NNPC Considering IPO After Declaring First Profit In 44 Years

 

The Nigerian National Petroleum Corporation (NNPC) is considering an Initial Public Offering (IPO) after declaring a profit, the first in its 44-years of operation.

“A listing would draw on the experience of Saudi Aramco, the Saudi Arabian oil giant that listed in 2019,” Bloomberg quoted Managing Director Mele Kyari as saying at a briefing in Abuja on Thursday.

“There is no date on it, but there is a possibility of doing this,” Kyari added.

A bill recently signed by President Buhari holds in it a clause that enables the NNPC offer shares to the public.

READ ALSO: Buhari Announces ₦287bn NNPC Profit After Tax For 2020

The President had on Thursday announced the declaration of a Profit after Tax (PAT) of N287billion in the year 2020, according to him, the announcement is in fulfillment of an earlier pledge by the Federal Government to publicly declare the financial position of the NNPC.

This is sequel to the completion of the statutory Annual Audit exercise for Year 2020.

“The NNPC losses were reduced from N803 Billion in year 2018 to N1.7 Billion in year 2019 and the eventual declaration of Net Profit in Year 2020 for the first time in its 44-year history,” the President declared.

He further directed the NNPC to timely publish the Audited Financial statements in line with the requirements of the law and as follow up to our commitment to ensuring transparency and accountability by public institutions.

While the news is a very cheerful one, and some would expect the corporation to fly into selling shares, Kyari however, noted that obviously because you have made profit today doesn’t mean you are ready for IPO.”

He added that it is a very long and highly tedious process.

Why Nigeria Is Still Subsidising Petroleum – NNPC Chief

 

Solomon Elusoji, Lagos

The Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, on Tuesday suggested that the inability to find an appropriate price for petrol has forced the continuation of the subsidy scheme.

The NNPC is currently the sole, official importer of petroleum products into the country.

While its landing price is about N256 per litre, according to Mr Kyari, petrol sells for N162 to N165 in most parts of Lagos.

In March 2020, the Federal Government said it would allow market forces to dictate the pump price of petrol.

But after oil prices rose in the preceding months, the Federal Government decided not to adjust the price correspondingly under pressure from organised labour.

“The reality is that we cannot afford it,” Mr Kyari said on Tuesday while appearing on Channels Television’s Sunrise Daily.

“But also the second reality is if you don’t do something smart, you could end up throwing prices at Nigerians that are well above prices that they should pay for.”

The NNPC chief said the government is still engaging with organised labour and other stakeholders on how to properly price the product.

“The engagement is aimed at making sure there is a reasonable level of pricing that we can do that will recover the cost,” he said.

Fuel smuggling

Meanwhile, a huge chunk of the petroleum the NNPC pays for is being smuggled to neighbouring countries where they are sold at higher prices.

“Petroleum consumption in Nigeria is not up to 60 million litres per day, but we supply up to that,” Mr Kyari said.

“We always plan with 60 million litres, because anytime we do below that, there is a crisis.”

He acknowledged that there “are sharp practices which we are trying to control” and “an organised cross-border smuggling of petroleum, which is associated with the price of petroleum itself.”

The smuggling, he noted, is exacerbated by the fact that Nigeria shares borders with countries who have no choice but to transport petroleum by road.

When borders were shut last year, the NNPC chief said, consumption fell to 52 to 53 million litres per day. And during the thick of the COVID-19 lockdown in 2020, the number fell to about 42 million litres.

“If everything works well and consumption is limited to our country, we are dealing with about 42 million litres,” Mr Kyari said.

Why NNPC Is Borrowing To Acquire 20 Percent Equity In Dangote Refinery – Mele Kyari

 

Solomon Elusoji, Lagos

The Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, on Tuesday explained why the national oil company is purchasing a stake in Dangote oil refinery.

The refinery is expected to begin production in 2022 with an installed 650,000 barrels per day capacity.

