By Adewole Kehinde
“The future success of our nation depends on our ability to understand the difference between right and wrong and to have the strength of character to make the right choices.” George W. Bush
On February 2, 2024, former Vice President Atiku Abubakar condemned the directive by President Bola Tinubu to the Central Bank of Nigeria to take over the responsibility for crude oil sales proceeds from the Nigerian National Petroleum Company Limited (NNPCL).
Since he lost the 2023 presidential election, Atiku has been out looking for all available opportunities to criticise the APC’s administration, which I don’t have issues with as far as people-oriented criticism.
First, Atiku should know that the NNPC became a limited liability company in July 2022, transitioning into a commercial venture in line with the provisions of the Petroleum Industry Act (PIA).
As such, NNPC Limited, which was incorporated in September 2021 under the Companies and Allied Matters Act (CAMA), runs as a profit-oriented company.
I recall that former President Muhammadu Buhari, speaking at the unveiling of the company, said that the NNPC Limited will operate free from institutional regulations, such as the Treasury Single Account, public procurement, and the Fiscal Responsibility Act.
However, the federal government remains the company’s sole shareholder, even as the company intends to go public.
The NNPC Limited, according to the PIA, is expected to keep 20% of its profits as retained earnings, while 80% is to be remitted to the government as a shareholder.
Section 53(7) of the PIA states that NNPC Limited and any of its subsidiaries shall conduct their affairs on a commercial basis profitably and efficiently without recourse to government funds.
It further states that NNPC Limited “shall operate as a Companies and Allied Matters Act entity, declare dividends to its shareholders, and retain 20% of profits as retained earnings to grow its business.”.
The law also stipulates that where NNPC Limited has a participating interest or 100% interest in a lease or licence, the company will have to pay its share of all fees, rents, royalties, taxes, and profits.
The regulation further states that NNPC Limited is the concessionaire of all production-sharing contracts, profit-sharing contracts, and risk service contracts on behalf of the federation.
According to Section 64(c) of the PIA, the NNPC Limited is mandated to lift and sell oil under these contracts for an agreed commercial (management) fee. After deducting expenses and the cost of oil production, the NNPC and its partners will then share the proceeds, known as profit oil or gas.
Of the total profit of oil and gas accrued to NNPC Limited, 30% is to be set aside for exploring the country’s frontier basin.
After the deduction, NNPC Limited is mandated to promptly remit the remaining proceeds of the sales to the federation coffers, which can be via the Central Bank of Nigeria or other financial institutions as agreed upon by the government and the oil firm.
I need to remind Atiku that the NNPC Limited is a private limited liability company, meaning that within the context of the CAMA Act, the NNPC Limited is owned by the Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated, which are government-owned entities.
I also recall that on February 8, 2024, the NNPC Limited and the CBN announced that they had reviewed the decision of the NNPC Limited to domicile a significant portion of its revenues and other banking services with the CBN.
NNPC Limited and the CBN said they had set limits for the management of the oil firm’s revenue, saying the remittance does not imply that NNPC would halt transactions with commercial banks.
Atiku really goofed in the sense that NNPC Limited did not violate any of the rules of company law.
The NNPC Limited is now a private entity and still 100 percent owned by the federal government, which Atiku should know better.
The federal government is the major shareholder in the oil firm and is entitled to an 80% share of profits.
It is high time opposition leaders such as Atiku join hands with the government to support the transparency and accountability that have been inculcated in the NNPC Limited under the amiable management of Mal. Mele Kolo Kyari.
Adewole Kehinde is the publisher of Swift Reporters and can be reached at 08166240846. E-mail: kennyadewole@gmail.com
