Can NNPC Limited prove to Nigerians that there is always something
different in a name? Is it possible that a mare change in name without
change in tools and structure can gravitate to something outstandingly
different? Is this another gamble like Nigeria did with steel firms and the
Railway? MONEYReport Economic Intelligence provides background to what
may be expected

This is the second time Nigeria’s embat￾tled petroleum company conglomerate, the Nigerian National Petroleum Corporation (NNPC), catches our editorial fancy within a spate of nine months. It is really an unusual occurrence for an international econom￾ic journal that has to choose from arrays of developments across the world. The fact re￾mains that the NNPC is the blood of Nigeria as a country and everything about Nigeria takes its rise from whatever happens to it. With various incongruous policies taking place in Nigeria, the country still believes in the co-efficiency of the multibillion dollar investment. The new decisions on it have re￾mained the major turning points in the life of Africa’s biggest economy and the future of Nigeria is largely dependent upon it. This becomes so important with the conglomer￾ate sliding from a dominant investment that returns about 98% revenue to the country to one that returns far less and battling unstable operating difficulties as well as searching for a roadmap to implement a somewhat wor￾risome and controversial bill that has been considered largely ambitious and ambigu￾ous by almost all global oil majors, better known as the International Oil Companies (IOCs). The ‘incongruous’ performance of the NNPC has failed to lead Nigeria to any ‘congruity’. However, while the first editorial was re￾viewing the Nigerian government’s pro￾nouncement on the new status of the com￾pany, the current is exploring the entire razzmatazz that is the new company which new brand identity has just been released along the situation where its assumed listing and consequent quotation remains a puzzle to many considering the modus operan￾di of a typical Nigerian quoted company. Nigerians see the current development as completely fraught with inadequacies and inconsistencies considering what should be seen as the main reasons for the listing which is largely considered as a commercialization venture without going through the coun￾try’s major institution that is professionally.

responsible for that exercise. This becomes a very large hoopla to many Nigerians and the intending investors as the NNPC exercise looks quite similar in character and approach to past ones that heralded Nigeria’s journey to the privatization of public assets, most of which have not progressed to become any￾thing great for the economy. Notable gov￾ernment ventures sold by government under the privatization programmes have failed. The number is uncountable , but prominent among them include the four major steel mills, a comprehensive aluminium smelting plant, many agricultural start-ups, heavy en￾gineering and motors assembly plants and machines as well as newsprint firms , rubber and machineries. There were also a good number of investments where minority in￾terests of government were sold. The NNPC development is like rekindling a sore that has inflicted the government over the years while reflecting on the failure of government insti￾tutions purposely created to optimize growth and development. While Nigerians can easily gloss over the damage meted on the earlier institutions already privatized or commercialized, the NNPC case opens a new vista of discussions on Nigerian tangible assets and the pro￾cesses and patterns of their disposals. These processes may have to be considered as the reflection of the leadership of the country over many years because each political leader had his eyes on the NNPC as the goose while other more sustainable income channels had remained largely unattended to. This also in￾dicates that most of the various governments that ruled Nigeria had considered the NNPC so important, so much so that the conglom￾erate was put directly under their care while the managements functioned as mere errand boys of the leadership and the ruling political institution. To fully achieve this, the presi￾dents at some time, including now, took over the portfolio as Minister of Petroleum while appointing the junior ministers that reports to him. This miscarriage of management was very inevitable for them to have a total control of the entire oil industry which the NNPC functions as the principal investor and undertaker. This incongruous manage￾ment approach which is replete which huge corruption trends is still in operation even as the institution is believed to have been made public under what has been bandied as a new era, but managed by same people. Unfortunately, the public institutions that have been entrusted with the safety of public investments have become quasi political in￾stitutions whose authorities are proponents of the political office holders and whose ap￾pointment were largely not made as a matter of proficiency but their popularity to the top political executives. What this means was that the NNPC, like many other government critical institutions is an institution that lacks nation growth agenda and consciousness. As a matter of fact, the NNPC had lacked transparency, accountability, integrity and had deployed nepotism as its major tool of operation. Its employment pattern has since been skewed to favour only those who are connected to the establishment, indicating the fact that Nigeria’s biggest capitalized in￾stitution is not managed by her best hands but by chalatans of politicians. This is why the institution does not know the country’s fuel consumption level, it does not know what happens to the many barrels of prod￾ucts it produces, it does not even know its vendors, it does not know the state of health of its operational machineries and the num￾ber of its workforce. The new NNPC perspective becomes so difficult to decipher because its processes for unbundling would be more difficult than setting a new institution because there would be no basis to come up with any accurate estimate of what the institution is worth in

