Following the decision of the Federal Government to break the State-owned Nigerian National Petroleum Corporation into two independent commercial entities for efficiency, FG said it is going to sell to the public at least 30% of the shares in one of the emerging entity.
According to the Petroleum Industry Governance and Institutional Framework Bill 2015, the divestment of the shares will be done within six years from the date of the incorporation of the National Oil Company (NOC). At the time of its incorporation, the initial shares of the company would be held by the Ministry of Finance and the Bureau for Public Enterprises on behalf of the government.
Under the draft legislation, the state-owned NNPC will be split into two companies limited by shares, rather than a series of units as envisaged by the stalled Petroleum Industry Bill 2012. The NOC, also known as the National Petroleum Company, is one of the two companies. The other is the Nigerian Petroleum Asset Management Company (NPAM).
Some months ago, President Muhammadu Buhari, through the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu said the federal government has broken up the controversial Petroleum Industry Bill into different versions and is also proposing splitting the NNPC into two companies- National Oil Company that would be run on commercial lines and partly privatised and Nigeria Petroleum Assets Management Company.
According to the draft, the onus would be on the board of the company to make profits and raise its own funding. The NOC would be expected to keep its revenues, deduct costs directly and pay dividends to the government.
The report also stated that to start off, the NOC will receive about $5 billion, or at least the five-year average of the amount of money NNPC had to put into joint venture operations, while it would be partially privatised with the Federal Government divesting a minimum of 30 per cent of its shares in the company within six years of its incorporation.
NPAM, on the other hand, is expected to manage assets where the government is not obligated to provide any upfront funding. “These include oil licences run under production-sharing agreements in which independent oil companies cover operating costs and pay tax and royalties on output,” the report noted.