The Nigerian National Petroleum Corporation will float 40 percent of its stock on the local stock exchange once the President signs the Petroleum Industry Governance Bill, Nigerian media report. The PIGB is at the heart of an energy sector overhaul aimed at making the corruption-ridden state company profitable. To do this, NNPC group managing director Maikanti Baru said, the company needs to be more commercially driven. For this, it needs cash, which will be raised through the listing.
As part of the overhaul, the NNPC will be split into two: the Nigerian Petroleum Company, which will be an integrated oil company taking all assets of the NNPC with the exception of the production-sharing contracts, and the Nigerian Petroleum Assets Management Company.
NNPC’s existing stock will initially be split between the two state vehicles—Ministry of Petroleum Incorporated and Ministry of Finance Incorporated—with 40 percent going to each and another 20 percent held by the Bureau of Public Enterprises. In five to ten years, 10 percent of the initial stock plus a new batch of shares equal to 30 percent of this will be floated on the Nigerian Stock Exchange.
Nigeria, Africa’s top oil exporter, has struggled to make its oil industry work in the last few years after the oil price plunge exposed the problems at the NNPC ranging from graft to mismanagement. Militant activity in the Niger Delta, pipeline vandalism, and the subsequent production outages did not help the company get back on its feet. The federal government, however, has thrown its weight behind the reform drive that should make the oil industry more efficient and more profitable.
Nigeria produced 1.67 million barrels of oil daily in July, below the 1.8-million-bpd quota it had agreed with OPEC after it joined the production cut effort that was reversed this June. The West African nation should only benefit from the reversal as it can now expand its production as fast as it wants, which should boost oil revenues that the industry overhaul will require.
By Irina Slav for Oilprice.com
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