It was a pro-western author, Francis Fukuyama, who titled his well celebrated 1992 thesis on the fall of Berlin wWall as “The End of History and the Last Man.” In the thesis, the Liberal thinker reasoned that the fall of the Berlin Wall marked the greatest event in human history.
Following in the shoes of Fukuyama’s thoughts on the Fall of Berlin Wall, unveiling of the new Nigerian National Petroleum Company on Tuesday, 19 July, 2022, which has now been commercialised into a full government enterprise, marks the end of history because no other event in the present or future can surpass the unbundling of NNPC into Nigerian National Petroleum Company.
Experts have hailed President Muhammadu Buhari for his unprecedented courage to dare what has defied successive governments in Nigeria’s history. I join them to congratulate Nigerians on this new phase of the nation’s history. Without a doubt, Buhari has etched his name in gold, imprinted his signature on the sands of time.
With this development, the president has set NNPC on the path of sustainable and profitable growth. This is the same initiative that propelled oil companies like Petrobras, Brazil’s state-owned multinational corporation in the petroleum industry and Saudi Arabia’s Aramco. The Saudi Arabian Oil Company is a public petroleum and natural gas company based in Dhahran.
As of 2020, it had become one of the largest companies in the world by revenue. On May 11, 2022, Saudi Aramco became the largest company in the world by market cap, surpassing Apple Inc. This milestone was only possible for Saudi Aramco because it was commercialised just like Buhari has just done to the NNPC.
Because of the age-long concern over the status of the old NNPC, the new NNPC Ltd, which would operate as a profitable commercial entity and declare dividends to its 200 million shareholders, is a powerful idea whose time has come.
President Buhari did not leave anyone in doubt as to his resolve to rewrite the history of the oil and gas sector in Nigeria. This, he demonstrated with the passage of Petroleum Industry Act (PIA,) in 2021. The Act provides for the transition of NNPC into a fully commercial entity, a Limited Liability Company incorporated under the Companies and Allied Matters Act (CAMA), to be known as the Nigerian National Petroleum Company Ltd.
With the new initiative, Nigerian government is seeking efficient ways of positioning the country on its path to recovery and the petroleum industry which contributes about 90% of its exchange earnings would undoubtedly be critical on this journey.
The concatenation of events that would herald full implementation of key highlight of the PIA has commenced. Amongst steps taken is the commercialisation of the Nigerian National Petroleum Corporation (NNPC). A lot has already been achieved.
Where the government-managed NNPC had proved to be inefficient and riddled with corruption, a commercialised NNPC with more committed employees would mean better accountability and transparency in its operations. The possible introduction of more shareholders would strengthen the amount of funding available to the NNPC and further shift the burden of being the sole-financier away from the government.
An Initial Public Offering (IPO) would see the NNPC’s shares traded on Stock Exchanges and position the corporation to raise much more funding, build trust and endear to the international community. While this might seem like a daunting task, Nigeria can, perhaps, take a cue from Saudi Arabia whose National Oil corporation; Saudi Aramco, began raising capital for its IPO in December 2019.
The Saudi Crown Prince, Muhammad bin Salman (MBS), announced a valuation of $2 trillion enticing the world’s largest investment banks, appointed a new set of leaders on the board of the corporation, and executed a highly engaging local marketing strategy. Although the valuation figure was brought down to $1.5 – $1.7 trillion by financial advisors, Saudi Aramco successfully achieved its IPO raising nearly $26 billion for 1.5% of Aramco’s value.
Just like Saudi Aramco, the new NNPC Ltd is one of the series of expected reforms that will culminate in Nigeria measuring up to its counterparts in OPEC. Nigeria’s Petroleum Industry Act (PIA), as passed in 2021 and signed into law, is one of President Buhari’s most audacious attempts to overhaul the petroleum sector in Nigeria.
The Act seeks to provide legal, governance, regulatory and fiscal framework for the Nigerian Petroleum Industry. Despite being a major source of revenue, the oil sector lags other sectors in terms of GDP contribution. If implemented diligently, the PIA will help facilitate Nigeria’s economic development by attracting and creating investment opportunities for local and international investors.
Nigeria is Africa’s largest market, with a young, growing and vibrant population. The population is forecast to grow by an average of 2.6% per annum (World Bank, 2020). This population growth is expected to fuel greater energy demand.
Just like President Buhari handled the commercialisation of NNPC into NNPC Ltd, he has turned his attention to the lingering strike by the Academic Staff of the Nigerian University (ASUU), which began about five months ago.
President Buhari has raised the red flag for his officials handling the industrial dispute and has subsequently given two weeks ultimatum to the Education Minister to get done with settling with ASUU.
It is a fact that education is the bedrock of every development and no nation can progress without quality education; hence, Buhari’s commitment to revamp the quality of education in Nigeria.
In my opinion, President Muhammadu Buhari is doing his best for Nigeria. The best we can do is to support him to ensure that his mandates are implemented in the remaining months of his second term.
Back to the oil sector, the things that had eluded Nigeria since it started oil exploration are legal, governance, regulatory and fiscal frameworks for the petroleum industry, development of host communities and related matters. But the new NNPC is a sign that things have changed for the better under Buhari.
Instead of applauding President Buhari for this uncommon feat, anarchists had been quite unhappy with the steady reforms in the Oil and Gas Industry. They started twisting things and attempting to stand facts on its head. But no one expected these greedy elements to be happy with reforms that will save the ‘fat cow’ from being milked by a few privileged individuals the way they did in past administrations.
They devised a means of misinforming Nigerians that the Buhari-led government was setting a booby trap for its successor with the 18-month postponement of implementation of the PIA. One of the banes of government policies in past administration was the rush to implement them without properly setting up the implementation framework. Buhari is not like them and has refused to succumb to stampede by enemies of Nigeria to implement the PIA.
That is why the implementation of the PIA by President Buhari heralded a new era and lifeline in the petroleum and gas industry. This giant stride will certainly recalibrate the narrative of the Oil and Gas sector in Nigeria.
One thing Nigerians can be rest assured is that the commercialisation of the NNPC by the Buhari administration can never be like the case of Power Holding Company of Nigeria (PHCN), Nitel, Mtel, Nicon Insurance, Nigeria Ports Authority (NPA), Nigerian airways, under the privatisation policy of past administrations, the sale of some of these state enterprises to private sector initiatives was envisaged to turn them around for efficiency, but the persistent controversies surrounding most of the establishments raised suspicion about the integrity and sincerity of the agency responsible for their sale and management. They faultered on dividends to the owner, the government. Nitel, specifically, was compelled by the House of Representatives’ Committee on Privatization in 2001 to pay up N2 billion dividends since its existence as Posts and Telecommunications P&T.
We have witnessed in the companies a situation where their supervision led to epileptic electricity supply and dried up water taps. Industries either closed down or cut down on operation while they operated at high overhead costs, with the impact still being felt today. It was as if these companies ere privatized to syphon, public funds. Without proper documentation, workers in service were not paid and their retirement, as well as other entitlements were reduced.
Even in the oil sector, the mismanagement led to spending of whopping sums of money for fuel subsidy scam. As an expert and a member of the international advisory council for the down stream sector, I can confirm that the new NNPC will be different. After carefully studying the documents leading to the commercialisation of the new NNPC with professionals, there is a congruence of opinion that it is design in such a way that would help get rid of political oil cabals who must start looking elsewhere to continue their looting.
– Ibrahim is director, Communications and Strategic Planning, of the Presidential Support Committee (PSC)