The Nigerian National Petroleum Company (NNPC) Limited could become the most capitalised firm in Africa with the highest chain of ventures if the ongoing reforms go according to the plans of its board and management. It has been over a year since the Petroleum Industry Act (PIA) 2021 came up, ending the defunct Nigerian National Petroleum Corporation to the new NNPC Limited.
Within this one year period, Daily Trust on Sunday highlights the key milestones the company has recorded, some of which include the ongoing onslaught against oil thieves, acquisition of 380 Oando retail stations, its corporatisation, interventions in road projects and its entire future looking branding for cleaner energy for today and tomorrow.
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From its takeoff on April 1 1977 as a merger of the Nigerian National Oil Corporation (NNOC) and the Federal Ministry of Petroleum and Energy Resources, the Nigerian National Petroleum Corporation (NNPC) has witnessed key transformations towards a value addition pathway.
Shortly after the PIA came on stream, the NNPC was incorporated under the Company and Allied Matter Act (CAMA) by the Corporate Affairs Commission (CAC). The new NNPC Ltd took over assets, interests and liabilities of the defunct corporation shortly after its certificate of incorporation was received by President Muhamadu Buhari on October 8, 2021.
N621bn roads rehab project ongoing
In February 2022, the company mobilised to fix 21 major highways through the Federal Ministry of Works and Housing in a N621billion deal. It is generating revenue for this through the novel NNPC tax credit scheme as a response to calls from Petroleum Tankers Drivers (PTD) branch of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) to fix major roads that have hampered the smooth distribution of petroleum products nationwide.
The spokesman ofs the ministry, Boade Akinola, confirmed that some of these roads have been fixed while work is ongoing at other sites. Some of the projects are Suleja-Minna highway, where two oil depots are situated; the Lambata-Lapai-Bida road in Niger State, another highway linking the West with North.
According to details of the 2023 budget proposal, over N650million has been pegged for fixing roads leading to NNPC depots and other petroleum product distribution arteries. They include the rehabilitation of the Aba-Owerri road NNPC depot expressway in Abia; Lagos-Badagry expressway; access road to Apapa/Tincan Island Port – NNPC depot; Apapa/Tincan Island Port – NNPC Atlas Cove; and special repairs of Jos-Jengre Kan Iyaka road section (NNPC depot-Jengre) in Plateau.
Resolution of oil well litigations
On July 19, 2022, the NNPC formally transited to NNPC Ltd with the unveiling of logos, projections and expectations. Among these expectations is the resolution of oil well disputes between its partners and an expansion of petroleum retail outlets to over 1,500 units from about 500 units.
Barely a month, precisely in August, the NNPC Ltd, partners resolved a $9bn dispute and signed pacts for six oilfields, while also launching a crude oil monitoring system.
According to the Group Chief Executive Officer of the NNPC Ltd, Malam Mele Kyari, the lingering disputes had attracted $9bn contingency liability, but that has been resolved and the partners signed new oil production pacts for the renewed Oil Mining Leases (OMLs) for six oil fields, comprising OMLs 125, 128, 130, 132, 133 and 138, for 20 years.
Kyari said, “The DSA has put aside all contingent liabilities of about $9bn reduced to a bottom line that all of us can accept, but this wouldn’t have happened if our partners didn’t give us certain rights and obligations.
“With the signing of the DSA and the new PSC, investments will come back and there will be more expansion for the petroleum industry.”
Ensuring subsidised petrol supply despite global crisis
Since February this year, the Russia and Ukraine faceoff has affected global energy prices, with crude oil price and refined white products risings. However, in the face of this, the NNPC recently stated that it had maintained federal government’s quest to subside petrol at N6.5trillion annually.
The company, in August, also said there was an average consumption of 68million litres of petrol daily, a figure it has recorded since January to August 2022.
A statement by the Group General Manager, Group Public Affairs Division, Garba Deen Muhammad, noted that the NNPC only became the last resort for petrol import in 2017 after high cost drove away oil marketing companies. The company noted that if not for the subsidy, Nigerians would have been buying petrol at N462/litre.
380 Oando stations acquired
On October 1, the NNPC Ltd acquired 380 Oando stations and other assets nationwide from OVH Energy. With that, the company officially became present in Togo as it marches to becoming a pan-African venture.
“The acquisition will bring over 380 additional filling stations under the NNPC retail brand in Nigeria and Togo on our journey to attaining 1,500 stations. We will be the largest petroleum product retail network in Africa,” Kyari noted.
The new assets also include a reception jetty with 240,000 tonnes monthly capacity in Lagos, eight LPG plants, three lubes blending plants, three aviation depots, and 12 warehouses.
Daily Trust on Sunday observed that some Oando outlets in Abuja, Nasarawa, Lagos and several other states have already been branded as NNPC retail stations.
