Business
State of the Nation: Who really owns NNPC Ltd?
The Nigerian Petroleum Industry Act (PIA) which came alive last year was an effort to refit the regulation and governance of the nation’s oil and gas industry with a view to strengthening and making it more commercially viable as a business entity.
Recently passed into law by the National Assembly, the PIA created the Nigerian National Petroleum Corporation Limited (NNPC Limited); a corporate entity incorporated under the Companies and Allied Matters Act. PIA as we were told commercialised the nation’s apex oil concern turning it into a commercial entity that is valid in law as if it is real.
Now, if NNPC limited is a legal commercial entity, the question the PIA chose to ignore either by deliberate commission or callous omission is: who actual own(s) the company now; what’s the ownership structure of the new entity?
Last week, the Group Chief Executive Officer of the NNPC Ltd., Mele Kyari, made a presentation to the state governors at a meeting in Abuja, in which he shared updates on crude oil production, Petrol (PMS) supply situation, and security intervention against oil theft by the new organisation. Again, either by oversight or deliberate design, he did not say anything as concerns the interests of the states and local governments nor that of private investors in the ownership structure of new NNPC Ltd.
Since the old NNPC was co-owned by the three tiers of government, how do you reconcile the fact that the federal government is carrying on as if the new organisation solely belongs to it? Where lies the interests of the states and local governments, are they expected to come in as private investors or whatever shares the federal holds will be held in trust on behalf of the three tiers of government?
As stipulated in the Act that enabled the new NNPC Ltd., “the ownership of the shares in the new conscription shall be vested with the government, and the ministries of Finance and Petroleum Resources shall hold the shares on behalf of the government.” This is blurred because it was not stated whether the federal government will be holding all the shares or the shares ascribed to it or rather paid for by it on behalf of the three tiers.
If the federal government is warehousing the entire shares of the new NNPC Ltd., so what changed in the ownership structure of the old order?
The Act made it very clear that “the President of Nigeria will appoint the President of NNPC Ltd as well as heads and members of the regulatory agencies. Separately, the minister of petroleum, then, will head the industry with a wide range of powers to formulate, monitor, and administer government policy under the PIA.” Is that not back to the previous arrangement that the new creation was set out to correct?
It would be recalled that President Mohammadu Buhari, during the official unveiling of the new NNPC Ltd., said that the NNPC Limited would sustainably deliver value to its over 200 million shareholders and the global energy community; operate without relying on government funding and be free from institutional regulations such as the Treasury Single Account (TSA).
His words: “The provisions of PIA 2021, have given the Nigerian petroleum industry a new impetus, with an 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.”
As the President said, the new structure of the nation’s apex oil concern would translate into ensuring and delivering dividends to its shareholders. The question is: who are the shareholders: is it just the federal government (on behalf of the Nigerian people) or it includes the other two tiers in addition to other private investors (indigenous and foreign)?
We need to also clarify whether the new NNPC Ltd. is a Public Liability Company (Plc) or a limited liability company? And whichever it is, The PIA did not stipulate the share holding ceiling for the federal government. So who determines the cap to avoid the federal government having undue domineering influence in the new commercial entity thereby weighing it down again as obtained in the old order?
Where are the anticipated private investors going to come in if the new company is going to function as a public liability concern? Will there be public offerings of shares or the shares would be ascribed to select investors? And if the offer will be to select interests, who determines the interest groups/individuals that will be allowed to own shares in the new entity- ministers of finance/petroleum or the Group Chief Executive Officer of the NNPC Ltd?
The challenge of interpretation in the law will surely come either now or in the near future because of its ambiguous and imprecise language. This lack of clarity will create uncertainty and even possible disputes, especially if relevant parties/stakeholders define them differently.
As expected, the state governors have already faulted the part of the legislation that places its ownership on the federal government as the PIA is freeing the NNPC Ltd from first paying all revenues generated into the Single Treasury Account before anything else.
At the NGF 32nd meeting, the governors said, “The Forum is in full support of the unbundling and commercialisation of the Nigeria National Petroleum Corporation (NNPC) but concerned with the proposed ownership structure of the NNPC which seem to have placed full ownership on the Federal Government.
“Placing the ownership of the NNPC on the Federal Government ignores the fact that the NNPC is owned by the three tiers of government. Rather, the new entity (NNPC Limited) as created by the PIA should be owned by a vehicle that holds the interest of the three tiers of government.
The NGF recommended that the new incorporated entity (NNPC Limited) be owned by a vehicle that “holds the interest of the three tiers of government,” and the institution that is currently positioned to carry out this mandate is the Nigeria Sovereign Investment Authority (NSIA).
No doubt, the concerns being raised by state governors regarding the ownership of the emerging NNPC Ltd, its assets and liabilities, was a genuine one and need to be addressed to let stakeholders particularly each of the three tiers of government in the federation know their standing as pertains to the ownership structure of the new NNPC Limited.
The league of state governors needs to take up this issue immediately with the National Assembly particularly the Senate before the end of the current Assembly. It should not be left for a later date. Since this Assembly was responsible for repackaging and enacting this piece of legislation into law, they are in the best position to effect the observed oversights as a new Assembly coming in the future may not see it as a matter of urgent national concern. God bless Nigeria!
- Mr. Izeze is a Columnist with National Daily Newspaper and can be reached on: email- iizeze@yahoo.com; WhatsApp only: 08033043009