No petrol price increase soon, NNPC GMD, Kyari, tells Neptune Prime (2)

As the country’s petroleum industry takes a giant step of making the Nigerian National Petroleum Corporation (NNPC) a private venture, Mele Kolo Kyari, its Group Managing Director (GMD), talks about fuel price increase, deregulation, buying into Dangote Refinery and others in an exclusive interview with Neptune Prime. 

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We are buying (20% equity shares in Dangote Refinery) at USD2.7 billion and it is a very good bargain. It is a very good bargain because when you want to build a refinery to the capacity of 20% of 650,000 barrels per day, which is around 110,000 barrels per day, there is no way that amount can build it for you.

However, we are not just buying into a refinery, but buying a refinery that is attached with a petrochemical plant. So we know this is a good deal, there can be nothing better than this.

Of course, the very fact that portfolio diversification is what every company does, all our peers, the other national oil companies, Aramco, Equinox, Petrobras, everybody is diversifying. You don’t put all your capital in one place. And as we are going ahead, not just with Dangote but anyone who wants to bring up a refinery of this magnitude or in the excess of 100,000 bd, we will take equity in it. Our ultimate objective is to dilute our ownership with other private capital so that ultimately we don’t own 100% of any refinery, this is the best practice because people see it as a bailout for Dangote. In fact, he doesn’t need us as his refinery is 75% to 80% completed, he has no need of our participation to complete this refinery.

Neptune Prime: How do Nigerians benefit from this?

GMD NNPC: For Dangote Refinery, Nigerians will surely benefit from it.

First, it will guarantee energy security for this country. When you have control of the 20% production from a refinery, you can insist on taking delivery of those production. It means that you really have 20% of about 50 million liters in a day, literally, you have 10 million liters under your control.

Secondly, this refinery is a good business. We know that we are going to recover our capital within maximum period of 5 years, even though we think it can actually be recovered in 3 years, therefore if in an investment of this magnitude you can recover your cost in five years, it is monumental and of course, it means Nigerians will get back their money through the corporation.

When you recover your cost it means that you can make profit so this company will be profitable in three years and I can assure you that if it becomes profitable, dividends will come and it will be given to the coperation and the corporation will transfer the dividends to Nigerians.

As the refinery is completed, you will know for sure that thousands of direct and indirect jobs will be created. Along in line with the distribution system, the truck drivers and the rest will become much more available, you can see the bundle of opportunity that the refinery will create.

READ ALSO: No petrol price increase soon, NNPC GMD, Kyari, tells Neptune Prime

On Making NNPC a PLC

On NNPC, it is a corporation that is set by an act of the National Assembly so, it will no longer be bound by the act, it will be a company governed by the Companies and Allied Matters Act (CAMA). That means it’s just like any other company you see in the country, it will be transformed from what you have today, which is the NNPC Act which will vanish and in place will become governed by CAMA.

What this means is that you must have greater transparency, you must do business, you must declare dividends within a certain period of time, you must make some accountability that you don’t have to do today under the corporations act and you cannot keep toxic assets.

More importantly, for our country, once you are a company under CAMA, you have no obligation of making cash calls from the government, so government is free from any financing for NNPC. It should go and look for finance to fund its projects.

Overall, it is going to be a brand new company, a modern company like Aramco, Equinox, Petrobras, all of them are operating in the same manner. A lot of obligations that we carry out today are not necessarily our business but with this PIA it will free us from all these.

Also, if what we have to do is to regulate and we are going to be a commercial company that will be bound under appropriate laws.

I think this is good news for our country which obviously should have happened 20 years ago and I think this is the best time to do it.

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