NNPC to sell its shares to public after declaring first profit in 44 years
NNPC to sell its shares to public after declaring first profit in 44 years
The Nigerian National Petroleum Corporation (NNPC) is going to the capital market to make an initial public offer (IPO) of its shares after declaring profit for the first time in its 44 years of operation in the 2020 financial year. This arrangement will result in the listing of the state-owned giant oil company on the stock exchange.
This plan is coming after President Muhammadu Buhari, had earlier this month, and signed into law the Petroleum Industry Act (PIA), which enables NNPC to offer its shares to the public.
It would be recalled that the President had on Thursday disclosed that NNPC for the first time in its 44-year history has declared a Profit after Tax (PAT) of N287 billion for the year 2020.
While noting that the agency’s losses were reduced from N803 billion in 2018 to N1.7 billion in year 2019, the president also directed the corporation’s management to henceforth ensure timely publication of its audited accounts.
Media Adviser to the President, Mr. Femi Adesina, who disclosed this in a release noted that the move was in fulfilment of an earlier pledge by the federal government to publicly announce the financial position of the NNPC.
The move to go the capital market was made by the Group Managing Director of NNPC, Mele Kyari, during a press briefing in Abuja, who according to Bloomberg, said that the listing of NNPC’s shares will draw on the experience of the Saudi Arabian oil giant, Aramco, which listed its shares in 2019.
Kyari in his statement said, “There is no date on it, but there is a possibility of doing this. Obviously because you have made profit today doesn’t mean you are ready for IPO. It is a very, very long, tedious process.’’
The declaration of the result is sequel to the completion of the statutory annual audit exercise for year 2020, the first time in 2 years.
The NNPC has for many years operated under a cloak of secrecy and is very often mired by several allegations of corruption and lack of accountability.
The President, in his announcement, said that the NNPC losses were reduced from N803 billion in the 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 news of the proposed sales of NNPC shares to the public and its subsequent listing on the Nigerian exchange limited is a very good one as it is hoped that this will help improve transparency and accountability in the oil firm which had been bedevilled with large scale corruption.
This will also be a huge boost to the country’s stock market and allow Nigerians to have a say in the running of the oil firm rather than just a few individuals.
The Petroleum Industry Act that was signed into law by President Buhari in August, said that the NNPC will be registered as a commercially focused entity.
KPMG in its earlier report had stated that the new legislation specifies that the company pay its fair share of royalties, fees, rents, taxes and other payments due to the government and that it should pay out the bulk of its profits as dividends after retaining 25% for reinvestment.
The Nigerian Stock Exchange has a market capitalization of N20.6 trillion ($50 billion). The largest IPO on the bourse to date was Guaranty Trust Bank Plc’s $824 million listings in 2007, according to data compiled by Bloomberg.