It has been touted as a groundbreaking project for energy security in the country and for the African continent.

In May, the NNPC announced that it plans to acquire a 20 percent equity stake in the private company led by billionaire Aliko Dangote.

“There is no resource-dependent country that will watch a business of this scale, which borders on energy security and has implications for fiscal security of the country, and you don’t have a say,” Mr Kyari said on Tuesday while appearing on Channels Television’s Sunrise Daily.

He argued that the decision was also driven by the profit potential of the refinery business.

“For the Dangote refinery, we are not taking government money to buy it, which is the mistake that people are making,” he said. “We are borrowing on the back of the cash-flow of this business.

“We know that this business is viable, it will work and it will return dividends. It has a cash-flow that is sustainable because refinery business, in the short term, will continue to be sustainable.

“That’s why banks have come forward to lend to us, so we can take equity in this.”

What Mr Kyari Said

“Dangote refinery will come into production by 2022. And what that will do is to deliver over 50 million litres of gasoline into, to be specific, our markets. We are also working on our refineries, to ensure that we fix them. We have awarded the contract for Port Harcourt refinery rehabilitation. And ultimately we are going to close that of Warri and Kaduna very soon in July, so that all of them will work contemporaneously. The net effect is that you are going to have an environment where Nigeria becomes the hub of petroleum products and supply. It’s going to change the dynamics of petroleum supply globally in the sense that the flow is coming from Europe today and it is going to be reversed to some other direction. We will be the supplier for West Africa legitimately and also many other parts of the world.

“So the meaning of this is, there is an opportunity that has been thrown at us. And I’m not sure Mr Dangote wants to sell his equity in the refinery. I can confirm that it was at our instance that we started this engagement. He did not want to sell his shares in this refinery.

“There is no resource-dependent country that will watch a business of this scale, which has bordering on energy security and has implications for fiscal security of the country, and you don’t have a say. And for us, as a strategy, we started this process long before Dangote started his refinery project. We take equity in very significant businesses that are anchored on the oil and gas operations: fertiliser, methanol plants, modular refineries and some other businesses that we are dealing with.

“It is to expand our portfolio and also because we are the national oil company, we have the responsibility to guarantee energy security for our country. And there is no way you can have a say, except you have a seat on the board of these institutions. And that’s why anyone that is going to construct a refinery that is in the excess of 50,000 barrels per day, we will talk to them, take equity in it, as long as we have the money to pay for it.

“For the Dangote refinery, we are not taking government money to buy it, which is the mistake that people are making. We are borrowing on the back of the cash-flow of this business. We know that this business is viable, it will work and it will return dividends. It has a cash-flow that is sustainable because refinery business, in the short term, will continue to be sustainable. That’s why banks have come forward to lend to us, so we can take equity in this.

“We are very proud that we did this. This is good for our shareholders, which includes all 200 Nigerians who will also be happily buying shares from this company if they had the opportunity. But now we have done on their behalf, so that ultimately the value will come to all of us.

“But there is no way you can watch a business of this magnitude, of this sensitivity, to run without the involvement of the national oil company. No country does this.”

Fuel subsidy

Mr Kyari also suggested that the inability to find an appropriate price for petrol has forced the continuation of the subsidy scheme.

The NNPC is currently the sole, official importer of petroleum products into the country.

While its landing price is about N256 per litre, according to Mr Kyari, petrol sells for N162 to N165 in most parts of Lagos.

In March 2020, the Federal Government said it would allow market forces to dictate the pump price of petrol.

But after oil prices rose in the preceding months, the Federal Government decided not to adjust the price correspondingly under pressure from organised labour.

“The reality is that we cannot afford it,” Mr Kyari said.

“But also the second reality is if you don’t do something smart, you could end up throwing prices at Nigerians that are well above prices that they should pay for.”

The NNPC chief said the government is still engaging with organised labour and other stakeholders on how to properly price the product.

