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Nigeria’s oil firm NNPC considering IPO after first profit in 40-year

Nigeria’s state oil firm, the Nigerian National Petroleum Corporation (NNPC) is considering an initial share sale after posting the first profit in its 44-year existence.

Provisions in the newly signed Petroleum Industry Act (PIA) enable the corporation to offer shares to the public, NNPC Group Managing Director Mele Kyari said at a briefing.

A listing would draw on the experience of Saudi Aramco, the Saudi Arabian oil giant that listed in 2019, he said.

“There is no date on it, but there is a possibility of doing this,” Kyari said.

NNPC reported net income of N287 billion in 2020, compared with losses of N1.7 billion in 2019 and N803 billion the year before.

The corporation, which released audited results for the first time two years ago, has for years operated under a cloak of secrecy often mired by allegations of corruption.

READ ALSO: President Buhari celebrates 5.01% Q2 GDP growth, charges economic managers to keep at it

“Obviously because you have made profit today doesn’t mean you are ready for IPO,” Kyari said. “It is a very, very long, tedious process.”

Since 2015 when Buhari  became the president, he had pledged to improve transparency in government corporations, including the NNPC.

Under the Petroleum Industry Act he approved on August 16, the NNPC will be registered as a commercially focused entity.

The new legislation “specifies that the company pay its fair share of royalties, fees, rents, taxes and other payments due to the government, and that it should pay out the bulk of its profits as dividends after retaining 25 percent for reinvestment,” accounting firm KPMG stated in a report published last month.

The Nigerian Exchange Group (NGX) has a market capitalization of N20.6 trillion.

The largest IPO on the bourse to date was Guaranty Trust Bank Plc’s $824 million listing in 2007, according to data compiled by Bloomberg.

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