After 44 years in operation: NNPC ready to declare 2020 dividend – GMD


Forty four years after its establishment, the Nigerian National Petroleum Corporation (NNPC) Monday announced plans to declare its first dividends to Nigeria.

Group Managing Director Mele Kyari stated this while speaking at the   2021 edition of the Nigeria Annual International Conference and Exhibition (NAICE) organised by the Society of Petroleum Engineers (SPE) in Lagos.

The conference was themed: “The Future of Energy: A Trilogy of Climate Change, Public Health & Global Oil Market.”

 He said the corporation’s 2020 financial statements to be  released in the third quarter of this year would  come with unprecedented news.

He said:  “Everything we are doing must align with the wider national interest. And therefore, NNPC, being the representatives of all of us and, is, of course, a very potential global player – this is our ambition and we are getting there.

 “And I can tell you, within the next month or two maximum, we will publish our statement of accounts for 2020. And I can also confirm to you that for the first time in our history, we will declare dividend to the Nigerian people.”

Kyari said the corporation would play a key role in the global transition to low carbon energy in the near future.

“We are deepening natural gas utilisation under the National Gas Expansion Programme (NGEP) to earn more carbon credit and create a net zero carbon environment in line with our drive of becoming energy company of global excellence.

“NNPC is currently extending natural gas infrastructure backbone through the OB3 and AKK gas pipelines to deepen domestic gas utilization, support industrial growth and job creation.

“Our goal is to take the right quantities of gas to every part of Nigeria at the right quality and the right price.

“NNPC is leveraging technology to achieve better systems and processes optimization to support performance, accountability and value creation that exceeds the simple fulfilment of our business mandates,” he said.

 “However, looking at climate and population change dynamics, anticipated economic growth and rising global population especially in Asia and Africa will obviously increase energy consumption beyond what renewable energy sources can meet by 2050.

“Building on this convergence, Nigeria as a key player in global energy security is addressing its challenges mainly fiscal, security and cost competitiveness to stimulate investments in the oil and gas industry.

“NNPC as a National Oil company is leading multiple initiatives to address this and other issues.

“As we celebrate the passage of the PIB, we have moved our focus to improving security architecture through collaboration with major stakeholders. NUCOP is working with operators and service contractors to challenge cost of operations and increase profitability and growth in the Nigerian oil and gas sector.

“Industry conversations are dominated by the shift to renewable energy as a source of cleaner and climate-friendly fuel,” Kyari  added.

He also told the gathering that oil demand was rising and prices had gone up to pre-pandemic levels, averaging $74/bbl; as countries gradually overcome the pandemic shocks and economies re-open.

 ..Lists conditions for oil majors’ divestment

The NNPC boss listed various issues that needed to be exhaustively addressed before Shell Petroleum Development Company (SPDC) and other oil majors begin divestment of their investments in Nigeria following a growing appetite for cleaner and more environmentally-friendly energy.

This, he said, was necessary to avoid fracturing the Nigerian economy in hurried exodus.

To this end, the national oil company said special attention would be paid to abandonment and relinquishment costs; severance of operator staff; third party contract liabilities; competency of the buyer; post purchased technical, operational, and financial capabilities, especially in the era of activist investor’s sentiments against funding of fossil fuel projects and alignment with Nigeria national strategic interest.

 Kyari said the NNPC would soon unveil a Comprehensive Divestment Policy (CDP) that would guide the entire divestment process.

He said while the NNPC partners reserved the right to divest their interests, the national oil company also has a duty to provide clear-cut guidelines and criteria for such divestment to guarantee a win-win situation for all parties.

“We are seeing a wave of divestment by oil majors operating Nigeria. NNPC as a national oil company cannot stop partners from divesting their interest, even though it creates a challenge for us in ensuring that we get right and competent investors to take position and add value to the assets.

 “NNPC will ensure that Nigeria’s National strategic interest is safeguarded, by developing a Comprehensive Divestment Policy,” Kyari said.

In subsequent deals, the NNPC boss said,  the corporation  would  tweak its rules of engagement by making clear distinctions between divestment of shares and operatorship agreements under various joint operating agreements, while leveraging its rights of pre-emption as well as evaluating the operational competency and track records of new partners.

He said the imperatives of energy transition and the influence of activist investors on the global energy industry were making oil and gas companies diversify their portfolio to low-carbon investments by whetting the appetite for investment in cleaner energy sources like; wind, solar, hydrogen, natural gas and bio-fuels.

Kyari said the new energy sources have obvious wider business implications on the oil and gas industry.

In view of this, the NNPC boss advised “oil-dependent economies to brace up for the bumpy ride ahead, as the global transition to non-fossil sources of energy will mean declining revenue, foreign exchange and weaker funding of projects particularly in the context of green finance and activist investor’s action on the boards of major oil companies and global financial institutions.”

Experts react, laud NNPC

Speaking in a telephone interview with Blueprint, a political economist and development researcher, Mr Adefolarin Olamilekan, urged Nigerians to interrogate the statement by the NNPC  boss on announcing dividend 44 years after operation.  

He said the statement was an attempt by the NNPC management to take Nigerians for granted and “play on our collective intelligence.”

“Recently, the national oil management body cried of bleeding from unsustainable subsidy payment, loss of oil revenues due to pipeline vandalism, the shrinking oil price at the international market affecting projected inflow of profit and many sundry challenges posed by the current Kyari-led NNPC. So for every concerned and right thinking person, there are reasons to interrogate what is really happening to the monies generated by NNPC.

“For the interest of the Nigerian people, whatever comes out the audited account of NNPC would not change their perception about the corporation as long as the four national refineries remain a site for monument and a cesspool of salaries and allowance for unproductive workers,” he said.

Also speaking to our reporter, MD/CEO SD&D Capital Management Limited, Idakolo Gabriel Gbolade said it was important that the books of NNPC were examined to ascertain the reporting system to the government and the public were in order. 

He said: “The NNPC has been reporting consistent losses for the past years since the time the agency decided to make its finances public. However, we cannot rule out investment in gas, Joint Venture and in other subsidiaries that could have started churning out profit for the agency. 

“There is also a possibility that increased transparency is now being practiced by NNPC management and the declarations from October will be a fair and actual position of affairs of the agency.

“Finally, when NNPC starts declaring dividends, then it has joined its counterparts in other countries that have been efficiently and effectively managed and have been profitable,” Idakolo further said. 

But going forward, Adefolarin urged President Muhammadu Buhari  to assent the PIB, saying it would ensure transparency in the management of the NNPC. 

“Time has come to operationalise another model with approaches that would guarantee openness, transparency, and accountability in the nation’s oil and gas corporation,” he added.

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