Road to IPO: NNPC Ltd, successor firm to NOC, begins incorporation journey

The construction of the road to an eventual initial public offering (IPO) for state-owned national oil company, Nigerian National Petroleum Corporation (NNPC), appears now to have begun with its paving, if the approval for the successor company, NNPC Limited, to begin its incorporation process is anything to go by.

An IPO for the much beleaguered company, described for many years as opaque in its operations and its finances regarded as untidy, has long been awaited and the passage by legislators, and signing of a new law, Petroleum Industry Act (PIA), by President Muhammadu Buhari, appears to have drawn this much closer.

Buhari on Sunday took this a notch further, which immediately drew the attention of the global analyst and investor community, when he ordered the immediate incorporation of the successor company, NNPC Limited, and constituted a new board, which now excludes him and his junior petroleum minister, Timipre Sylva, as chairman and alternative chairman respectively.

It also signalled the pursuit of a profitable going concern as the new driver of its business model. The steps are coming earlier than usually seen in government’s implementation of policies or extant legislation, this newly signed Petroleum Industry Act (PIA).

President Buhari in directing the incorporation of the NOC as a limited liability company noted that the step was in consonance with section 53(1) of the PIA 2021, which requires the oil minister to cause for the incorporation of NNPC Limited within six months of commencement of the Act, in consultation with the minister of finance on the nominal shares of the company.

Mele Kyari, the group managing director of the NNPC, has been directed to take necessary steps to ensure that the incorporation of the NNPC Limited was consistent with the PIA provisions.

In July, the two chambers of the Nigerian National Assembly – the Senate and House of Representatives – passed the Petroleum Industry Bill (PIB), which had taken 13 years for Nigeria to get to that point. Last month (August), President Buhari signed it into law, opening a lid for Nigeria’s decades long opaque oil industry to begin moving in the direction of several other oil producers whose NOCs had since gone in the profit way.

For 44 years, NNPC operated as a government behemoth, largely mysterious, seen as a business entity for engaging in anything but profit making.

Under section 59(2) of the PIA 2021, President Buhari has approved the appointment of the board and management of the NNPC Limited, with effect from the date of incorporation of the company.

With this, many investment analysts, oil industry watchers, audit experts, tax assessors, and other professionals who know the workings of an open-market oil industry, will be waiting in the wings with appetite for NNPC Limited’s initial public offering (IPO) in about 2024, according to Kyari, when he undertook a Stock Exchange-styled ‘Facts Behind the Figures’ explanation of the corporation’s first profit in 44 years.

Chairman of the board is Ifeanyi Ararume, a former senator, while Kyari the NNPC GMD and Umar I. Ajiya are chief executive officer, and chief financial officer, respectively.

Other board members are: Tajudeen Umar (North East), Lami O. Ahmed (North Central), Mohammed Lawal (North West), Margaret Chuba Okadigbo (South East), Constance Harry Marshal (South-South), and Pius Akinyelure (South West).