PIA: Experts react as Buhari directs incorporation of NNPC Limited

Experts, yesterday, expressed mixed reactions as President Muhammadu Buhari, who is also the Minister of Petroleum Resources, directed the incorporation of the Nigerian National Petroleum Company Limited, in line with the nation’s Petroleum Industry Act, PIA.

In his directive, the President also named Senator Ifeanyi Ararume as NNPC Limited Board Chairman, with Mele Kolo Kyari and Umar I. Ajiya as Chief Executive Officer, and Chief Financial Officer, respectively.

A statement by Special Adviser to the President on Media and Publicity, Femi Adeshina, yesterday, said the President in his “capacity as Minister of Petroleum Resources, has directed the incorporation of the Nigerian National Petroleum Company Limited”.

Adeshina explained that “this is in consonance with Section 53(1) of the Petroleum Industry Act 2021, which requires the Minister of Petroleum Resources to cause for the incorporation of the NNPC Limited within six months of commencement of the Act in consultation with the Minister of Finance on the nominal shares of the Company.

“The Group Managing Director of the NNPC, Mr Mele Kolo Kyari, has, therefore, been directed to take necessary steps to ensure that the incorporation of the NNPC Limited is consistent with the provisions of the PIA 2021.

 “Also, by the power vested in him under Section 59(2) of the PIA 2021, President Buhari has approved the appointment of the Board and management of the NNPC Limited, with effect from the date of incorporation of the company.

“Chairman of the Board is Senator Ifeanyi Ararume, while Mele Kolo Kyari and Umar I. Ajiya are Chief Executive Officer, and Chief Financial Officer, respectively.

“Other Board members are; Dr Tajudeen Umar (North East), Mrs Lami O. Ahmed (North Central), Mallam Mohammed Lawal (North West), Senator Margaret Chuba Okadigbo (South East), Barrister Constance Harry Marshal (South South), and Chief Pius Akinyelure (South West)”.

However, reacting to the development, Professor Omowumi Iledare, the Ghana National Petroleum Corporation (GNPC) Professorial Chair in Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, Ghana, said: “Great news indeed, if PIA requirements are met. This is the first test of the PIA, which defines who can be the non-executive chairman.

“The President has power to appoint as long as the government owns 100 per cent.  Government, however, is defined in PIA glossary as the federal government.  But the shares by Ministry of Petroleum Inc and Ministry of Finance Inc are held on behalf of the federation.”

“My immediate reaction is simple. This looks more like a political board. It is a reappointment of those that are currently on the NNPC Board apart, perhaps, from Araraume.

“However, as long as investors have confidence in the new Board, We are good. The likelihood is very low. So it seems government has made up its mind to continue to fund NNPC.

“Time will tell. We can beg to take a clue from these appointments for the other Boards as documented in PIA Section 59. We should also pay attention to paragraph 59(f), in case there is room for further cerebral dialogue.

“First, where are the Articles of Incorporation of the new NNPC Limited that this board will run transparently?

“Second, the core objective of PIA with respect to NNPC Limited is to establish the framework to create a commercial institution that is profit oriented. Can this political board deliver?

“Third, NNPC Limited has no Companies and Allied Matters Act, CAMAC registration number yet, does it? I guess this may be just being an extension of the life of the old board. It seems then that NNPC Limited, which is yet to be registered, is a new wine in an old wine cloth.

“Perhaps, I am still caught up in what ought to be cloud. I beg for forgiveness.”

Also reacting, chief executive officer, Cabtree & Vice Chair of the Gas-to-power study group of the Nigerian Gas Association, NGA, Olabode Sowunmi, said: “There is a new table that’s being created by the PIA. We have not yet studied the PIA. So, we are not aware, let alone being ready for the new developments that will come in from the PIA.

“Anyone giving the President or the NNPC advice now is not on top of issues. NNPC is to be more transparent now than in the past.”

Recently, Kyari, had said the apex oil company will serve as a holding company for all its subsidiaries in the post Petroleum Industry Act, PIA era.

“So, these shareholders can decide, as the law provides that over time, they can reduce the shareholding into some private shareholding. That means it can be floated subsequently as a company that is quoted on the stock exchange. The intention at the very onset is not to go to that step but there is provision in the law that allows us ultimately to sell shares of this company.

“This is very simple. This company will pay taxes and royalties, which are revenues that accrue to the federation. So every part of this country and every sub national institution or government will benefit from it.

“Secondly, this company will pay company income tax that also comes to the federation for the benefit of all. So, what is different is that this company will now have profit to make and declare dividend, which will be decided by the board of directors of this company.”

Kyari, who commended the legislators for providing three per cent of the budget of oil companies for the development of host communities in the PIA, added: “The very reason that they don’t have a stake is that till now, we have failed as a system to make sure that those values that should have come and many other interventions did not get to them.”

Credit: Vanguard