NNPC Limited In 2022: A Prospective12 min read
By Adewole Kehinde
On July 19, 2022, the Nigerian government made an official announcement confirming the complete transformation of the Nigerian National Petroleum Corporation (NNPC) into NNPC Limited (NNPC Limited).
NNPC Limited is a brainchild of the Nigerian Petroleum Industry Act (PIA) which was passed into law in August 2021.
The NNPC was a state-owned and controlled corporation licensed to operate in the country’s petroleum industry which utilized the country’s fossil fuel and natural gas reserves by partnering with foreign oil companies.
Following the unveiling, the NNPC became fully commercialized and transited into a limited liability company.
It is important to note that as an offshoot of the Petroleum Industry Act (PIA) 2021 which was enacted to provide for the legal, governance, regulatory and fiscal framework for the Nigerian Petroleum Industry, NNPC limited is expected to operate within the provisions of the Act.
The Chief Executive Officer (CEO) is no longer referred to as Group Managing Director (GMD) but is now referred to as Group Chief Executive Officer or Group CEO.
The vision of the company is: to be the dynamic global energy company of choice and its mission is reliably delivering energy while continuously creating value for all stakeholders.
In line with Section 53(1) of the PIA 2021, with the transition, the government will no longer have control over the staffing of the NNPC limited.
Also, Section 53 (5) of the Act stipulates that shares of the company held by the government are not transferable or mortgaged unless approved by the government and the National Economic Council.
With NNPC Limited coming on board, the new company will no longer be concerned with issues of petrol price determination, and subsidy.
The new NNPC Limited will no longer remit funds to the Federation Accounts Allocation Committee (FAAC).
Sector 54(9) provides that the initial capitalization of the NNPC Limited will not be less than its financial requirements to effectively discharge its commercial duties and deal with its obligations and liabilities transferred to it.
The Federal Government will put an end to funding its projects as was obtainable since its inception.
According to the law, the company will run on a commercial basis profitably and efficiently without recourse to government funds and shall declare dividends to shareholders and retain 20 percent of profits as retained earnings, to grow its business.
Apart from profit-seeking, NNPC Limited is expected to operate above board by mandatorily making disclosures for every financial year.
Most importantly, NNPC Limited will be ready for an Initial Public Offer (IPO) in the next 18 months.
Meanwhile, President Buhari said the New NNPC would guarantee energy security, free from institutional regulation.
Buhari said this at the unveiling of the Company which was held at the State House, Abuja.
Sharing his vision for the petroleum industry reforms and the new corporate entity, the president said that his administration was keen on creating the right atmosphere to attract investment and grow the country’s economy.
Buhari also said that NNPC Ltd. would play an important role in the global energy market.
“NNPC is mandated by the law to ensure Nigeria’s national energy security is guaranteed to support sustainable growth across other sectors of the economy as it delivers energy to the world.”
Describing NNPC Limited as Africa’s largest national oil company by capitalization, he said that the company now had the impetus to become a self-governing entity free of government control.
“The provisions of the PIA 2021 have given the Nigerian petroleum industry a new impetus.
“An independent National Oil Company that will operate without relying on government funding and free from institutional regulations such as Treasury Single Account, Public Procurement, and Fiscal Responsibility Acts.”
He, however, declared that NNPC Ltd. would henceforth conduct itself under the best international business practice in transparency, governance, and commercial viability.
Speaking in a similar vein, the Minister of State for Petroleum Resources, Chief Timipre Sylva, said that the Buhari administration had been very clear from the onset about its desire to create a more conducive environment for the growth of the oil and gas industry.
Describing the unveiling of the new NNPC as a “remarkable milestone”, Sylva expressed optimism that the company would live up to its mandate.
“This is one of the magnanimous provisions of the PIA, which is being unveiled at this important occasion.
“The unveiling of NNPC Limited today is a new dawn in the quest for growth and development of the Nigerian oil and gas industry, opening new vintages for partnerships,” Sylva said.
In the meantime, NNPC Ltd. announced plans to aggressively grow its petroleum products retail outlets across the country by 174 percent; that indicates an increase from the current 547 to 1,500 in the next six months.
This development was to keep to its new focus on commercial viability and profitability in the pursuit of its mandate to provide energy security for Nigeria.
Group Chief Executive Officer (GCEO) of NNPC Ltd., Malam Mele Kyari, announced the presidential unveiling of the new NNPC as provided by the PIA 2021.
“We have taken a strategic initiative to achieve our mandate of ensuring energy security for our country by rolling out a comprehensive expansion plan to grow our oil retail outlets from 547 to over 1,500 within the next six months,” Kyari said.
On the prospects of the new NNPC, he said that the Company was primed to succeed considering the array of talents, skills, and professionals in its employ, adding:
“NNPC Limited is positioned to lead Africa’s gradual transition to new energy by deepening natural gas production to create low carbon activities and positively change the story of energy poverty at home and around the world.”
