Kyari and the NNPCL’s challenge

The recent disclosure by the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mallam Mele Kyari, that working with the board, management and staff of the company, his target is to make the entity be among the top 50 among the Fortune 500 Companies in three years, is quite laudable.

The NNPC GCEO who made the disclosure recently, explained that with the huge assets available to the company and the new corporate culture of profit orientation, NNPCL would soon become the toast of the entire continent.

Fortune 500 refers to a list of 500 of the largest companies compiled by Fortune magazine, United States, every year wherein companies are ranked by their annual revenues for their respective fiscal years.

The list includes both public and private companies using publicly available revenue data. According to him, the target would be achievable in the near term.

While admitting that because of the mode of operation of the company in the past, Nigerians had lost faith in it, Kyari stated that henceforth the company has no room for excuses not to deliver on its mandate as a commercial venture.

“We have to deliver together and we are ready to deliver. We know our shareholders, the 200 million Nigerians are doubtful, but we need to surprise them because we know that there is a new expectation and this expectation can be met and this will be led by culture change.

“Before, you could lose money and nothing will happen, government could always pay, but the law now says we have no recourse to public funds, it will be a commercial relationship…and we have no room for excuses,” he assured.

Kyari pointed out that the net assets of the new company remain a major factor working in its favour, stressing that its upstream assets alone could be worth between $80-$90 billion.

“The meaning of this is that the NNPC will clearly not be below 150 (currently) in the Fortune 500 companies and I can tell you this upfront: Our target is that by sheer act of doing things right, we are getting into a business, delivering value and investing appropriately and within three to four years’ time, we should be counting ourselves among the first 50 in the Fortune 500 companies,” he boasted.

He disputed insinuations that the NNPC was presently in a, ‘deep financial hole,’ insisting that no company declares profit when its finances are in trouble like the NNPC did last year.

He added that although Nigerians were losing faith in the NNPC as a corporation, the company would shock doubters by its new mode of adopting global best practices in its operation.

“Things have changed and that change is now being amplified because we have an enabling legislation and we are bound by a new set of rules under the Companies and Allied Matters Act (CAMA),” he noted.

Stating that the oil and gas industry remains a very profitable one and that the company was willing to scale up its value, he lamented that oil firms less than half of NNPCL’s assets were making more profit.

“We are going to be IPO ready by the middle of next year,” he reiterated, insisting that the company’s processes will henceforth be world class, reducing wastes as well as paying more taxes to the government.

Already the largest company in Africa, Kyari noted that Nigerians will be proud of the new NNPC in years to come, with a clear deviation from the way it operated in the past. In the coming years, he stated that the company would have private equity, explaining that this would mature in the next 11 months, culminating in a mixed ownership of its shares.

On subsidy, he reiterated that it would no longer be a burden to the NNPC like it was in the last, explaining that it would not affect the company’s bottom line as the oil firm would henceforth charge a fee for providing such service to the government.

He noted that the ministry of petroleum incorporated and the ministry of finance incorporated currently hold the shares of the company on behalf of over 200 million Nigerians.

On the contention that the states and local governments are not currently represented on the board of the NNPCL since it’s a federation asset, Kyari stated that the National Assembly which made the law clearly represents every Nigerian.

The implications of Kyari’s target to make NNPC be among the top 50 among the Fortune 500 Companies in three years are that the entity will, within the timeline, turn around its four refineries in Kaduna, Warri, Port Harcourt and Eleme, to full production capacity and earn appreciable profits for Nigeria and other shareholders.

This, indeed, is the way to go in solving the lingering inability of NNPC to refine crude oil, making the prices of petroleum products exorbitant and beyond the reach of majority of the people as well as fritting away scarce foreign exchange through the importation of petroleum products thereby putting unnecessary pressure on the naira.