NNPCL: Long-term strategic imperatives (part seven)

November 10, 2025 hubnig12 2 Views 0 Comments

This is the seventh and concluding part of the series of articles on the long-term strategic imperatives of the Nigerian National Petroleum Corporation Limited (NNPCL). The series has been canvassing the need for the privatisation of the entire NNPCL and its subsidiaries along the path of the privatisation of British Petroleum which took nine years to achieve and turned the company into a globally competitive oil and gas major. The advocacy of the articles has been evidenced-based and focuses primarily on two recommendations: the privatisation of the entire NNPCL over a period of ten years; and the strategic repositioning of NNPCL as an entirely upstream oil and gas company, much like how the international oil majors operate in Nigeria. This is because the upstream is where Nigeria’s greatest opportunities exist to develop and optimise the benefits from its enormous oil and gas assets to the maximum.

Last week’s article, the sixth in the series, argued powerfully for NNPCL’s exclusive focus on the upstream sector, describing NNPCL’s involvement or romance with the midstream and downstream oil and gas sector as a huge distraction with incalculable opportunity costs for the company and the nation at large. The article was of the view that the opportunities, particularly in the gas sector, where Nigeria has three times as much confirmed reserve as oil is literally limitless. It will take NNPCL devoting a hundred percent attention to the upstream to capture the full benefits of these opportunities for itself as a corporate entity and for the nation.

The focus of this concluding article will be on how to go about privatising NNPCL as a corporate entity and commercial concern after first divesting itself of the three petroleum refineries and its downstream asset, NNPC Retail Limited, as recommended. To begin with, let me state here that I in no way arrogate to myself superior knowledge or anything close to it concerning the technical, managerial and operational affairs of NNPCL. Far from it! The Board and management of the company are populated by eminently qualified, knowledgeable and competent professionals with enormous wealth of experience. For example, the incumbent Non-Executive Chairman, Mr. Ahmadu Musa Kida, is a civil engineer who also obtained a postgraduate diploma in petroleum engineering and spent 35 years working for Total Exploration and Production Nigeria (TEPNG), rising to the position of Deputy Managing Director of the Deepwater District and was also a member of the Board of Total Upstream Companies in Nigeria (TUCN). He played a major role in the Egina Deepwater development project which added 200,000 barrels per day to Nigeria’s daily oil production before retiring voluntarily in 2015. Similarly the Group Managing Director/Executive Director of the company, Mr. Bayo Bashir Ojulari, has 35 years of cognate experience in the oil and gas industry in diverse aspects of upstream operations, gained from his employment and career development with Total Exploration and Production Nigeria (TEPNG) and Shell Petroleum Development Company (SPDC). He rose to become the Managing Director of Shell Nigeria Exploration and Development Company (SNEPCo) from 2015. He also won a number of impressive international awards.

It is clear therefore that the affairs of NNPCL is directed and managed by a competent leadership and a professional management team of global standard with deep private sector background and experience. There is no doubt that if they were to run NNPCL as a private concern they will do many things differently. The one hundred percent government ownership of the company and the consequential political climate within the organisation are limiting factors to the decision-making domain and options available to the Board and management. However, it remains the duty of the Board to give NNPCL the required strategic direction with visionary insight and outstanding courage to put the company on a trajectory of excellence at this critical time in its history. The management team would also be expected to translate the bold visions of the Board into implementable decisions and actionable steps that will yield great and quicker results in our national quest for energy security, energy independence and sustainability with enormous benefits and revenue streams from our abundant hydrocarbon endowments.

The foregoing makes the privatisation of NNPCL inevitable. It is within the context of a fully privatised NNPCL that the aspirations of a professionally and competently run NNPCL can be realised. We have a good example in British Petroleum. The privatisation was done in stages and was completed in 1987, beginning with the British government selling 17 percent of its shares in1977. This was followed by the selling of more shares between 1979 and 1981. Then the government sold 7 percent of the shares in1983 and finally sold 31.5 percent of the shares in 1987, thus completing the full privatisation of the oil major. However, as a result of the privatisation, British Petroleum ceased to be a national or state-owned oil company and became a private company whose shares are publicly traded in various countries around the world. Major shareholders include institutional investors like Norway’s Norges Bank, Morgan Stanley, and State Street Corporation, which invests on behalf of many foreign and domestic investors.

Since the nationality of owners/shareholders will be a very sensitive matter in a fully privatised NNPCL, it would be expedient and indeed necessary for the shareholders and investors in the company to be limited to Nigerian nationals. The company will evolve over time to the point where the nationality of ownership may no longer be a major consideration as it is currently with mobile telephone service providers like MTN or Airtel. Similarly, government will over time prioritise the quantity of oil and gas produced daily, the ability of Nigeria to monetise its hydrocarbon resources, government’s royalty and tax income streams from the oil and gas industry over direct government ownership of oil and gas assets. For example, the government of the United States, which is the largest crude oil producer globally, with 21.91 million barrels per day, does not own any oil and gas company or oil and gas assets. However, the government collected $8.5 billion in royalties from oil and natural gas leases on onshore federal lands in the 2023 fiscal year; and $88.2 billion in federal excise taxes from gasoline or petrol.

As in the case of the telecom sector, Nigerians are gradually coming to realise that it really does not matter who owns petroleum refineries, provided they function efficiently to ensure energy security; and that as the privately-owned Dangote Refinery has impressively demonstrated so far, privately owned petroleum refineries can do the job better, more cost-effectively and efficiently, and more transparently and accountably.

It might take some time more to wean both the government and the Nigerian public from the emotional attachment to public ownership of oil and gas assets, but privatisation of these assets is the most viable and cost-effective path to energy security, sustainability, transparent and efficient management of the Nigerian oil and gas sector. In the short to medium term, we will have to work around political opposition and stonewalling to the privatisation of publicly owned oil and gas assets represented by NNPCL. Nigeria will also have to work out a transparent and equitable way to sell the shares of NNPCL to a broad cross-section of the Nigerian investing public to ensue inclusivity and fairness. The privatisation of NNPCL will encounter some predictable brick walls from known vested interests, but it will inevitably prove to be the most efficient and sustainable path to the development of the Nigerian oil and gas industry.
• Mr. Igbinoba is Team Lead/CEOs at ProServe Options Consulting, Lagos

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