Nigerian National Petroleum Company Limited (NNPCL) has started a process that will see it launch a multi-billion naira initial public offering (IPO) as part of its expansive growth plan.
Chief Financial Officer (CFO), Nigerian National Petroleum Company Limited (NNPCL), Umar Ajiya, said the company’s IPO might occur in 2024, going by the ongoing internal preparations.
According to him, while the company has a definite plan to float an IPO and list its shares, it has not finalised on the details of the IPO, the mode of listing and whether it would list on the domestic securities exchange or a combination of local and foreign listing among others.
Ajiya, who spoke during a panel discussion at the CERAWEEK Energy Conference in Houston, said ongoing internal process to get the company ready for an IPO would be finalised by the middle of 2023.
Many experts have advocated for the listing of the national oil company in order to engender strong corporate governance and unlock the intrinsic value of its assets.
Renowned industrialist and boardroom guru, Chief Olusegun Osunkeye said government should follow up the recent conversion of the Nigerian National Petroleum Corporation (NNPC) to a private company with the launching of its IPO to enable it operate optimally and transparently.
According to him; the ultimate challenge for Nigeria now is how the government, other capital market regulators and operators can work harmoniously to encourage investors and boost the economy.
“As a positive fallout of the Petroleum Industry Act (PIA), recently the news broke that the Nigeria National Petroleum Corporation (NNPC), has been converted to a private company, NNPC Limited. The announcement has triggered the ongoing analysis of the company’s financial health, civil service orientation of its staff and other key performance indicators that will enable a discerning investor to purchase its shares. The new company can take advantage of Initial Public Offering (IPO) to raise capital to boost its operations and generate tax for the government” Osunkeye said.
Managing Partner, Imperial Law, Mrs. Afolake Lawal, a corporate governance specialist, underlined the need for strong corporate governance at the NNPCL noting NNPCL Act stipulated that the company shall operate under the purview of the Companies and Allied Maters Act, thus making the provisions of the Nigerian Code of Corporate Governance 2018 (‘Code’) applicable to it.
She noted that the code seeks to institutionalise corporate governance best practices in Nigerian companies so as to rebuild public trust and confidence in the Nigerian economy, thus facilitating increased trade and investment.
According to her, the code recognises that its prescribed practices can be tailored to meet industry or company needs, by adopting the ‘apply and explain’ approach where so required.
“It assumes the application of all its principles and requires entities to explain how the principles are applied. By this, NNPC Ltd will have to demonstrate how the specific activities it has undertaken best achieve the outcomes intended by the corporate governance principles.
“The code subscribes to enforcement of its standards through third parties i.e. regulators and registered exchanges are empowered to sanction specific deviations. However, the petroleum industry in Nigeria lacks a sectorial code on corporate governance, thus making the incorporation of good corporate governance practices in the Act a welcome development, and thereby placing NNPC Ltd under a compulsion to comply with the set standards,” Lawal said.
She pointed out that good corporate governance would keep the NNPCL on the path of sustained profitability, and also aid the achievement of other objectives of the company, particularly, the need to attract desired investors to the company.