Page 4 - DMEA Week 36 2021

DMEA COMMENTARY DMEA

IPO at the heart

of NNPC’s plans

The Nigerian firm intends to list within the next few years after reporting its first annual
profit and plans in train to assume a new role in charge of the country’s downstream.

AFRICA NIGERIA is planning to list its state oil company view of how things are going to be done better to
once a corporate overhaul is complete, with the align with best practices in the industry, trying
firm having declared its first annual profits in 44 to see how we can latch on to the existing frame-
WHAT: years of operation. The announcement comes as work for energy transition […] in the long-run
NNPC will embark on a the long-awaited Petroleum Industry Act (PIA) it is going to be a great company and great com-
corporate restructuring begins to take effect. panies always go for IPO.”
process as it prepares to Under the new legislation, the Nigerian He explained that to be IPO-ready, the com-
launch an initial public National Petroleum Corp. (NNPC) will trans- pany would need to do things differently, “get
offering (IPO). form itself to become a commercial enterprise its books corrected”, recapitalise and “shape its
with some autonomy. portfolio”.
WHY: Speaking in an interview with Bloomberg Kyari also spoke of the opportunity it had
The company recently Television this week, the company’s managing identified to acquire a stake in the Dangote
announced its first ever director Mele Kyari said that the new NNPC Ltd Refinery, which, following the latest update from
annual profit and it plans would not be ready for an initial public offering the company’s executive director, appears to be
to build on the success of (IPO) until 2024 at the earliest. a bargain.
similar listings by state “We want to get ready […] Surely, it is not Speaking to Arise News, Devakumar Edwin
oil firms. what we will do in 2022 or 2023, probably the said that by the time it is completed, Dangote’s
earliest consideration will be in three years’ capital expenditure on the 650,000 barrel per day
WHAT NEXT: time,” Kyari said. (bpd) refinery will reach nearly $19bn. When
The listing will not In late August, NNPC recorded a net first proposed, the facility was expected to come
happen before 2024, profit of NGN287bn ($698mn). Celebrating in at around $9bn, but that cost had risen to
giving the company the news, Nigerian President Muhammadu $15bn by 2019.
time to integrate its new Buhari said: “The NNPC losses were reduced NNPC has an agreement in place to acquire
investments in refining. from NGN803bn [$1.95bn] in year 2018 to a 20% stake in the unit for $2.7bn, valuing the
NGN1.7bn [$4.1mn] in year 2019 and the even- facility at around $13.5bn. Even then, NNPC will
tual declaration of Net Profit in Year 2020 for the pay only around $900mn in cash for the share-
first time in its 44-year history.” holding, with the same value being provided via
It should be noted that 2019 was the first year crude feedstock discounted by around $2 per
for which the company published audited finan- barrel and another third will be paid in profits
cial statements. from the business. NNPC expects to receive
Meanwhile, Kyari noted: “This company is $1bn in finance from the Cairo-based African
going to be profitable […] it has a short-term Export-Import Bank (Afreximbank) to fund the

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