other to accord it the actual value. Presently, the government is still very confused about how to implement the entire process without avoiding the tragedy that is imminent when it is fully considered as a full public institu￾tion. The modus operandi of its new status becomes so difficult to the extent that the Bureau of Private Enterprises (BPE) has con￾tinued to fail whenever it is called for a key role even as the highly corrupt civil service machinery remains largely inadequate. The Nigeria Exchange Limited (NGX) is also not comprehensively held on trust by many since its demutualization, believed to have been hijacked by the cream of the Nigerian enter￾prise stakeholders who had all the years been planning of taking control of activities of the exchange. So the process of accomplishing the demand of an NNPC purportedly owned by the over 200 million Nigerians faces the same integrity issues as the management that is holding it on trust. The entire process could be put into double jeopardy and that becomes a doomsday transformation. With oil and gas investments capitaliz￾ing on global developments to make higher profits, the NNPC has remained a cesspit of some sort, unable to satisfy local consumers, unable to meet allocated production quota, unable to remain afloat and has drastically failed to meet its revenue projections at the time its kinds across the world have been smiling to the banks. Worse still, it has con￾jectured a fraudulent petroleum importation and financing deal called subsidy which has carelessly raped the Nigerian economy. Not even the pace-setting mode by the First Re￾public by borrowing from the World Bank to build the first refinery was enough to ginger the subsequent governments and manage￾ment of the octopus to advance the process of improving the conglomerate. All that has been achieved by the NNPC was to expand its holding of every lucrative investment around Nigeria’s natural resources through humongous policies that did not only offer them a controlling power but making the company accountable to itself. It has been the most reckless conglomerate in the world. Going forward with the new proposal, many still feel that it will be very difficult to really establish any new thing in the con￾jecture, unless someone comes up with an elaborate presentation and that person must come from the moon, because it seems many people around the purvey of government and the NNPC have been either seriously compromised or blatantly blinded. This may be why The Guardian Newspaper in its edi￾torial, August 15th, 2022 noted that, “while the pandemic in 2020 affected business and economies all over the world, especially the oil industry, Saudi Aramco reported a reve￾nue of about $205 billion in 2020.In 2021, the corporation reported revenue of $360 billion. This makes Aramco one of the world’s most profitable companies with a net income of over $100 billion in 2021.The NNPC since its creation has incurred losses, after each finan￾cial year. In 2020 the NNPC reported reve￾nue of N3.7 trillion (less than $10 billion), reporting a loss of N281 billion. In 2021, the corporation made a revenue of N2.9 tril￾lion(less than $8 billion)…..”. The editorial continued, “presently, stakeholders are total￾ly unsure about how the new NNPC would deal with legacy issues, including redundant staff, religious and ethnic considerations, government and political interferences, ex￾tant liability, compulsory commitment to frontier exploration, mounting pressure over energy transmission, derelict refineries, and over 90% loss-making subsidiaries. Many believe that the current transition by NNPC is merely a change of nomenclature and the company will soon go back to its business as usual”. While many still look the other way in a negative reaction to the proposal by the Gov￾ernment, a handful of Nigerians have con￾tinued to postulate the kind of philosophy that can allow the institution and their pro￾tagonists to make the desired change. While indicating that the major problems with the NNPC come from the interferences from the caterpillars of our commonwealth who pry into the activities of the corporation from the various government institutions, top organi￾sations, families of government officials and the elevated technocrats and their aristocrat￾ic friends who do the willing of the leader￾ship across the world. Awful stories involving various transactional issues that bedeviled the corporation ere not carried out from outside the NNPC but within the organiza￾tion or government, most of which involved different commercial rackets and deals that failed to have been unraveled by government agencies and corrupt institutions. In an interview by Thisday Newspapers, Gbite Adeniji, an energy sector advisor noted that, “I love the new structure. It is a more streamlined company with very clear business lines. They have clearly gotten pretty good advice. The question now is just making sure they have the right people in the right place”. There are, however, differ￾ent opinions and facts about the poor per￾formance of the conglomerate and the very unwelcome nature of government’s decision to quietly privatize it without defining the audacity of its baggage. This has become so important based on the hidden contents of the previously disposed government as￾sets which later have become their Achilles heels. The saying, that ‘once beaten, twice shy’ has become an unavoidable credo that

