He Nigerian National Oil Company Limited (NNPCL) took over the assets of the national oil company (NNPC) on Friday after 46 years of operations as a corporation.
The final ceremony officially marking the birth of NNPCL took place on Friday at the corporation’s towers in Abuja.
The company took over after fulfilling the statutory requirements within 18 months stipulated in accordance with section 54(3) of the Petroleum Industry Act (PIA) 2021 and the corporation became a company whose operations They will be regulated by the Business and Related Matters Law (CAMA).
President Muhammadu Buhari had launched the new Nigerian National Petroleum Company Limited in July 2022, a landmark event that officially changed the oil company from a wholly state-owned entity to a commercial oil company, limited by shares.
The legal transition, based on the new Oil Industry Law, came into effect on July 1. The NNPC completed its incorporation in September 2021 weeks after President Buhari signed the PIA into law.
NNPC Limited was then launched with an initial capital of N200 billion, making history as the company with the highest registered capital in the country.
The new entity is expected to become a for-profit, commercial national oil company, independent of the government, although government agencies remain its shareholders. It will be audited annually.
Speaking on Friday, Minister of State for Petroleum Resources Timipre Sylva noted that with the reforms introduced by the federal government, NNPCL is expected to be a commercially oriented and competitive company.
“To achieve this desired end, a deliberate effort must be made to implement the law in a way that best achieves its stated objectives in accordance with the wishes and aspirations of Nigerians whose lives will be affected by the consequences of our decisions and actions. .
“As part of the commitment to achieve a viable National Energy Company, the PIA set a long deadline of 18 months from the effective date of the Law as the period within which the total transfer of assets, interests and liabilities,” said Mr. Sylva.
It added that the PIA authorized NNPC Limited to operate like any private company in Nigeria with exemption from the Fiscal Responsibility Act, the Government Procurement Act and the TSA to ensure there are no excuses for failure.
“In exchange for this empowerment, PIA expects a strong, commercially oriented national energy company with a mandate to operate profitably and deliver dividends to shareholders.
“NNPC Limited is positioned to lead Africa’s gradual transition to new energy, deepening natural gas production to create low-carbon alternatives and changing the story of energy poverty at home and around the world,” he said.
Speaking earlier, NNPCL Group Chief Executive Mele Kyari said the new company with more than $60 billion in assets would look to boost its earnings from the current $2 billion declared by the oil corporation for 2021 operation.
New Dawn
Kyari said that before the transition, the corporation had challenges with its operations.
“Now everyone can see that we are a great company. There is no company with 60,000 million dollars in assets. It does not exist in this country.
“So, we are the largest company in this country. We are also the largest company in Africa. Let me be upfront about it, our past structures were designed around people and geopolitical areas. It’s not like that. Today we have a thin management structure that recognizes only our ability to deliver,” he said.
He noted that while the law provides that NNPC could decide to leave certain classes of assets, NNPC Limited has resolved to take over all of the assets and liabilities of the defunct corporation.
“But they will ask me, so what do I want to do with the assets? Assets are the general assets of joint ventures and other businesses that the company has. The shareholders have transferred all the assets to us, so there are no assets left out.
“The law states that we can potentially leave some of them behind. Based on today’s tally, every asset of the corporation, including its liability, has been transferred to NNPC Limited and I repeat, the liabilities are far less than the assets we hold. So, it’s a very comfortable situation,” he said.
With the new law, he said, there is now a clear line of sight on the company’s financing operations, including withholding part of dividends and 30 percent of oil profits from Production Sharing Contracts (PSCs).
He noted that NNPCL has a powerful brand and can attract funds for its businesses, ensuring that the company will provide energy security for the Nigerian people while generating money for the country.
“For fiscal 2020, we brought this 43-year loss-making company back to a profit position of N287 billion and by 2021 we reached a profit level of N674 billion. We believe that we will do better in 2022 despite all the challenges.
“But I should also add that this is not a N674 billion company. By the way, this is less than $2 billion. We are not a $2 billion profit company. You can’t make $2 billion with $60 billion in assets. So we can still do better.
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“We have seen our peers holding maybe 50 percent of these assets and have declared close to $9 billion. It is possible in this business and we will catch up,” Mr. Kyari said.
“So how do we catch up? First, we will reduce our costs. We’re cutting costs substantially because when your cost is high, you run into trouble and you can’t make a profit.
“We are increasing our production. With all these challenges, we will grow our production because a lot of things today can be called force majeure, but even force majeure is created by something and we are responding to that something that is creating the force majeure situation and we are dealing with it. .
“And that’s why in July 2022, we’re down to almost a million barrels a day of crude oil and condensate combined. That was pathetic, unfortunately. But I dare say that maybe it was preventable and we responded. Today, as of yesterday, we have crossed 1.6 mbpd.
“This is not rocket science. And we have a line of sight to recover the budget level of 1.8 mbpd,” he added.
Agreement
Meanwhile, the NNPCL signed an agreement with the Gambia National Petroleum Company (GNPC) on Friday for collaboration in the oil and gas sector.
The memorandum of understanding (MoU), according to the company, contemplates the collaboration between both companies in border exploration, opportunities for expansion of the crude oil market and technology transfer towards the search for greater energy security.
The signing of the agreement took place at the NNPC headquarters in Abuja.
“Areas of interest include exploring new frontiers; Opportunities for the expansion of the crude oil market and technology transfer towards the search for greater energy security for both countries and the West African sub-region,” the oil firm said.