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Nigeria: With Planned Dividend Payout, NNPC Prepares for Life Outside FG’s Control

The Nigerian National Petroleum Corporation (NNPC) is assiduously working towards the payment of dividends to its shareholders, notably the federal, state and local governments, to satisfy one of the conditions

The Nigerian National Petroleum Corporation (NNPC) is assiduously working towards the payment of dividends to its shareholders, notably the federal, state and local governments, to satisfy one of the conditions for listing on the Nigerian Exchange Limited (NGX), THISDAY learnt on Sunday.

Within the first six months of the operation of the new petroleum legislation, expected to be signed into law by President Muhammadu Buhari any time soon, the Minister of Petroleum Resources, being the president, is mandated under the Petroleum Industry Bill (PIB) to incorporate the NNPC as a limited liability company to be known as NNPC Limited, to fully commercialise its operations.

Nigerians were shocked recently to hear the Group Managing Director of the NNPC, Mr. Mele Kyari, declare in public on three separate occasions that the corporation which has consistently operated at a loss plans to pay dividends like the Nigerian Liquefied Natural Gas (NLNG) Limited.

The first instance was during an interactive session with the National Association of Energy Correspondents (NAEC) in Abuja, last November; the second was when he appeared on ARISE News Channel to clarify issues around the Dangote Refinery, and the third was last week in Lagos, while delivering an address at an event organised by the Society of Petroleum Engineers (SPE).

“Everything we are doing must align with the wider national interest. And therefore, NNPC, being the representatives of all of us and, is, of course, a very potential global player, this is our ambition and we are getting there.

“And I can tell you, within the next month or two maximum, we will publish our statement of accounts for 2020. And I can also confirm to you that for the first time in our history, we will declare profit to the Nigerian people,” he told his audience.

Clause 53 of the legislation recently passed by the National Assembly, says the petroleum minister must consult with the minister of finance to determine the number and nominal value of the shares to be allotted, which would form the initial paid-up share capital of NNPC Limited.

In addition, 53 (7,8) provides that NNPC Limited must operate as an, “efficient profit-making entity,” declare dividends and also pay all fees, rents, royalties, profit oil share taxes and other requirements on any lease or licence.

However, THISDAY learnt yesterday that to satisfy the standard for listing, which the NNPC would be mandated to do under the new law, Financial Standard ‘A’ requires that a company which wants to be listed on the main board of the exchange must provide three years financial statements, the most recent of which must not be more than nine months old at the time of application submission.

In addition, the standard requires that company must provide financial statements with the date of the last audited accounts not being older than nine months.

The Chief Executive of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, who alluded to the process of listing in a note at the weekend, stressed that the planned action by the national oil company could be a precursor to its listing in 2022.

Rewane, noted that listing of the NNPC like it’s Saudi Arabia counterpart, Aramco, could boost market capitalisation by as much as 65 per cent to hit N33 trillion when the deal is completed.

“Only a discerning analyst would have raised his eyebrow when the NNPC announced its intention to pay its first dividend in September 2021. He would ask if this was a precursor for listing the oil behemoth on the Nigerian stock market just like Aramco did in Saudi Arabia.

“Aramco IPO has been the world’s largest to date. To list any company on the exchange, the company must have paid dividends in the prior three years. This announcement was swiftly followed by the FEC approval of NNPC’s acquisition of a 20 per cent stake in the Dangote Refinery and Petrochemical project.

“These decisions are not only huge but are potentially transformational for the petroleum sector in Nigeria, which had been hitherto in a moribund state.

“The governance requirements of listed companies is likely to force the NNPC to become more transparent and accountable in its financial management,” Rewane said.

Meanwhile, the NNPC in its April 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR), released yesterday, stated that its expenditure for the month under review increased by 17.24 per cent or N72.34 billion to N492.05 billion.

The national oil company also announced a trading surplus of N43.57 billion in April 2021, representing a 23.64 per cent increase over the N35.24 billion surplus it recorded in the previous month of March 2021. It also clarified that its calculation of trading surplus or trading deficit was derived after deduction of the expenditure profile from the revenue for the period under review.

According to the report, the NNPC’s operating revenue in April 2021, as compared to March 2021, increased by 17.73 per cent or N80.67 billion to stand at N535.61 billion. The NNPC attributed the rise in trading surplus to the activities of the corporation’s upstream subsidiary, the Nigerian Petroleum Development Company (NPDC), such as crude oil lifting from OML 119 (Okono Okpoho) and OMLs 60, 61, 62, 63 (Nigerian Agip Oil Company), as well as increase in gas sales.

“The positive outlook was further consolidated by the robust gains of two other subsidiaries namely: Duke Oil and the National Engineering and Technical Company (NETCO),” it stated.

In the downstream, to ensure uninterrupted supply and effective distribution of fuel across the country, it stated that a total of 1.67 billion litres of Premium Motor Spirit (PMS) or petrol translating to 55.79 million litres/day were supplied in the month under review.

The report also showed a 34.29 per cent reduction in the number of pipelines vandalised from 70 in March 2021, to 46 in April 2021. While Port Harcourt area accounted for 54 per cent, Mosimi area accounted for 46 per cent of the vandalised points.

In the gas sector, a total of 209.27 billion cubic feet (bcf) of natural gas was produced in the month under review, translating to an average daily production of 6,975.72million standard cubic feet per day (mmscfd).

For the period of April 2020 to April 2021, NNPC noted that a total of 2,902.52bcf of gas was produced, representing an average daily production of 7,369.76mmscfd during the period.

“Period-to-date production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and NPDC contributed about 62.07 per cent, 19.95 per cent and 17.98 per cent respectively to the total national gas production.

“In terms of natural gas off-take, commercialisation and utilisation, out of the 206.40bcf supplied in April 2021, a total of 126.83bcf of gas was commercialised consisting of 42.92bcf and 83.91bcf for the domestic and export markets respectively.

“This translates to a total supply of 1,430.90mmscfd of gas to the domestic market and 2,976.94mmscfd of gas supplied to the export market for the month.

 “This implies that 61.45 per cent of the average daily gas produced was commercialised while the balance of 38.55 per cent was either re-injected, used as upstream fuel gas or flared. Gas flare rate was 9.74 per cent for the month under review (i.e. 670.19mmscfd) compared with average gas flare rate of 7.42 per cent (i.e. 542.22mmscfd) for the period of April 2020 to April 2021,” it noted.

According to the national oil company, a total of 795mmscfd was delivered to gas-fired power plants in the month of April 2021 to generate an average power of about 3,416 MW.

Emmanuel Addeh in Abuja and Peter Uzoho in Lagos