PIA, passed in Aug 2021, requires the Minister of Petroleum (in consultation with Finance Minister) to incorporate a new company, to be called Nigeria National Petroleum Company Limited (NNPC Ltd), to take over most of the assets & liab of NNPC.
What is Changing?
1. The C is changing from Corporation to Company. When it was a corporation, it was established and governed by its own law, called NNPC Act 1977 (as amended). Now as a company, it will be governed by Companies & Allied Matters Act (CAMA), the law that governs other companies in Nigeria.
2. The addition of “Limited” means it is a private limited liability company, rather than a PLC (public company). In other words, you cannot buy the shared of NNPC now.
3. The shareholders remain the govt thru Ministries of Finance & Petroleum Incorporated.
NNPC Ltd is still a state-owned company (public in that sense), but not public company in the sense of listing on stock exchange (companies that carry “Plc”)
5. The above means PIA did not privatize NNPC. Shares are still 100% owned by government.
6. It has always been commercial (it sells crude oil and gas with a view to making profits), but the new arrangement makes it fully profit-oriented ie profit is now bigger deal to it, in addition to still serving national interest. Runs like any other company.
7. Previous version of PIB had a provision for phased, timelined privatization of successor companies to old NNPC, but the finally signed version (PIA) does not. It remains 100% government company.
8. However, shares held by govt (they hold 100%) may be transferred (including to public) subject to approval from govt or National Economic Council. So the PIA does not totally foreclose full or partial privatization of NNPC but no timeline for such (unlike previous PIB);
– NNPC Ltd is still a govt company.
– But now runs like a company, subject to rules guiding other companies, no longer by its own special law.
– Now more commercial oriented.
– Can raise funds, spend, make money without recourse to government purse.
– Can enter into incorporated JV (like NLNG) with other companies without needing any special law, just to seek approval from its shareholders and go to CAC for registration of the joint company.
– PIA requires it to retain 20% of its profits for expansion activities and remit the remainder to government.
– Sir Jarus (Energy Expert).