“The engagement is aimed at making sure there is a reasonable level of pricing that we can do that will recover the cost,” he said.

Fuel smuggling

Meanwhile, a huge chunk of the petroleum the NNPC pays for is being smuggled to neighbouring countries where they are sold at higher prices.

“Petroleum consumption in Nigeria is not up to 60 million litres per day, but we supply up to that,” Mr Kyari said.

“We always plan with 60 million litres, because anytime we do below that, there is a crisis.”

He acknowledged that there “are sharp practices which we are trying to control” and “an organised cross-border smuggling of petroleum, which is associated with the price of petroleum itself.”

The smuggling, he noted, is exacerbated by the fact that Nigeria shares borders with countries who have no choice but to transport petroleum by road.

When borders were shut last year, the NNPC chief said, consumption fell to 52 to 53 million litres per day.

And during the thick of the COVID-19 lockdown in 2020, the number fell to about 42 million litres.

“If everything works well and consumption is limited to our country, we are dealing with about 42 million litres,” Mr Kyari said.

No Plan To Increase Petrol Price In May – NNPC

A file photo of an attendant filling the fuel tank of a car.

 

There is no plan to increase the pump price of Premium Motor Spirit (PMS), popularly known as petrol, for the month of May, said the Nigerian National Petroleum Corporation (NNPC).

This followed the announcement by the NNPC Group Managing Director, Mele Kyari, that the petroleum sector regulator has no plan to increase the ex-depot price of petrol in the country.

Kyari made the announcement while briefing reporters after a closed-door meeting with the National Association of Road Transport Owners (NARTO) and the Petroleum Tanker Drivers (PTD) on Monday in Abuja, the nation’s capital.

The meeting convened by the NNPC boss held amid the industrial action by the tanker drivers who had given NARTO a seven-day ultimatum to address the issues bordering on the increase of compensation for their members.

As a result, the tanker drivers decided to suspend their industrial action, with a promise to resume operation.

On his part, Kyari asked the union to expedite action to ensure that fuel queues do not resurface across the country.

“On the ongoing strike by Petroleum Tanker Drivers (PTD) associated with the ability of their employers – NARTO to increase their compensation, leading to the industrial action, this we were not able to resolve last week.

“But we have given a commitment to both NARTO and PTD that we will resolve the underlining issues within a week and come back to the table so that we’ll have a total closure around the dispute – both in terms of government’s responsibility and then the responsibility of NARTO (owners of the trucks) to the Petroleum Tanker Drivers,” he said.

We Pay About N120bn Monthly To Subsidise Petrol, NNPC Laments

 

The Nigerian National Petroleum Corporation (NNPC) says it pays between N100 billion and N120 billion every month to subsidise Premium Motor Spirit (PMS), also known as petrol.

NNPC Group General Manager (GMD), Mele Kyari, disclosed this at the weekly presidential ministerial media briefing on Thursday at the State House in Abuja, the nation’s capital.

He lamented that the burden placed upon NNPC by the ongoing subsidisation of the cost of petrol in the country was overwhelming.

As a result of the huge sum being paid, Kyari stated that Nigerians would have to pay the actual cost for petrol sooner or later.

He decided that the product was currently being sold below the cost of importation, causing the NNPC to pay the difference.

The NNPC boss, however, refrained from calling the shortfall payment a subsidy, stressing that the fund was paid to maintain the pump price of petrol at the current level.

He stated that the NNPC can no longer bear the monumental cost, saying market forces must be allowed to determine the pump price of petrol in the country in the nearest future.

When asked when the corporation would stop subsidising petrol, Kyari declined to give a specific date.

A file photo shows an attendant filling the fuel tank of a car.

The Minister of State for Petroleum Resources, Timipre Sylva, also gave an update on happenings in the nation’s petroleum sector.

He disclosed that the Petroleum Industry Bill (PIB) currently before the National Assembly would be passed by April 2021.

