The Nigerian National Petroleum Co. Ltd. (NNPC) has concluded plans for an initial public offering, (IPO) signalling a renewed determination to tap private capital and make its opaque operations more transparent.
An IPO is a public offering in which shares of a company are sold to institutional investors.
Chief Finance and Investor Relations Officer (CFIO) Olugbenga Oluwaniyi said in a statement that NNPC is currently engaging with prospective investor relations executives and investment banks, in line with capital market regulations and the oil industry law which mandates it to list its shares on the stock market.
NNPCL has joint ventures with major oil companies that pump more than half of Nigeria’s oil.
It became a fully commercial entity in 2021, and the Petroleum Industry Act (PIA) required NNPC to list within six months after the law was passed in 2021, but it has yet to do so.
This latest push for a listing comes after two previous attempts in 2018 and 2023, which ultimately did not materialise
Metrobusinessnews.com (MBN) had exclusively reported about public outcry concerning the alleged lack of transparency in operations, which they claimed has led to confusion and wastages in the oil sector.
From alleged diversion of large volumes of crude oil to foreign creditors, which has made it difficult to sustain the naira-for-crude deal,
creating a supply crunch for domestic refiners, to lack of full operations by modular refineries, all have been linked to inefficiency and opaqness in the operations of the company.
Several modular refiners are still awaiting their first crude oil supplies despite the NNPCL’s pledge to support them as part of the federal government’s efforts to boost local refining capacity and reduce dependence on imported petroleum products.
The modular refineries, which are smaller-scale, flexible refining units, have been touted as a crucial step towards achieving energy self-sufficiency. But, the company which analysts say has been biting more than it can contain, has been preoccupied with other extraneous issues at the expense of its core responsibilities.
Criticising the NNPC’s lack of transparency, Victor Ogiemwonyi, Lagos based analyst and retired Investment Banker noted, in his article, “What Is Holding Up NNPC From Becoming A Publicly Listed Company?” said;
“The opacity surrounding NNPC’s operations raises concerns about accountability. The company frequently makes corporate decisions with impunity, reinforcing the suspicion that the full story is not known to the public
A fundamental policy shift that could make NNPC more accountable and beneficial to Nigeria would be to publicly list its shares. Doing so would subject the company to market rules and scrutiny. Currently, the lack of transparency is reminiscent of a conversation I once had with an executive from an International Oil Company (IOC) in Nigeria. He explained that no one truly wants NNPC audited because it serves as a “piggy bank” for the government. If the government needs a new helicopter, for example, it simply instructs NNPC to buy one—no need for legislative approval or appropriation processes.
If NNPC were publicly listed, such opaque transactions would cease, making its financial dealings visible to all stakeholders. This is precisely why NNPC leadership is reluctant to embrace public listing. Instead, they continue to engage in new ventures and sign long-term contracts with little public accountability.
For a corporation supposedly preparing for public listing, one would expect financial and legal advisors to have been appointed by now. However, there is little indication that meaningful work is being done toward this goal. If it takes this long to prepare for a listing, it further underscores the deep-rooted issues within NNPC. The best course of action would be to list the company as it is and let investors determine its value.”
However, according to the Chief Finance and Investor Relations Officer (CFIO) on Thursday, NNPC Ltd was currently engaging with prospective partners in an exercise tagged, “NNPC Ltd. IPO Beauty Parade” in line with capital market regulations before the commencement of the Initial Public Offer (IPO).
According to Oluwaniyi, the aim of the IPO Beauty Parade is to assess potential partners and determine in what ways they could be of support to the company.
He listed the areas of partnership required to include: Investor Relations, IPO Readiness Advisers, and Investment Bank Partners.
“The company with the best offer in terms of project partnership would be selected for each of the three categories,” Oluwaniyi said.
This isn’t the first time the idea of an NNPC IPO has been floated.
In 2018, under a different management structure of Emmanuel Kachikwu, petroleum resources minister of state and managing director of the NNPC, there were preliminary discussions and some preparations made towards a potential listing.
However, that effort did not progress to a full-fledged IPO for various reasons, including market conditions and internal restructuring challenges at the time.
By the provisions of PIA, the company was supposed to be listed six months after the establishment of the Act.
Besides, by its own admission, it was initially expected to be ready for an IPO by the end of Q2 2023, according to its quarterly report, but the listing did not materialise.
The corporation is yet to publish its audited accounts for 2024 and its books require thorough cleaning after years of subsidising petrol and intervening in various sectors of the economy.
Indeed, NNPC Ltd only published its first audited accounts in 2023 after four decades of operation and has since struggled with financial transparency.
The analysts say, while going public could present greater challenges, raising concerns about governance, investor confidence, and regulatory scrutiny, due to age long alleged abuses, they expressed optimism that the action will revive confidence in the company as the shareholders would insist on corporate governance adherence.
They further observed that the exercise provides opportunity for it to clean up its image and improve on corporate governance practices, adding that combining the functions of regulation, operation and marketing for some decades would require it to convince its partners and would-be investors that it would shun its octopus image and imbibe business-like approaches when dealing with them and pay its own share of costs in oil development plans.