tends to inform the cranky position and uncompromising debates of many investors on the raging issue of a New NNPC. As an investment, many Nigerians believe that it is time the NNPC bug was killed but the fact still remains that the process to get that done must be novel, strategic and under a govern￾ment that was not part of the beneficiaries of the corrupt tendencies that ruined the corporation. However, it is also believed that the NNPC miasma has spilled over 45 years and it would be difficult to remove the saints from the devils, implying that privatization, if not nurtured and delivered on a clean slate, will tantamount to bringing a new thing to the world and the pain in the arse persists. However, the so many questions that would be cropping up from the new NNPC have not really located any dutiful response as neither the BPE nor the Ministry of Pe￾troleum has summoned courage to hazard any response. Several calls, email messag￾es and other contacts with the office of the Director-General of the BPE could not be responded to. Nigerians see the avoidance of official response from the BPE as part of the conspiracy issues between the institution and the corrupt loose-end of top government officials. These are believed to have been the plot to allow all the ugly matters surrounding top government institutions to be allowed to sink deep into the abyss, only to become some serious issues when they are eventually taken over by new investors. How would Ni￾gerians or other discerning investor rate the value of an establishment that does not keep tracks of its level of production and cannot give account of the real consumption level of her products? This becomes a major area of discord, which also means that Nigerians are not guaranteed the real value of the services they have been rendering. Several questions and puzzles like, 1. What happens to the moribund refiner￾ies between now and full privatization? 2. What happens to the energy security is￾sues as government policy? 3. How will the rehabilitation of every ac￾tivity, communities, staff, contractors, degra￾dation, pipeline etc take place? 4. What is the major difference between the old NNPC and the now christened NNPC Limited? 5. Will the government favour an outright sale of the shares of the company or reliance on equity investors, Public Private Partner￾ship? 6. Why did the government jettison the much orchestrated commercialization pro￾gramme of the institution? 7. Why has this taken so long to be imple￾mented given the fact that the President has been the Minister of Petroleum since seven years and was privy as an industry insider haven been a Commissioner of Petroleum Resources as a military officer and Military Head of State before transforming to Presi￾dent under the new democratic dispensa￾tion? 8. Is this a matter of rebranding to give a failing institution a good name? 9. What are the new philosophies behind the sudden turn of events that prompted gov￾ernment’s reaction? 10. Which capital project in the oil and gas sector was constructed or executed by the NNPC since inception? 11. Why has the federal government been pumping money into NNPC as against the development in other countries? 12. Why has the management of NNPC lived a life of complete incompetence, only surviving because government was busy pumping money into it? 13. Can NNPC prove Nigerians wrong that it has not been a complete investment failure because it failed the country when it mat￾tered most to her? 14. Can the NNPC management deny that the corporation has been a nest of tribalism, nepotism and religious bigotry? 15. Can the NNPC management deny that if not because revenue from oil and gas has been flowing like waters into its control with￾out it establishing any critical infrastructure, it would have since died like the Nigeria’s four steel plants and rolling mills located in Ajaokuta, Delta, Katsina, Jos and Oshogbo, owned by the Federal Government and bur￾ied by the BPE? These questions may not answer the critical conditions that can assuage the fears of in￾vestors in Nigeria but can provide a working plan to return it to a line where profitability can be kept in view. Because the technical infrastructure that is the NNPC and other management alliances the government has struck with other institutions over the years could be the only dependable gratuity on