Sylva told reporters that the bill would not suffer a setback, going by all indications from the leadership of the National Assembly.

He stressed the importance for Nigeria to steer away from oil to gas, adding that the 20-year-old PIB would attract a lot of investments to the gas sector.

On the issue of having functional refineries in the country, Sylva faulted Senator Dino Melaye’s analysis of the proposed rehabilitation of the Port Harcourt refinery.

According to him, Melaye is no expert on refinery and should, therefore, not impress his views on an area he is not conversant with.

The minister said the Federal Government remained committed to its promise to deliver a functional refinery to Nigerians in due time.

Why We Shut Down Four Oil Refineries – NNPC

 

The Nigerian National Petroleum Corporation (NNPC) has revealed why it shut down four oil refineries across the country. 

According to the Group Managing Director of the NNPC, Mele Kyari, the four oil refineries in Port Harcourt, Warri, and Kaduna were shut down because they were functioning below capacity.

Kyari who was a guest on Channels Television’s Politics Today on Wednesday stated that having ascertained that the refineries were underperforming, it became necessary to stop them from operating altogether.

“All the four refineries in three locations are shut down and it was a deliberate decision for two reasons. One is that the delivery of crude oil to these refineries is completely challenged because the pipeline network has been completely compromised by vandals and all kinds of people that will not allow us to operate these pipelines.

“That means you are not able to deliver crude oil to these refineries effectively to their maximum capacity. Secondly, what you call rehabilitation is different from the turn around maintenance. Turnaround is routine which every refinery does but when you talk about rehabilitation, it is that colossal loss of capacity in the refinery and it means you haven’t done the turnaround maintenance properly.

“Typically, every refinery is expected to operate at 90 per cent of its installed capacity. With the best of effort, with all the turnaround maintenance that has taken place, it is impossible to run any of the refineries before the shutdown at that level. Our estimate was to run it at 60 per cent of capacity but if you do that, all you are doing is value destruction. You will take $100 crude into the refinery and bring out $70 product. It doesn’t make sense.”

Outburst Over Fuel Price Increase Understandable But Misplaced

Mr Kyari also weighed in on the recent increase in fuel price, dismissing the criticism that followed the recent hike.

“The outburst is very understandable but I also believe very strongly that it is misplaced because Nigerians are not aware of the opportunities lost,” he said during an interview on Channels Television’s Politics Today on Wednesday.

According to Kyari, the issue of subsidy has been a big issue in the country for many years but the government can no longer afford it because of the economic issues facing the country.

“And not only that, every corruption that you are aware of in the downstream industry is one way or the other connected to fuel subsidy,” the NNPC boss added.

Kyari is the latest government official to defend the decision to fully halt subsidy, a decision that saw the price of fuel surge from N48/litre to N60-61/litre drawing criticism from organised labour, the opposition and many Nigerians.

But the NNPC boss insists it is the right decision.

“It requires courage to make this decision, I can share this with you. Only a Buhari regime can make this decision,” he said, insisting the move would pay off in the long run.

Read Also: Market Forces To Now Determine Price Of Petrol, FG Reiterates

According to the NNPC boss, contrary to what most people believe, subsidy is something that is beneficial only to the rich, not the average man.

“The subsidy in itself, is by every means an elitist thing and I can share this with you. It is only the elite that will have three, four, five cars in their houses, fill their tanks and also feel comfortable doing this.

“The ordinary man is not the beneficiary. First, he loses in infrastructure, hospitals are not built, schools are not built and ultimately, the brunt of the corruption in the downstream sector will be transferred to the ordinary man. So, overall, you lose everything.

“It is very understandable for people to get angry that prices have gone up. Just like the prices of every commodity, when it goes up, there can be difficulties and challenges that people will naturally face but once prices go up, the other natural thing that must happen is that your income needs to increase so that you are able to procure the things that are now delivered at higher prices.

“You can’t do this anywhere in the world if there is no productivity.