With the new commercial focus and corporate identity, NNPC would now be regulated in line with the provisions of the Companies and Allied Matters Act (CAMA).
Mele Kyari’s Achievement
Mallam Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited from all indications, is undeniably a game changer.
Mallam Kyari is a hard-working gentleman with a perfect magical touch, full of diverse knowledge, ideas, and experience that he has used to transform the NNPC from what it was to an exceptional powerhouse in Africa and around the world.
Mallam Mele Kyari rolled out Transparency, Accountability, and Performance Excellence, a blueprint to ensure the NNPC’s continued success both at home and abroad, as soon as he took office as the 19th GMD of the then NNPC.
In just a few years, Kyari has significantly increased national crude oil reserves to meet the 40,000-billion-barrel target through focus and commitment. Kyari has increased exploration work in some basins as well as drilling of specific oil wells. Drilling of the Kolmano River II and III wells, as well as seismic data collection in the Bida and Sokoto basins, are just a few examples.
With the nation’s crude oil reserves on the rise, the country’s oil production was pursued with a single goal in mind: to increase output to three million barrels per day through peaceful negotiations. Similarly, production shortages caused by oil blocks were addressed, and sabotage that reduced the country’s oil production was precisely managed.
Concerning the country’s oil production, Kyari led NNPC Limited to a future investment of N10 billion for the development of the Bonga South-East Field, following a peaceful conclusion and agreement on a deep offshore block, OML 118.
Kyari led the NNPC Limited in securing several alternative funding facilities for the NPDC and some of the Joint Ventures projects, allowing for further asset development. These include the N875.75m NPDC OML 65 Alternative Funding and Technical Services Package with CMES-OMS Petroleum Development Company and the $3.15bn Alternative Financing Package for the development of NPDC’s OML 13 with Sterling Exploration and Energy Production Company Limited (SEEPCO) and other partners.
To reduce the burden of petrol importation, Kyari made sure the NNPC LTD keyed into the decade of gas initiative, led by Timipre Sylva, the Minister of State for Petroleum Resources, to launch the autogas initiative. Kyari’s foresight led him to invest heavily in the gas sector in a bid to effectively change the nation’s trajectory to a gas-driven economy. This was done with the signing of the NLNG Train 7 project, a future promising project, with the hope of delivering over $20bn in revenue to the government and the creation of 50,000 direct and indirect jobs. With the Russia-Ukraine crisis, Nigeria is now on the verge of being one of the world’s largest gas-exporting countries all over Africa and Europe.
It is also on record that the Kyari-led NNPC Limited saw the successful commencement of the construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project with a saving of $300m from the initial amount. The AKK project has the capacity of making available around 2.2 billion cubic feet of gas per day with the expansion of the pipeline systems to double delivery capacity from 1.5BCF/D to over 3.5BCF/D.
To fully cater to the demands of gas domestically, the GCEO also commissioned the Oredo Integrated Gas Handling Facility (IGHF) and the Liquefied Petroleum Gas Storage and Dispensing Unit, with the ability to deliver over 200 million standard cubic feet of dry gas per day and 330 metric tonnes of Liquefied Petroleum Gas (cooking gas) which is equivalent of 16 units of 20 tonnes LPG trucks per day into the domestic market.
Similarly, Kyari saw to the Final Investment Decision (FID) of the Brass Fertiliser and Petrochemical Company for the $3.6bn Brass Methanol Plant in Odioma, Bayelsa State. He also spearheaded another investment with the signing of a $260m financing agreement for the Assa-North Ohaji South (ANOH) Gas Project with Seplat, promising about 300 million standard cubic feet of gas per day and 1,200 megawatts of electricity to the domestic market. The NNPC Boss also facilitated the United States Trade and Development Agency (USTDA) Grant which will assist in the upgrade of the 1350MW Abuja Independent Power Project to World Bank Standard for bankability.
Since Nigeria relies heavily on petroleum products importation, proper measures were needed to manage its importation, supply, and distribution to get to Nigerians without difficulties where ever they may be within the country, hence Kyari introduced “Operation White” which has ensured a steady fuel supply. This explains the fastest detection of the root cause of fuel scarcity that hit the country in the early months of this year. It was quickly detected that there were cargoes with high methanol content. Immediately, the methanol-blended petrol cargoes were removed from the market and this was what created the vacuum that led to petrol scarcity.
In response to the scarcity, under the leadership of Kyari, NNPC Limited imported huge quantities of petrol that bridged the supply gap created, and in no time, normalcy was returned and the scarcity disappeared.
The rehabilitation of refineries is another key area where Kyari has performed very well, investing billions for the reviving of the long deteriorating refineries that have been in a state of neglect. The Port Harcourt, Kaduna, and Warri refineries are all marked for rehabilitation. This, he did, to reduce the cost of importing petroleum products for the country and create more jobs for the teeming youths.
