the changes that would happen based on the transition of the firm from a corporation to a limited company.
President Muhammadu Buhari, had on Tuesday officially unveiled the NNPC Limited and declared that the new entity was henceforth free from institutional regulations.
Buhari, who made this public at the Presidential Villa, Abuja, stated that the oil firm would from now on conduct itself under best international business practice.
In view o this development, Kyari said: “You now have a smarter, more responsive and much more accountable company that must act within the premises of all regulations that are in Nigeria for private companies.
“It must also meet the standards of best practice in every industry in terms of governance, complying with regulations and beyond these, eyes are on the ball that your shareholders are expecting you to deliver value to them.
“That value must translate in two forms. One is that they must see dividends and the second part is that you must deliver energy in this country. This company is now in a position to do both of them because it is now a nimble company, can act, borrow and return peoples money quickly.”
He said the firm would now make decisions very quickly, get the best class of people anywhere in the world, inject them into the company and get its Initial Public Offer (IPO) ready by June 2023.
“I am sure Nigerians will see a very different company in the coming days and months. And we are convinced that by the mid of next year this company will be IPO ready,” Kyari stated.
Proving further explanation, he said, “IPO ready means that you have systems and processes lined on the side of profitability and is a company that is accountable to its shareholders and stakeholders.
“Simply that is what IPO processes look for; to see that you have the assets. Today government has transferred those assets to NNPC and we have very ample assets that nobody has in this country and, of course, not even in Africa.”
Asked to explain how the oil firm would handle subsidy on petrol being a commercial entity, Kyari replied that fuel subsidy was not a burden of NNPC.
He said, “Subsidy is not NNPC’s burden. Subsidy is the decision of the state and in every jurisdiction anywhere in the world, countries see them differently. In some countries, they put petroleum tax on top of the market price of these products.
“So when decisions are to be made in some jurisdictions they will reduce the level of taxation. That also is another form of subsidy. In some countries, you have zero taxation but you will pay the market price for the commodity. That also in a way, in fiscal system, looks at it from a subsidy point of view.
“In very many countries, a leader can decide that I don’t even want my countrymen to buy it at the market price. I’m ready to reduce that price for them so that they can buy.”
Kyari added, “In either case, whichever way the decision and the policy of the state decides, you know NNPC is there in the space to provide the product to the state at commercial value and, of course, it is also our duty to deliver to the customer at the price that the state wants.
“So it is no longer an NNPC issue. NNPC will have no issue with this. NNPC will be happy to supply because we will now see the state as our customer.”
He further explained that the new NNPC had no need for a sovereign guarantee, as lenders would only ask for such when the company seeking the loan lacked access to its assets.
“Today the assets are in our books and have been transferred to us. That is what banks are looking for, and that is the reason why they ask for a sovereign guarantee,” he stated.
The NNPC boss denied claims that the company’s workforce was bloated, as he stressed that “today our total population is just 7,000 and I believe that with the expansion we have in the plan we are going to get more people to work for us.
“The law has also provided that no one is going to leave this company. Everybody’s work is preserved, their benefits are preserved. So, there is no matter of concern for the employees of this company.”
He disclosed plans to construct 950 more fuel retail outlets as part of the company’s comprehensive expansion plan before 2023.