The Nigerian National Petroleum Corporation (NNPC) has announced that it is considering 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 is also coming after President Muhammadu Buhari, earlier in August 2021, signed into law the Petroleum Industry Act (PIA), which enables the state-owned oil giant to offer its shares to the public.
This disclosure was made by the Group Managing Director of NNPC, Mele Kyari, during a press briefing in Abuja.
According to Bloomberg, Kyari 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.
What the Group Managing Director of NNPC is saying
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.’’
What you should know
Nairametrics had on Thursday reported that President Buhari announced that the NNPC reported a profit after tax of N287 billion in 2020, an announcement that is in fulfilment of an earlier pledge by the Federal Government to publicly declare the financial position of the state-owned oil company.
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.