If the Petroleum Industry Bill (PIB) forwarded to the National Assembly Wednesday is passed as it is, the law will require the Federal Government to divest 30 per cent of its shareholding in the National Oil Company (NOC) and sell the shares on the Nigerian Stock Exchange (NSE).
The NOC, which is slated to be the successor company of the Nigerian National Petroleum Corporation (NNPC) and shall assume some of its assets and liabilities, is meant to be created not later than three months upon enactment of the Act.
By its establishment, the Federal Government hopes that it can create a viable oil company to operate under commercial terms and will transform into a world class national oil firm in the mould of Saudi Aramco, Malaysia’s Petronas and Brazil’s Petrobras.
It is expected that the NOC would compete for acreages with private multinational oil firms and other NOCs. But in order to broaden the scope of ownership of the oil company and enhance corporate governance, the bill is proposing that the NOC be made public by way of listing on the NSE.
Specifically, Section 151 of the reform bill provides that the government “shall at anytime within six years from the date of incorporation of the National Oil Company, divest up to thirty per cent of the authorized shares of the National Oil Company to the public in a transparent manner on the Nigerian Stock Exchange.”
The reform bill also provides that government should incorporate the National Gas Company (NGC) Plc and sell up to 49 per cent of the equity to the public on the NSE. Section 148 of the bill authorises the Minister of Petroleum Resources to incorporate the NOC as a public company limited by shares, within three months of the effective date of the reform Act.
The bill also proposes that the NOC, which will be incorporated under the Companies and Allied Matters Act, will also be vested with certain assets and liabilities of NNPC. NNPC was established by Decree No.3 of April 1, 1977, “for overall control of the oil industry,” and with additional responsibility of “exploitation, production, transportation, processing of oil, refining, and marketing of crude oil and its refined derivatives”.
However, over the years, the corporation lost direction, as it assumed multiple and conflicting roles, and has made little progress in oil exploration and production. To address this challenge, the new NOC will be subject to the governance rules of the Securities and Exchange Commission (SEC) in accordance with Subsection (2) and will also inherit the employees of the NNPC, in accordance with the provisions of Section 358 of the reform bill.
For the NGC, Section 162 stipulates that “notwithstanding the provisions of Section 161 of this Act, the government shall at any time within six years from the date of incorporation of the National Gas Company Plc, divest up to forty nine per cent of the shares of the National Gas Company to the public in a transparent manner on the Nigerian Stock Exchange.”
The NOC and NGC will, however, not be subject to the Fiscal Responsibility Act of 2007 and the Public Procurement Act of 2007 and will inherit the employees of the Nigerian Gas Company Limited, in accordance with Section 358.
Federal Government to take National Oil Company to Stock Market.