which the future of the corporation can rely. The International Oil Companies (IOCs) which made all the monies the corporation had enjoyed are now in difficulty and this has struck the corporation’s backbone , exposing the fact that all its many glorified engineers and managers have been relying on royalties and not any practical efforts. It is obvious that a complete privatization would be the best to happen but the fact re￾mains that the configuration of the take-off remains a very difficult task for government considering the fact that even the efficacy of the several management consultants work￾ing in the sector are liable for the lack-luster performance. The Nigerian government is aware that all the big names in management across the world have been bankrolled to op￾timize the activities of the corporation but all the country got was an abstract failure. Maybe, the beginning of the transformation into a full-fledged privatization must be the engagement of such partners to reveal what they did wrong or what they did not do or what they recommended which was not done, or who was responsible. If this was not done, there is the possibility that the same companies could come around again to be￾come BPE lead consultants to lead us into another round of cul-de-sac. Some of them have been known to have harbored some blind alley in their pontifications as “pundits” Many Nigerians are inclined not to take the much trumpeted listing and the eventual quotation of the NNPC without a pinch of salt. The reason is that the trajectory of the gargantuan oil and gas Corporation leaves much to be desired. The story of NNPC is like the story of the blind man and the ele￾phant; a fable obviously familiar to many mortals. Apparently the first and biggest con￾glomerate in Africa, the NNPC never had a good corporate image nor has it an impres￾sive growth antecedent. Its history started and ended within the realms of supervising crude oil production through joint venture partnership and collecting huge sums of money which were spent on investments that have not been sustainable. Many may argue that the NNPC has been the goose of the Nigerian economy, but has also been reaping where it did not sow. It has not added much value to the source of its products and has not made any frantic effort to invest inde￾pendently in the exploration, apart from setting up moribund subsidiaries that became mere beneficiaries of the larger institution. Much of what it has claimed to have achieved were executed by consultants from foreign competing institutions or other institutions owned by employed executives of the NNPC in disguise. These lacuna which have been the hunchbacks of the conglomerate have continued to make it to remain laid back and grossly incompatible with the activities of other global energy institutions owned by governments, such as Saudi Aramco, Sonan￾gol, Gazprom, Petrosa among others. The image it has cultivated has remained largely in alliance with its age in the Nigerian econ￾omy, as many equate the integrity of NNPC with those of the Nigerian Police Force or any other public institution that has been lacking in performance but rich in vices. These indications become necessary based on the unfolding scenarios involving the corporation and the importation of adulter￾ated fuel running into billions of dollars and whose consequences to the assets of many Nigerians are even quite unquantifiable. This is not the first time poor quality fuel importa￾tion has arrived in Nigeria and consumed by Nigerians with very damning consequences. Many years ago it was the case of the “Smell￾ing fuel” which circulated all over Nigeria which transporters and other fuel users in￾haled while driving without anybody telling us the long term effects. At another time, it was of NNPC vessels with oil abandoned somewhere off some unknown coasts. One more time, it was about legal issues which the country had to pay penalties on. Then, it was about fuel with high methanol content and tomorrow it could be any other. These developments and a lot more explain the fol￾ly in leaving the NNPC in the hands of those that killed it to search for its survival. Every effort by the management has been a mias￾ma and do not speak well of a company that claims to have been in strong preparations to launch itself to the capital market in the next few months (al presidency). Nigerians are sentimental and emotional investors and may be swayed into huge subscription of the NNPC IPOs without thinking of the failures imminent from a badly managed institution. We are aware that the NNPC subscription, when the time comes, will be huge irrespec￾tive of its very poor history, but we also have to highlight these issues of care-free attitude to intimate investors of questions to raise. Current developments in the NNPC do not position it to be seen as a blue-chip when its IPO comes up because it seriously lacks the integrity of a blue-chip based on the glowing recklessness in history of its management and some disturbing history of transparen￾cy worries. The reason is that investors may swoop on a perceived blue-chip whose one year operation after subscription would ren￾der a history of woes and dead-on-arrival equity. Many corporations have positioned themselves using state cover only to be un￾masked much later to the chagrin of expect￾ant investors. The structural discord in the NNPC which was called for by the desire for state capture to incorporate quota system, federal character or representative idiocy may be very deceptive when such positions become finally stripped. One can see that the discordant tones from the NNPC management and the incoherent revelations of the government representa￾tives and political officials in the corporation do not position it as an equity ready for the market. When you go to the market with borrowed robes, you simply get completely misunderstood and every transaction will be at your peril!!