“And there will be no productivity except there is growth in infrastructural development, industries are able to work, therefore, there is a connection between production and consumption. What subsidy does is to remove that connection.

“When people get angry, this is coming from people who, practically are not aware of this situation and they are not aware of the loss that they have and most importantly they are being engineered into making those statements, and we understand this perfectly.

“We are the national oil company, it’s our role to ensure energy security. But you can’t do this until you are able to deliver cost. And that cost is lost daily as prices of crude oil goes up and you are unable to do many things”.

Pipeline Explosion: If Acts Of Vandalism Continue, They Will Kill Us All – Kyari

PHOTO: NNPC

 

The Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari, has called on Nigerians to expose acts of pipeline vandalism happening within their communities.

Multiple explosions rocked the Ile Epo community around the Abule Egba area of Lagos on Sunday night, claiming five lives, burning vehicles and properties worth millions of Naira.

Mr Kyari stressed that if the acts carried out by these vandals continue, more lives would be lost to resultant effects from the vandalism.

RELATED: Panic As Pipeline Explodes At Ile Epo In Abule Egba Area Of Lagos

During an on-the-spot assessment of the scene of Sunday’s pipeline explosion in the area, Mr Kyari stated that the NNPC was working with security agencies to contain the situation.

He said, “It’s unfortunate we lost five lives to this inferno, with many in critical condition in the hospitals, all due to unpatriotic acts of vandals along our Pipeline Right of Way, who make insertions into the pipelines to steal products, leading to disasters such as this.

“We’re working daily with security agencies to contain this situation which portends danger for all of us. Nigerians must know that these acts of vandals are happening within communities and if they are allowed to continue, then they will eventually kill all of us.”

The NNPC boss explained that when the explosion was reported, they shut down the flow to contain the damage.

He, however, noted that the flow of petroleum products has since resumed.

“We, therefore, need the support of every member of the community to expose the bad eggs in their midst. We are counting on Nigerians to help us resolve this as it is becoming a matter of national security concern.

“Having shut down to contain the damage yesterday, we’ve now fully restored the line. We are now back on stream.”

“Petroleum products are flowing all the way from Atlas Cove to Mosimi all the way to Ilorin Depot. We enjoin everyone to work with us in sustaining this,” Kyari said.

FG To Stop Importation Of Petrol By 2023

 

The Federal Government has set a 2023 deadline to stop the importation of petrol into the country.

Nigeria, an oil-producing country has been heavily dependent on the importation of petroleum products since its four major oil refineries have been under-utilized.

READ ALSO: FG To Stop Fuel Importation In 2019 With New Oil Policy

According to the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, while signing the Condensate refinery strategy programme Front End Engineering Design, the strategy is expected to deliver 20 million litres of Petrol when it’s completed.

Mr Kyari explained that President Muhammadu Buhari is concerned that as an oil-producing country, Nigeria is one of the highest importers of petrol in the world.

“For a country that has been producing oil for over 50 years, it is really a difficulty to explain why we are still importing petroleum products.

“We have a clear mandate of Mr. President to stop this and we believe this can be done between now and 2023; it is not a political deadline, it is a realistic, technical deadline that we can deliver on this.”

He listed strategies the corporation hopes to implement to achieve the deadline, including delivering on functional refineries, support to partners on projects that will make gasoline available in the country.

“First, we will deliver on our refineries to make them work and significant work has gone into that and we believe that we can deliver on this.

“Secondly, we will support our partners to deliver on their projects that will make gasoline and other products available which is essentially the many other refinery projects intervention that are going on that we know and we support all of them, particularly the Dangote refinery, we will help them in any way possible to support them to deliver on that.

“Thirdly, which is where we come in, in the upstream as we all know, we haven’t done well, we are busy exploring for oil-producing wells but we haven’t bothered to say what additional value we can add to this country and that’s where the condensate refinery comes in.

