By Eshioromeh Sebastian, Sani Danlami, Abuja
The Nigerian National Petroleum Company Limited (NNPC Ltd) yesterday announced its readiness to proceed with an Initial Public Offer (IPO) as mandated by the Petroleum Industry Act (PIA) 2021.
The development is coming amid growing demands for transparency and complete privatization of the state owned cooperation to enhance its operational efficiency and effectiveness.
A statement by Mr. Olugbenga Oluwaniyi, NNPCL Chief Finance and Investor Relations Officer, disclosed that the company is currently in final preparations for its historic entry into the capital market.
“We are at the crucial stage of selecting partners through our IPO Beauty Parade’ initiative,” to identify the best partners in Investor Relations, IPO Readiness Advisory, and Investment Banking services”, Olugbenga announced.
The state-owned oil firm is engaging potential partners to ensure a successful public offering that will see NNPC Ltd shares listed on the Nigerian stock exchange.
“We will select partners offering the most competitive terms to guide us through this landmark transition,” Oluwaniyi added during the consultative meeting at NNPC Towers in Abuja.
NNPCL’s potential listing will mark a watershed moment for Nigeria’s economic ecosystem as it offeres a chance to professionalize the oil sector while creating new wealth distribution channels. The success of this transition, according to experts, will depend on striking the right balance between attracting serious capital from institutional investors and maintaining inclusive opportunities for citizen investors.
The fear is that, without proper safeguards, there is a real risk this could become another elite economic enclave rather than the public wealth engine it ought to be.
The state owned petroleum corporation was once a major burden on the economy, with trillions of naira lost annually to fuel subsidies and refinery maintenance.
In 2018, reports published by the Nigerian National Petroleum Corporation (NNPC) revealed a staggering loss of N228.1 billion between April and November, just a seven-month period. Supporting this, the National Bureau of Statistics (NBS) reported that the federal government’s spending on petrol imports surged by nearly 50%, reaching N2.95 trillion that year. A significant portion of these funds went toward subsidizing fuel sold at the government controlled price of N145 per litre, even as the NNPC’s four refineries remained in disrepair.
The NNPC’s financial records further highlighted its decline, showing revenue plummeting from N520.4 billion in April 2018 to N292.3 billion by November 2018. Rather than building on its earnings, the corporation suffered severe setbacks. Simply put, any company that loses N228.1 billion in just seven months, instead of generating profits, is clearly mismanaged.
The NNPC’s status as a loss-making entity is well documented. Within that same seven-month period, the Kaduna, Warri, and Port Harcourt refineries contributed N81.718 billion to the deficit, underperforming by 9.8% year-on-year. Additionally, the NNPC’s corporate headquarters posted a N138.064 billion loss in its 2018 financial report.
Subsidy remained a huge drain on public finances. In 2022, it gulped 4.3trn naira ($9.3bn; £7.5bn) and for the first half of 2023, 3.36trn naira was budgeted for it.
However, President Bola Ahmed Tinubu made a decisive and strategic move in June 2023 by announcing the complete elimination of fuel subsidies on his inauguration day.
This bold policy shift effectively lifted the financial burden of subsidies from the Nigerian National Petroleum Company Limited (NNPCL) and eradicated the systemic corruption plaguing the petroleum sector. The reform marked a crucial transition, enabling NNPCL to operate as a fully commercial, profit driven entity rather than serving as a conduit for government patronage and exploitative oil marketers.
By dismantling the subsidy framework, the administration fostered a more transparent and market driven energy sector, aligning NNPCL with global best practices in corporate governance and fiscal responsibility. This decision did not only curbed wasteful expenditures but also positioned the company for sustainable growth, free from the distortions of artificial pricing and rent-seeking practices that had long undermined Nigeria’s economic potential.
The policy’s success is already evident in the revitalization of Nigeria’s refining sector. Within less than two years, the Port Harcourt refinery resumed operations, complementing the newly commissioned Dangote Refinery, while the Warri refinery has begun functioning at partial capacity. Additionally, several private refineries are coming up to foster a competitive market environment that enhances efficiency and reduces reliance on fuel imports.
This progress has further emboldened NNPCL to pursue a corporate transformation. Yesterday, the company announced its intention to list on the Nigerian Stock Exchange, a strategic move that has been widely applauded by financial experts as a critical step toward transparency, improved valuation, and enhanced investor confidence in Nigeria’s energy sector.
While some have said the move is revolutionary as it will open up the entire upstream and downstream economy to investors and quality capital that will catalyze the long awaited diversification of the Nigerian economy and strengthen the forward and backward linkages between the oil sector and the rest of the economy, others have expressed slight scepticism about the development.
Chukwuemeka Ojielo, an economist and financial expert, who spoke with our reporter, said the move is an opportunity to democratize ownership of the national oil company while attracting much needed investment. By transitioning to a publicly traded entity, NNPCL could follow the model of commercial banks like First Bank where ordinary citizens can own shares, fostering greater public participation in the nation’s most strategic asset.
He explained that the shift promises to bring improved transparency, better corporate governance, and increased accountability – benefits that typically accompany public listings of major corporations. However, he raised concerns considering the company’s stated focus on attracting institutional investors rather than retail shareholders.
