Buhari Express High Hopes on New NNPC But Analysts Say Time Will Tell
President Muhammadu Buhari yesterday unveiled the new Nigerian National Petroleum Company (NNPC) Limited, a landmark event in Abuja, that officially changes the oil firm from a wholly, state-run entity to a commercial oil company, limited by shares, and registered under the Company and Allied Matters Act.
He said the new company is expected to be managed as a private energy enterprise, with the designation of the group head changed from ‘Group Managing Director’ to ‘Group Chief Executive Officer.’ But some analyst say they suspect that the fate of the NNPC may be that of some other state-owned, but commercialised concerns.
“We are transforming our petroleum industry to strengthen the growth today July, 19 2022,” President Muhammadu Buhari said at the event. But Proshare analysts yesterday expressed some doubt on the type of efficiency to be expected.
This expectation, according to them, is given the natural, ownership interests vested in the government (the Nigerian factor) – held by the ministry of finance and ministry of petroleum incorporated.
The frontline financial analysts cited the example of the Brazilian counterpart, where the state-owned Petrobras is facing management issues with the Brazilian government.
The opinion of Proshare is that the sociopolitical issues that usually affect the smooth running of such enterprises, which often manifest in political interferences, will creep in and begin to bug the company.
According to Proshare, “the pursuit of social interest and the need to score political points might undermine the NNPC board decisions on appointments, pricing policy, value creation, and energy transition, financing, and refineries operations.”
They said however that nonetheless, the Initial Public Offering (IPO) of the new NNPC by mid-2023, as promised by the Group CEO of the company, might be the game changer needed.
The IPO is expected to dilute the shareholding, where possibly the majority shares of the federal government may be reduced.