In 2017, the Federal Government planned to stop the importation of fuel by 2019 with the approval of a new National Oil Policy by the Federal Executive Council.

FG Targets Oil Production Of Three Million Barrels Per Day

 

The Federal Government has said that a target of three million barrels per day of oil production has been set and steps are being taken to realise it before the end of 2023.

This is according to the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Mele Kyari, at a meeting with the House of Representatives committee on petroleum upstream.

Mr. Kyari added that a target of 40 million barrels of reserves has also been set and the possibilities of achieving them are high due to the several interventions being explored by the government.

“The national target of three million barrels per day of daily production and 40 million barrels of reserves has not been attained, we are much focused today, we know it is possible, we have taken steps to realise this before the end of 2023.

“A number of interventions are ongoing, including our elaborate intrusion into the frontier basins which we announced oil discovery in the Gongola basin, and we expect many more to happen including the Anambra platform and some part of Benue, Bida and Chad basin.”

READ ALSO: Finance Minister Breaks Down Proposed 2020 Budget, Puts Total Revenue At N8.15trn

The NNPC boss stated that the failure of having refineries across the country owes fully to the inability of the Government to take care of them and no excuse is tenable for such.

“The refineries didn’t fail because there were no skilled people; they failed because we are unable to take care of the refineries and we don’t want to give excuses why we didn’t take care of it, you can blame anyone, but what we have decided to do is to make them work.”

He added: “There is no scarcity of skilled people, the will is there and our plan subsequently will be made available and I assure you that the plans we have in place will make them work and it will deliver the refineries; we have the best refiners in the world.”

Nigeria Will Comply With OPEC, Non-OPEC Output Cut Deal, Says NNPC Boss

A file photo of NNPC GMD, Mele Kyari.

 

 

The Nigerian government says it is committed to the production adjustments agreed on under the Declaration of Cooperation (DoC) between member countries of the Organisation of the Petroleum Exporting Countries (OPEC) and Non-OPEC Countries.

Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) and Nigeria’s Representatives on the OPEC Economic Commission Board, Mr Mele Kyari, said this in a statement on Wednesday in Abuja.

According to him, the country is totally committed to full compliance with the agreement reached by the parties to the DoC at the last Ministerial Meeting of what is known as OPEC Plus, held on July 2 in Vienna, Austria.

READ ALSO: FIFA, UEFA, Others Shower Praises As Okocha And Siasia Celebrate Birthdays

“Right now, we are not only committed to the agreement but we have elevated our attitude towards it to the point of complete devotion to the adjustments and we urge other parties to follow suit,” the OPEC Rep said.

He was optimistic that the momentary and artificially induced bearish trends would naturally correct itself based on the strong market fundamentals which have remained steadfast despite the price slid.

Kyari noted that with a visible steady decline in commercial stock overhang propelled by healthy demand, it is only logical for all advocates of oil price stability like the OPEC Plus allies to comply strictly with the agreed production adjustments.

He explained that with the increasing volatility of the oil market, it has become commonsensical for Nigeria and all other parties to the agreement to entrench an attitude of unwavering devotion to the deal anchored on full and timely conformity to their obligations.

NNPC Boss Meets Governors, Pledges To Grow Economy

NNPC boss, Mele Kyari

 

The newly appointed Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, has pledged closer ties with the Nigerian Governors’ Forum to ensure the growth of the economy.

While meeting with the NGF delegation in his office, Mr Kyari explained that the partnership will also grow renewable energy and generate revenue for the country.

“What is important to Nigerians are two things – fuel supply and absence of queues in fuel stations. And the second part of this is very critical. How much money we deliver from our transactions into the federation account.

READ ALSO: Buhari Asks Senate To Confirm Tanko Muhammad As CJN

“These two elements are critical and they are very important for the well being of this country,” he said.

The NNPC boss also assured the governors that the financials and operations of the corporation would continue to be communicated to them while ensuring fiscal feasibility for the states in consonance with the medium-term expenditure framework.