The NNPC has also invested in the Dangote Refinery, which is set to produce 650, 000 barrels of crude petroleum daily, making it the largest, such refinery in the world. As such, it will meet the country’s demand for 57 million liters of petrol per day, 27 million liters of diesel daily, 11 million liters of kerosene daily, and nine million liters of aviation jet per day.
It is instructive to say that this investment is timely and in tune with the new direction and structure of the NNPC as a public limited liability company. Furthermore, this will strengthen the domestic refining capacity and improve the petroleum products supply from local refineries. This is one of the six refineries in which the NNPC Limited seeks to invest in line with the vision of improving domestic refining capacity, strengthening petroleum products supply from our local refineries, and becoming a net exporter of petroleum products to give the economy a more solid boost.
Kyari also provided an oil reservoir to save the country in terms of its needs until things revert to normal. Under his watch, the passage of the Petroleum Industry Act came to be, after the country has not been able to have this legislation for almost two decades despite its importance. The Petroleum Industry Act provides for the transitioning of the NNPC into a fully commercial entity, a Limited Liability Company incorporated under the Companies and Allied Matters Act (CAMA), known as the Nigerian National Petroleum Company Ltd.
Just as the World Bank had advised, Kyari believes that subsidy removal, though a tough decision will end up helping the government financially and doing better for the economy, as it will boost investments across the oil and gas sector.
In the area of financial transparency, Kyari made public the audited financial statements of NNPC Limited, with the Company recording its first-ever profit in its 44 years history. Subsequently, the management continued with the Publication of the Corporation’s Monthly Financial & Operations Reports (MFOR) in line with his TAPE vision, thus placing the NNPC Limited as the only national oil company that publishes its financial and operations reports monthly globally.
As far as Transparency is concerned, Kyari spearhead the enlisting of the NNPC Limited with the Global Extractive Industry Transparency Initiative as an EITI Supporting Company which places NNPC Limited in the group of over 65 extractive companies, state-owned enterprises that commit to observing transparency and accountability standards defined by EITI.
The Kyari’s stewardship also saw the construction and rehabilitation of 21 roads under the FG’s Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme. The provision of jobs and inclusion of relevant stakeholders is another area Kyari has placed his magical touches on, aside from the recruitment of over a thousand graduate trainees. Indigenous Nigerians were also engaged in carrying out jobs for the NNPC Limited.
Still, under the leadership of Mallam Mele Kyari, the NNPC has commenced the construction of a 50-megawatt gas turbine power plant, the Maiduguri Emergency Power Project (MEPP), expected to generate electricity for the capital city and its environs following the sabotage of the existing facilities by insurgents.
Kyari’s achievements have been reflected in all areas, even outside the oil and gas sector as during the outbreak of the COVID-19 pandemic, he facilitated the sum of N21bn from the oil and gas sector to support the COVID-19 fight. Under the leadership of Kyari, 26 percent of the fund was deployed for the provision of logistics and in-patient support equipment such as ambulances, ventilators, isolation centers, etc.
Other notable achievements of the exceptional NNPC Group Chief Executive Officer include the implementation of various International Financial Reporting Standards (IFRS) 9, 15, and 16 across NNPC Limited Group to ensure regulatory compliance as well as the implementation of the Centralized Invoice Processing System, integration of systems, applications and products to Remitta, SAP Funds management and issued conditions for financial autonomy of NNPC Limited SBU.
Kyari’s administration has also inaugurated the NNPC Limited Delivery Team charged with the responsibility of ensuring the effective performance tracking of the top five priorities across the business as well as launching the NNPC Limited Code of Conduct and Tip Portal. Also, Kyari launched the Nigerian Upstream Cost Optimization Programme (NUCOP) to drive down the cost of crude oil production in the country to remain competitive in the global market.
These are some of the achievements of Kyari during the period he steered the ship of NNPC Limited. Indeed, Kyari is the best man for the Job. To his credit, he has received the award for the Group Managing Director of the Nigerian National Petroleum Company Ltd, the Leadership Newspapers Group Chief Executive Officer of the year award for 2021, Sun Man of the year, and CEO of the year at the African Energy Awards.
A winner of the Prestigious African Leadership Magazine’s 2020, Special African Business Leadership Award and a recipient of an Honorary Doctorate Degree in Engineering. Kyari is surely not the first GMD of the NNPC, but he has certainly proven himself to be the best, using his vast wealth of experience to revolutionize the oil and gas sector, showing an exemplary, unique, and rare leadership style. These qualities fully explain all the efforts, sacrifices, and transparency, the GCEO is making to transform the oil and gas sector to a standard that can stand the challenges of this present time.
Indeed, with Kyari, the dream, hope, and vision of leading the oil and gas sector in the continent and around the world are not only alive but close to realization.
Adewole Kehinde is the Publisher of Swift Reporters and a Public Affairs Analyst based in Abuja. E-Mail: email@example.com 08166240846