He said the approach risks excluding everyday Nigerians from meaningful participation in what should be a national wealth sharing initiative, especially given NNPCL’s enormous scale compared to even major indigenous players like Oando, which remains merely a partner rather than a controlling stakeholder in the petroleum sector.
The reality is that transforming a state run oil giant into a competitive public company requires enormous capital and expertise, which likely explains the emphasis on deep pocketed institutional investors. NNPCL’s listing represents a complex undertaking far beyond typical corporate IPOs, given its strategic importance, massive infrastructure, and historically opaque operations. While institutional investment is undoubtedly necessary to ensure the listing’s success, there must be deliberate mechanisms to guarantee ordinary Nigerians aren’t completely sidelined from this historic economic transition.
He advised that the government and NNPCL management should consider implementing special retail investor windows or share allotment programmes to ensure broader public participation.
The coming months will reveal whether this move will truly democratize Nigeria’s oil wealth or simply reshuffle its control among a different set of powerful actors. Careful execution and equitable policies will determine whether this becomes a genuine economic revolution or a missed opportunity for broader national prosperity.
“The gain is that it will continue to attract investors and make more people owners, and then make NNPCL a public company. If you have shares in First Bank today, you are part of the owner, but I am a bit concerned because they said they are looking for institutional investors and that means they are looking for investors that will come and own it.
“That is to say that you and I may not be the target. It is not for the ordinary Nigerians, and of a truth, what NNPCL needs isn’t a child’s play. You can imagine that OANDO as big as it is, has not been able to take full ownership, and it is just a partner, he said.
Prof. Yakub Aliyu, a financial economist, explained that that the move will revolutionize Nigeria’s oil sector and economy by attracting productive investments, boosting efficiency, and fostering diversification.
Speaking with Spear Newt, he said the decision “strengthens critical linkages between petroleum and other industries, accelerating economic recovery and sustainable growth.
He said: “It will immensely positively impact on the oil sector and the overall economy. Such a move is revolutionary as it will open up the entire upstream and downstream economy to investors and quality capital that will catalyze the long awaited diversification of the Nigerian economy and strengthen the forward and backward linkages between the oil sector and the rest of the economy. The Nigerian oil sector will now be more efficient and productive adding to the acceleration of the recovery efforts of the economy.
“As one of the largest companies in the country, NNPCL’s listing would significantly boost the stock market’s capitalization, attracting both local and foreign investo while increasing liquidity. This move would also enhance transparency and corporate governance, as the company would be required to disclose financial reports and adhere to stricter regulatory standards, potentially reducing inefficiencies and corruption.
“Partial privatization through the listing would reduce government control, allowing private investors to own shares and possibly improving operational efficiency and profitability. A successful NNPCL listing could restore investor confidence in Nigeria’s economy, signaling positive reforms in the oil sector and encouraging other large firms to go public. If profitable, NNPCL could start paying dividends, providing an additional revenue stream for the government and returns for shareholders.
However, he warned that the “challenges remain, including potential market volatility if NNPCL underperforms, lingering political interference, and difficulties in accurately valuing the company due to past inefficiencies.
“The listing could also drive reforms in the oil and gas sector, pushing NNPCL to operate more competitively, reduce subsidy dependence, and attract international partnerships. Additionally, foreign investor participation could bring in much-needed foreign exchange, helping stabilize the Naira”, he stated.
On his part, Mr. Olajide Abiola, a versatile, seasoned entrepreneur with cross sector expertise, said the imminent listing of NNPC Ltd on the Nigerian Stock Exchange (NSE) could transform the company, industry, and economy.
Access to Olajide, the move by the NNPCL may unlock funding, boost transparency, and reduce reliance on government support. The move could attract investment, deepen capital markets, and spur economic growth. However, risks like share volatility and governance challenges must be managed.
According to him, If executed transparently, the listing offers significant rewards for stakeholders.
“One of the most significant benefits of listing NNPCL on the NSE is the potential to unlock new funding opportunities for the company. By issuing shares to the public, NNPC Ltd can raise capital to finance new projects, expand its operations, and improve its overall financial performance. This can also help to reduce the company’s reliance on government funding and improve its financial independence.
“Also, listing on the NSE can also help to improve transparency and accountability within NNPC Ltd itself. As a publicly traded company, NNPC Ltd will be required to disclose its financial statements and operational performance on a regular basis. This can help to build trust with investors, customers, and other stakeholders, and can also help to identify areas for improvement within the company.
“Furthermore, the listing of the oil company on the NSE can also have broader implications for the Nigerian economy. As one of the largest companies in Nigeria, NNPC Ltd plays a critical role in the country’s oil and gas sector. By listing on the NSE, NNPC Ltd can help to attract new investment into the sector, which can help to drive economic growth and development. Additionally, the listing can also help to deepen the Nigerian capital market, making it more attractive to both domestic and foreign investors” he explained.
“However, there are also potential risks and challenges associated with the listing. One of the main concerns is the potential for volatility in the company’s share price, which can be influenced by a range of factors, including global oil prices, regulatory changes, and company-specific events.
“It can also create new governance and management challenges, as the company will be required to meet the listing requirements and corporate governance standards of the NSE”, he added.
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