Amidst elections, inflation, devaluation, oil quota backlash Our capital and investment market editor, MANDY OLIVER, says that Investment in equities serves as a grand savings outlet where one could put aside the funds he/ she may not be needing for a short to mid termed period, with prospects of generating higher value when the funds are eventually needed. But current developments are forcing the market to speak differently… Investment windows in the country point to either fixed income or equities which guarantee different returns. While the fixed income investment guarantees a fixed earn￾ing opportunity, that of equities gives you the discretion to determine what to earn, where precautionary time tested study is carried out on the market, period of in￾vesting, the sector to invest in and among others, the company’s growth trajectory and cyclical nature of price movement of the stock. The Nigerian prevailing investment cli￾mate points to the challenges posed by the forthcoming general elections fixed for February 2022. What happens in a Nigerian equities market every election year? What are the impacts of prevailing inflation, MPR increase and currency devaluation threats to investment opportunities in the Nigerian equities market? In the midst of all these, the equities market as seen through the numbers generated by the NGX Exchange at the close of trade by September 23, 2022, showed promises that irrespective of the in￾vestment headwinds, the market remained upbeat year to date (YTD). Out of the 19 measuring indices of the NGX equities market, eleven of the indices closed upbeat as at the end of trading by September 2022, while only eight indices closed in red. There is the possibility that the degree of growth could be expanded, while also the degree of decline could be expanded, whichever way the pendulum swings, the NGX Equities market points to￾wards likely ending the year in green. Pos￾itive indices so far points to the NGX All￾Share Index (ASI) which closed +14.77 per cent ytd, NGX-Main Board Index +28.46 %, NGX 30 Index + 1.39% and NGX Premium Index +3.55%.Other top advancers so far in in the year are, NGX AFR Div Yield Index + 15.55%, NGX MERI Growth Index + 18.97 %, NGX Consumer Goods Index +2.68%, NGX Oil/Gas Index +47.02%, NGX Lotus II closed + 1.10 % ytd, while NGX Growth Index closed +30.67 per cent, barely three months to end the year and five months be￾fore the election.

Out of the 19 measuring indices of the NGX equities market, eleven of the indices closed upbeat as at the end of trading by September 2022, while only eight indices closed in red

So far, the indices that have seen the red side of investment s at the end of trading on September 23, 2033, are the, NGX CG Index – -6.24% YTD, NGX Banking Index – -5.78%, NGX Insurance Index -12.04%, NGX ASeM Index -1.74 %, NGX-AFR Bank Value -17.06 %, NGX MERI Val￾ue -2.37 %, NGX Industrial Goods Index -20.02% and NGX Sovereign Bond Index that closed at -1.92% YTD. Even as investors may not be celebrating over the winning 11 indices against the oth￾er eight indices that have posted ytd loses, investment experts maintained that even as losses are seen now as minus to growth expectations, it provides ample opportuni￾ties for more investors to buy more at low prices with expectation to sell at higher price in short to mid-term future period. Mrs, Nkoli Edoka Managing Director/ CEO of Cowry Securities Limited made the disclosure recently to our correspondent in an interview, as she called on prospective investors to take advantage of the future earning potentials inherent in the market and stocks with good earnings prospects, by buying when share prices drop. According to her, “the best time to make it in the mar￾ket is now that some people are shying away from the market. Some equity prices have dropped and many others may also decline, so, buying such stocks at relatively low pric￾es, would be beneficial to any investors that invests for a short, mid or long term period. Edoka maintained that the viable market opportunities driven by the election scare, is historical that investor sentiments will always drive market reactions to economic.

