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By Adewale Sanyaolu and Juliana Taiwo-Obalonye, (Abuja)
President Muhammadu Buhari has officially unveiled the Nigerian National Company Limited (NNPC), with a charge that it must ensure that its over 200 million shareholders and Nigerians at large, get value in line with global best practices.
He noted that the Petroleum Industry Act 2021 has no doubt give additional impetus for transparent and profitable energy venture.
The President assured that the NNPC Limited will operate as a commercial, independent and viable NOC at par with its peers around the world, to sustainably deliver value to its over 200 million shareholders and the global energy community, while adhering to its fundamental corporate values of integrity, excellence and sustainability.
With the NNPC transitioned to a full commercial entity, the Federal Government will henceforth halt all forms of funding for projects and sundry purposes as against what obtained in the last 45 years of the national oil company’s existence.
According to the President, Nigeria places high premium in creating the right atmosphere that supports investment and growth to boost her economy and continue to play on important role in sustaining global energy requirements.
“We are transforming our petroleum industry, to strengthen its capacity and market relevance for the present and future global energy priorities.
“By chance of history, I was privileged to lead the creation of the Nigerian National Petroleum Corporation on the July 1, 1977. Forty-Four years later, I was again privileged to sign the Petroleum Industry Act (PIA) in 2021, heralding the long-awaited reform of our petroleum sector.
“The provisions of PIA 2021, have given the Nigerian petroleum industry a new impetus, with improved fiscal framework, transparent governance, enhanced regulation and the creation of a commercially-driven and independent National Oil Company that will operate without relying on government funding and free from institutional regulations such as the Treasury Single Account, Public Procurement and Fiscal Responsibility Acts.
“It will, of course, conduct itself under the best international business practice in transparency, governance and commercial viability.
“Coincidentally, I, on the 1st of July 2022 authorised transfer of assets from the Nigerian National Petroleum Corporation to its successor company, the Nigerian National Petroleum Company Limited, and steered the implementation leading to the unveiling of Africa’s largest National Oil company today.
“I therefore thank Almighty God for choosing me to consistently play on important role in shaping the destiny our National Oil Company from the good to the great.”
Buhari noted that NNPC Ltd is mandated by 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.
He added that the NNPC Ltd will focus on becoming a dynamic global energy company of choice “to deliver energy for today for tomorrow, for the day days after tomorrow.”
He thanked the leadership and members of the National Assembly for demonstrating uncommon courage and patriotism in the passage of PIA that culminated in the creation of NNPCL.
Minister of State for Petroleum Resources, Timipre Sylva, said with the signing of the PIA, which assures international and local oil companies of adequate protection for their investments, the nation’s petroleum industry is no longer rudderless.
‘‘From the onset of this administration, Mr. President never concealed his desire to create a more conducive environment for growth of the oil and gas sector, and addressing legitimate grievances of communities most impacted by extractive industries.
‘‘While the country was waiting for the PIA, Nigeria’s oil and gas industry lost about $50 billion worth of investments. In fact, between 2015 and 2019, KPMG states that “only 4 percent of the $70 billion investment inflows into Africa’s oil and gas industry came to Nigeria even though the country is the continent’s biggest producer and the largest reserves.
‘‘We are setting all these woes behind us, and a clear path for the survival and growth of our petroleum industry is now before us,’’ he said.
Sylva described the unveiling of NNPC Ltd as a new dawn in the quest for the growth and development of the Nigerian Oil and Gas Industry, opening new vintages for partnerships.
He thanked the President for his unparalleled leadership, steadfastness, and unalloyed support towards ensuring that the country’s oil and gas industry is on a sound footing.
The Group Chief Executive Officer of NNPC Limited, Mele Kyari, announced that the company had adopted a strategic initiative to achieve the mandate of energy security for the country by rolling out a comprehensive expansion plan to grow its fuel retail presence from 547 to over 1500 outlets within the next six months.
He assured stakeholders and the global energy community that the new company was endowed with the “best human resources one can find anywhere in the industry.”
“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,” he said.
Commenting on the consequences of the development, former Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof Adeola Adenikinju, said for the country to ensure energy security it must take the issues of energy affordability, storage, investment and diversification of its energy mix seriously.
He noted that a situation where energy is concentrated through a single source was not economically acceptable, noting
that the country must begun to take the issue of renewable seriously to have a balanced energy mix.
He equally noted that a situation where we don’t encourage indigenous production and refining of Petroleum products remains a huge set back.
He said Nigeria is heavily dependent on imported Petroleum products, a development that causes constant disruption in the downstream value chain through frequent fuel scarcity.
On energy affordability, he said when energy is not made affordable that puts a threat to our existence as more people will embrace the use of dirty fuel which
included the use of charcoal and firewood,thereby destroying the environment.
Adenikinju who is currently the Head of Economics Deptartment, University of Ibadan, said storage is another area to take a critical look at,saying our energy security must not be for today alone but for the future as we must develop ways of storing energy.
For his part, Founder Extractive360, Juliet Ukanwosu, said it will definitely take more than just a name change to achieve energy security and grow our reserves.
‘’We now need to begin activating the provisions of the PIA and fully activate what it prescribes to supports the NNPC on a commercial driven path. It is very critical to achieve a deregulated downstream sector and open up the entire value chain to a level playing field, where no stakeholder have undue advantage over the other. I believe the time is now to lift NNPC fuel import monopoly and allow more players in the field with equal access to forex and then allow market forces to determine pump price. Until govt gets off price control, it will be difficult to achieve supply stability, needless to mention the pressure subsidy is putting on the economy.
With subsidy gone and the market open to healthy competition, the downstream sector will flourish and Nigerians will have better value from the sector.
On reserve growth, of course full implementation of the PIA is equally key. We need to explore for oil and the right fiscal regime and operating environment is crucial to attracting investors. But bear in mind also that the era of investment rush in oil exploration might be over as companies globally are cutting down investments in fossil fuels. Companies now take their monies to where they can get the best returns.’’
