Federal Government to split NNPC into two companies, breaks up PIB into parts

The Federal Government is planning to break up the Nigerian National Petroleum Corporation (NNPC) into two companies – the Nigeria Petroleum Assets Management Company (NPAM) and National Oil Company (NOC).


The government has also concluded plans to split the Petroleum Industry Bill into different versions to aid its quick passing by the national assembly.

The Vanguard is reporting that the plan to break up the NNPC is meant to make it more efficient and to plug leakages and corruption in the corporation.

According to the draft legislation, the NOC will be an “integrated oil and gas company operating as a fully commercial entity and will run like a private company.”

The company will be expected to generate profit and raise funding by itself. Its operation will be similar to how the Nigerian Liquefied Natural Gas is run where the company keeps its revenue, deducts cost directly and pays dividend to the government.

To get things off the ground, the NOC will get $5 billion and it would be partially privatised with the government divesting at least 30 per cent of its shares in the company within the first six years of its incorporation.

On the other hand, the NPAM, would be in-charge of the management of government assets in companies where the government is not expected to provide upfront funding such as the “production-sharing agreements in which independent oil companies cover operating costs and pay tax and royalties on output,” the report stated.

Reuters, yesterday, reported that the Federal Government is breaking up the PIB and is replacing it first with a law to overhaul the petroleum sector with the aim of closing the loopholes that bred corruption.

The new PIB draft is expected to limit ministerial powers as board members of the companies are appointed by the president and confirmed by the senate.

If the proposed PIB is passed it would also allow for the creation of a  Nigeria Petroleum Regulatory Commission (NPRC) to oversee everything from oil licence bid rounds to fuel price.

A Special Investigation Unit would also be created under the NPRC with the powers to seize items and make arrests without a warrant.

The first new bill, which was drafted by the Senate under the supervision of the petroleum ministry is called “Petroleum Industry Governance and Institutional Framework Bill 2015.”  The main objective of the company is to create “commercially oriented and profit driven petroleum entities”.

The Bill is expected to be presented to senators this week.

Source: Reuters/ The Vanguard