NNPC: Between rebranding and reforms, By Tijah Bolton-Akpan

NNPC Limited

Last month, Nigerians learned that our state-owned oil company, the Nigeria National Petroleum Corporation (NNPC) was now “born again” as NNPC Limited, a public limited company owned The revival is part of broader reforms to the Nigerian oil and gas sector, as set out in the Petroleum Industry Act (PIA), the long-awaited Petroleum Industry Composite Act, which finally comes into effect after being signed into law by the President last August.

One of the merits of the NNPC reforms is the expectation that as a limited liability company, although wholly owned by the Nigerian state, it will be immune to political interference and inefficiencies bureaucratic. A key challenge that has dogged the company over the years has been its dual role as regulator and market player in the sector. The new company has been freed from this unjust and incestuous burden and is now a strictly commercial entity that will not depend on government funding and direct controls.

But beyond this functional change, will NNPC Limited's reforms go beyond the skin or is it just a case of old wine in a new bottle? What is expected of the new company under the PIA? Can the new NNPC Limited make the bold transformation of its predecessor's 45-year reputation as an inefficient, corrupt, deeply politicized and habitually loss-making statutory corporation? Does the young company really have what it takes to be both profitable and relevant in an industry struggling with profitability and relevance in the face of the global energy transition? Can NNPC Limited shed its old skin of guilt with joint venture partners in the social, economic and ecological devastation of petro-resource communities? Given the cessation of statutory payments to the federation account and the fact that NNPC's oil sales were the largest source of revenue for the Nigerian government, how will the reforms affect the country's fiscal health?

First, there is the lingering fear that the new state-owned company will be mired in the same inefficiency and clientelism as its predecessor. NNPC Limited inherits a workforce, management and even organizational culture determined largely by discretion and corrupt inducements, rather than merit and rules. The board of the new company was also put together to respond primarily to political imperatives, rather than strategic human resource considerations. It is indeed a tall order to expect that a company saddled with such a burden of inefficiency from the outset can profitably compete with its peers who are operated by the best in the industry.

Let's then look at profitability. We cannot just wish the loss-making history of NNPC in the rush to build a profitable business venture. Year after year, NNPC and its subsidiaries had suffered losses, until it posted a bracadabra profit for the first time in 44 years in its 2020 annual financial statements. This was rather controversial, given the Covid- 19 and the underperformance of companies around the world, especially in the oil and gas industry! Given this losing streak, it's understandable that we're concerned about the new venture's chances of...