•FG to Halt funding as national oil company transforms fully to commercial entity today
•Eyes IPO in June 2023 as Kyari assures NNPC will run as world class firm
• Says Dangote refinery ready Q1, 2023
Emmanuel Addeh in Abuja and Peter Uzoho
With the Nigerian National Company Limited (NNPC) officially transitioning into a private entity that would be regulated in line with the provisions of the Companies and Allied Matters Act (CAMA) from today, the Group Chief Finance Officer (Group CFO) will be expected to shoulder additional responsibilities of not only ensuring the liquidity of the group but efficient allocation of capital to businesses based on rate of return and business/project priorities.
Also, as the NNPC transitions to a full commercial entity today, the federal government would henceforth halt all forms of funding for projects and sundry purposes in contrast to what has obtained in the last 45 years of the national oil company’s existence.
THISDAY findings showed that from the new structure of the NNPC, the Group CFO would have to work closely with the Group Chief Executive Officer (Group CEO) of the company to ensure profitability of the company.
The new NNPC Limited structure which would be launched by President Muhammadu Buhari, is in line with the Petroleum Industry Act (PIA) 2021.
The Corporate Affairs Commission had on September 21, last year completed the incorporation of the NNPC Limited in accordance with the provisions of the PIA 2021.
The PIA was signed into law by President Muhammadu Buhari on 16th August, 2021, following its passage by the National Assembly in July of the same year.
Specifically, Section 53(1) of the Petroleum Industry Act 2021, requires the Minister of Petroleum Resources to cause for the incorporation of the NNPC Limited within six months of the enactment of the PIA in consultation with the Minister of Finance on the nominal shares of the Company.
With the registration by the CAC, the NNPC Limited was floated with an initial capital of N200 billion making history as the company with the highest share capital in the country.
From when the PIA was signed into law last year, the management of the NNPC has taken proactive steps to prepare it for the July 1 take-off as a CAMA company.
However, while the structure of the senior management team of the NNPC Limited would change with its new status, its Board would remain as inaugurated by Buhari.
But the Group CFO position is the next key important position in any CAMA company and the Group CEO and Group CFO must work together to ensure not only the success of the company, but the sustenance of adequate internal checks and controls.
Furthermore, the Group CFO would entail additional responsibility of not only ensuring the liquidity of the group, but efficient allocation of capital to businesses based on rate of return and business or project priorities.
The Board committees had long been set up and in place consistent with Nigeria’s Code of Corporate Governance.
“The new structure will ensure an optimal structure that enables agility and ability to reward performance appropriately,” a top official of the NNPC who pleaded to remain anonymous said.
Group Managing Director of the NNPC Ltd, Mr. Mele Kyari, recently explained: “On 1st of July, we crossed over to the NNPC Limited both technically and financially on every aspect. Not only that, on the 19th of July, I’m inviting all of you to be present. Mr. president will unveil the NNPC Limited to all of us on the 19th of July, and I’m inviting you.
“The meaning of this to our industry is that you’re going to have the partner of choice, the partner that will support you, the partner that will be the largest capitalised company in Africa. Not only that, a partner that will be born of best practice, of everything that you can think of because we’re going to be a CAMA company. We are going to be another Shell, decision making would be easy, finances will also be easy.”
FG to Halt Funding as NNPC Transforms to Full Commercial Entity Today
Meanwhile, as the NNPC transitions to a full commercial entity today, the federal government would henceforth halt all forms of funding for projects and sundry purposes in contrast to what has obtained in the last 45 years of the national oil company’s existence.
The new NNPC which would now operate as a limited company, the Group Chief Executive Officer, Mallam Mele Kyari, disclosed last night, would be completely set for an Initial Public Offer (IPO) by June 2023 to boost its capital base.
Speaking on Channels Television, Kyari boasted that with a N200 billion initial capital outlay as well as $5 billion initial debt funding, the new NNPCL would be one of the most efficiently run entities globally.
He also said the Dangote refinery would commence operation in the first quarter of next year, which according to him would positively impact Nigeria’s foreign exchange supply situation.
Before now, Kyari stated that every effort to make sure that the company became a fully commercial company didn’t work out because there wasn’t the enabling environment or the enabling legislation to support it.
Like its many global and local partners, who the GCEO stressed are operating without losing money, the NNPCL head noted that the firm has huge assets, and will have access to huge capital and the trust of the global business community unlike in the past.
Kyari stated that it was difficult to borrow before now because the NNPC was not a fully commercial company, assuring that there will be ease of transacting business with the new NNPC.
Although in its teething stages the NNPCL would still be largely owned by the federation, he noted that the NNPC will no longer require the approval of the executive or the National Assembly to borrow or seek financing for projects.
“There is a space for private people to take equity in this company. But as we speak now, the shareholders are the over 200 million Nigerians. There can be a second level of private ownership, that is by selling down some of these equities so that people can take it in their individual capacity not in the collective capacity as a nation.
“So definitely the whole gamut of the changes will happen. And this company must be IPO ready immediately before you can talk about selling down of interest,” Kyari stated.
According to him, the new company was already working towards making sure it expands its capital base by allowing private equity in the firm and operate profitably.
“We’re already on the positive trend and by the middle of next year, I’m very, very confident that this company will be in a place to say we’re ready for IPO and it will be the decision of the nation to go private completely in the sense that we can now sell their equity, which is different from being owned by the generality of Nigerians,” he explained.
From now on, he disclosed that the National Assembly will no longer need to pass the appropriation for the purpose of its contribution to the joint ventures, cash calls and all other obligations in the various business agreements.
“What that means is that the NNPC must now look for financing without recourse to the state. And indeed, the law is very, very clear that we will have no recourse to public funds.
“We cannot go to government anymore for financing. The reason is very simple that we can no longer ask for sovereign guarantee anymore. So the sovereignty vanishes,” he explained.
With the new status, he noted that the company’s interaction will be based on value addition, ability to pay back loans and general business credibility, dismissing insinuations that the non-functional refineries would impact on its core business.
“Firstly, refineries, and then filling stations, actually, they’re the least of our assets. Although I clearly agree that they are the most visible of our assets,” he stressed, adding that the real business is in the upstream.
Kyari stated that rather than rush into eliminating its hydrocarbons because of the so-called energy transition, at some point, there will be conversion of certain assets to process cleaner fuels, insisting that fossil fuels are not vanishing soon.
Kyari stated that although the NNPCL will not sack any of its over 7,000 direct employees, it will henceforth operate nimbly and become more transparent, even with a $5 billion existing credit line.
“I’ve seen over a billion $5 billion of loan or financing. And the key information we have from those partners are look, we know what you are, we know what you’re doing, we trust you and this is great for our company and for our country,” he noted.
On whether the next administration would not roll back the current gains when the current administration is no longer in place, Kyari maintained that he doesn’t foresee any political consideration in decision making in the organisation in the future.
