THE Group Managing Director (GMD) of the Nigerian National Petroleum Company Limited (NNPC), Mele Kolo Kyari, says the company will no longer bear the burden of petroleum import and subsidies once it effectively transits to a commercial entity.
The Corporate Affairs Commission (CAC) had already completed the incorporation of NNPC Limited in September 2021.
Kyari noted that the company would need to reach an agreement with the Federal government on subsidy.
“In the case of the price of petroleum, this is a policy matter. And the NNPC is going to be a supplier to the Federation at a fee. So, the issue of at what price you sell petroleum will be the decision of the State,” Kyari said in a monitored broadcast on Sunday, July 17, 2022 ahead of the unveiling of NNPC Limited as a commercial venture.
“The State has continued to maintain that we must continue to pay subsidy on petroleum products. We are happy to do this, but as a commercial venture, we will have a service-level agreement between us to render that service,” he said.
Kyari stressed that NNPC would be a service provider to the government rather than bearing the responsibility for importation and subsidy.
In the first five months of 2022, NNPC deducted N1.27 trillion for petrol subsidy, about 31 per cent of the N4 trillion provision for the year.
Kyari emphasised that the price of petroleum products would have nothing to do with its operations.
“We will procure the products and sell to the state and will be step-on-step with the country. I’ve seen no indication at this point in time that the state is ready to change any price of petroleum products. It has nothing to do with our operations.
“For us, what it really means is that this is business for us. We will charge a fee at any point so that the company can make money on behalf of its shareholders.
“More than anything else, there’s really no plan of tying this (subsidy) to our turnover, and they have no relationship,” he added.
Kyari said that the transition would heighten demand for transparency, as the NNPC had joined the global Extractive Industries Transparency Initiative (EITI).
He said, “Actually, it now becomes more demanding to be more transparent. NNPC is a partner company for the global EITI initiative, like many other private companies that voluntarily chose to become partners to the EITI.
“The meaning of this is that you’re going to make certain disclosures to your shareholders and to the world community that companies ordinarily are not required to do, and we will keep to that because we’re not going to withdraw as a partner company to the EITI.
“That means that there are further requirements beyond what we are doing today. Beyond just publishing your financial statements, there are many other disclosure requirements for being a partner company to EITI.
“We believe that this is good for our company; we will continue to sustain this. And as a matter of fact, as you may be aware, we’re the only company that publishes its operational reports – production, sales and everything – on a monthly basis.”
The NNPC has been paying subsidy on petroleum products, particularly petrol, to the tune of over N4 trillion. However, industry watchers have urged the government to effect the complete deregulation of the sector to attract private capital into the sector.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.