and political developments in any country including Nigeria. She said, “While many are seeking refuge outside the country, I prefer to stay here and take advantage of the budding opportunities that we have in the investment circle”. She believes that the equities market is going down, because some people are alleged to be pulling out their stocks, using their money to buy for￾eign exchange and keep. Everybody seems to want to convert their Naira to Dollar and keep it for security’s sake. But a lot of people like me see huge opportunities of earnings in the market, because some stocks are now attractive to buy” She said that the political and econom￾ic uncertainties in the country could have been responsible for the prevailing senti￾ment. “Because the people seem to be con￾fused, the people seem to be blind, there are no road maps. BDCs are the cause of the problem, it is time we separate the profes￾sionals from politicians. Professing the way out, she said “Do your work and get away when the time comes. The politicians in the system are having conflict of interest; all of them seem to be very dirty”. She said that it is for the technocrats to always be appoint￾ed to positions of authority in economic matters against appointment of politicians who will trade the interest of the major￾ity for their pecuniary political interest or ambition. Politics, she said, has become an occupation in the country, as some people prefer to be known and addressed as poli￾ticians, instead of their skill or profession, “This means their work is politics and noth￾ing else. When such people are placed in such sensitive places like the economy, you could imagine how the economic system will end up” She emphasized that, the stock market has potential to enrich investors who jump into the market when many other investors are running away, adding that, ‘’ the 2023 elections in Nigeria and prevailing equi￾ties market depressive mood provide great future earning opportunities to investors who invest in growth stocks listed in the market”’. Meanwhile, investors will be con￾cerned with rising Monetary Policy Rate (MPR) in the country and its impacts in the country’s equity market, at the time the country is passing through another election period when the investment climate is ex￾pectedly dictated by political sentiments and perceptions of the likely outcome of the presidential election, scheduled to hold in February 2023. Historically, such election era, has always ushered in a bearish markets both in the fixed income market and the equities mar￾ket segments, but Professor of Capital Mar￾ket at the Nasarawa State University, Uche Uwaleke, gives insight on ways to swim out of the challenges in the market. Respond￾ing to issues raised, said that the second half (H2) of penultimate election year, is not for risk-averse investors as recent evi￾dence from the stock market supports “a buy-in-Sept-Sell in January strategy, ceteris paribus.” According to Uwaleke, who is also the pioneer President of the Association of Capital Market Academics of Nigeria (AC￾MAN), “during electioneering period, In￾vestors are advised to take a longer term perspective as H2 of pre-election year is a good time to identify and take positions in undervalued stocks especially in dividend aristocrats.” The July forum which drew all the executive members of the association to the national headquarters in Lagos from where they connected other members vir￾tually, was themed: “impact of electioneer￾ing on fixed income and equity markets in Nigeria.” According to the University don, the impact of electioneering on equity and fixed income markets is mostly felt in the second half (H2) of penultimate election year and such pre-election years in Nigeria are characterized by tension and uncer￾tainties ahead of the general elections with adverse consequences for the economy and the equities market in particular. The next six months, according to the financial economist, would be character￾ized by rising inflation rate as the impact of the Central Bank of Nigeria’s (CBN’s) tight monetary policy will be insignificant in taming inflationary pressure.