Higher profit record in over 40 years
In another progressive move, the NNPC as a corporation on October 4, 2022, declared a N674bn net profit for the 2021 financial year. That was a 134.8 per cent rise from the N287bn it recorded in 2020.
According to management, the company was driven squarely by upstream activities, including oil and gas and power.
“We have recorded significant improvement in our financial performance over the past three years, turning up the curve from losses to profits,” Kyari said.
He also noted that the profit could have been more if not for the crude oil theft with the industry losing about 200,000 barrels per day to the menace.
He said Nigeria had the capacity to do 2.4million barrels per day, but due to the issues that resulted in shut down of pipelines, the daily production is just around 1.2m bpd.
Onslaught on oil theft
While launching the crude oil monitoring system and platform, the Group Chief Executive Officer of the NNPC Limited said it was to enable citizens contact the company on cases of suspected oil theft and vandalism around oil communities.
Kyari said there were still illegal activities in our oil assets like illegal refineries, insertion on oil pipelines, among others, though arrests have been made, vessels arrested by the Nigerian Navy and the armed forces are destroying illegal refineries.
It is said that Nigeria lost over 200,000 barrels per day of crude oil, cutting production capacity to 1.1millionbpd from a 1.8mbpd quota assigned to the country by the Organisation of Petroleum Exporting Countries (OPEC).
Following up on this has been a massive ongoing onslaught against oil theft, especially in the Niger Delta creeks through a partnership with security agencies and a contract with Tantita Security Services Ltd belonging to ex-agitator, Government Tompolo. Already, illegal pipelines have been discovered, as well as vessels and crew involved in the heinous activities.
Promoting gas utilisation
In September, the NNPC pledged to work with partners to raise domestic gas use to 5million tonnes in three years. At the India Nigeria LPG Summit it organised in Abuja, the company said its target was to rise from the current 1.7m volume of Liquefied Petroleum Gas (LPG) annually.
The reformed company has a strong presence in the LPG value chain, “contributing about 45 per cent of domestic supply via joint ventures, affiliates and subsidiaries.”
The NNPC Ltd is aligned with the federal government’s National Gas Expansion Programme (NGEP) and the National LPG Expansion Plan, which he said would create a Gas Funding Company Ltd for the injection of 20m cylinders in the next five years for consumers.
The company has also adopted the experience from the Pradhan Mantri Ujjwala Yojana (PMUY) scheme directed by the prime minister of India in 2016, and it increased LPG from about 61 per cent to over 90 per cent penetration.
Among the frontal gas projects coordinated by the NNPC so far is the Abuja-Kaduna-Kano gas (AKK) project from Ajaokuta in Kogi State.
Nigeria recently signed a contract to extend a gas pipeline to Morocco, which could be a potential exporting gas to Europe when completed in about five years.
On Thursday, the NNPC Ltd and Daewoo Group of South Korea signed a pact for the rehabilitation of the Kaduna refinery.
President Muhammadu Buhari, who witnessed the signing ceremony on Thursday in Seoul, South Korea, expressed delight over the development. It came on the back of the ongoing rehabilitation works at Warri refinery by Daewoo Group, which will at the first instance, deliver fuel production before the first half of 2023.
The NNPC also said the rehabilitation of Port Harcourt was ongoing and would begin to deliver petrol within a similar period.
Petrol scarcity could disrupt gains
In spite of these milestones, Nigerians have been faced with petrol scarcity since February this year, with the situation clearing and resurfacing afterwards. From the adulterated petrol crisis in February to price adjustment in July, and now, depot price hike, the marketers have told Nigerians stories to justify the scorching scarcity and higher retail prices, while black markets make clean kills.
Currently in Abuja, some stations sell at N250 per litre while black marketers sell at N350/litre.
Experts laud NNPC reforms, decry fuel scarcity
In the meantime, while some experts have lauded the reforms at the NNPC Ltd, others believe the company has to do more to clear the perennial fuel scarcity this year for Nigerians to gain from the reform.
Commenting on the milestones of the company, the chairman of Skymark Energy and Power Ltd, Alhaji Muhammad Saleh Hassan, lauded the management led by Kyari.
In a statement, Alhaji Muhammad noted, “Kyari is a go-getter any day. His poise to unravel oil theft in Nigeria, especially in the Niger Delta, which is already yielding positive results, as well as other transformative measures he has embarked upon, is highly commendable.”
The oil and gas expert noted that through his consistent efforts, the NNPC has completed its transition and transformed as a complete limited liability company with impressive shares at the Dangote Refinery, the largest refining in the world, which is nearing completion.
But for Mr Alechenu Anebi, another petroleum expert, fuel scarcity came with the reforms.
He noted, “Yes, we have seen the reforms and it is good, but Nigerians just want fuel available and at an affordable price. The earlier they begin to do this, the better for the country because you can’t pay huge subsidies and still allow marketers to determine pricing and petrol availability.”
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