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FG to List NNPC on Stock Exchange after Restructuring

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NNPC
  • FG to List NNPC on Stock Exchange after Restructuring

The federal government plans to list the Nigerian National Petroleum Corporation (NNPC) on the Nigerian Stock Exchange, once it concludes its reforms of the country’s petroleum sector, the latest draft national oil policy has revealed.

In the Draft National Oil Policy 2016, released alongside the Draft National Policy on Gas, three sectors in Nigeria’s economy – power, transportation, and industries – will be the key drivers of its new policy on gas.

According to the draft oil policy, a newly formed corporation could sell stakes so long as the government shareholder retains effective control and ownership.

It, however, pointed out that the government’s reform of the industry would see NNPC function more as a private entity with less of official bureaucracies.

Both policies obtained are still being worked on by the ministry and they have also been shared with key industry stakeholders for their comments and reviews.

The draft oil policy stated: “The NNPC will be made autonomous from the state, it will relinquish all its policy making and regulatory activities, and it will be treated on an equal basis with private sector operators for projects.”

“Under the Petroleum Policy, NNPC will be made autonomous from the state, it will relinquish all its policy making and regulatory activities, and it will be treated on an equal basis with private sector operators for projects.
“NNPC will also be restructured into five autonomous profit centre subsidiaries so that the value of separate activities can be realised and operational efficiencies can be introduced,” added the draft policy.

Besides, the document noted: “NNPC will be restructured such that it is fully set up as a Corporation (Limited Liability Company), in accordance with standard international practice for Corporations, including operating under commercial law and a two tier board structure.

“The NNPC restructuring will mean that policy making will become the sole preserve of the MPR (ministry of petroleum resources), all regulatory activities will become the sole preserve of the new single petroleum regulatory agency under the oversight of the MPR, NNPC will be responsible for managing the national interests in the JVs, PSCs and in other upstream, midstream and downstream projects where the government is involved as an investor, full corporatisation and restructuring of NNPC.

“The corporatisation and restructuring of NNPC will involve; separating NNPC into five independent autonomous units (profit centre subsidiaries) which will be operationally independent, self-accounting and will hold funds in their own right, the creation of a new parent holding company to be called the National Oil Company of Nigeria (NOCN).

“NNPC will cease to exist as a statutory corporation and as a legal entity and will be succeeded by NOCN. NOCN will be incorporated as a limited liability company, NOCN will be governed according to the governance rules of the Nigerian Stock Exchange prior to the listing of its shares, and by the rules of any bourse where its shares are eventually listed.”

On gas, the draft gas policy document said the government would be hoping to drive gas development through improved electricity generation, transportation of people and goods using gas as fuel, as well as energise industries in the country.

The two documents, which were released by the ministry of petroleum resources in Abuja, stated the government’s intention for oil and gas in the country, adding that gas would be treated as a stand-alone resource from oil.

“The previous gas policy has not succeeded. In addition, the world is now a very different place from when the Gas Master Plan was put in place. The international gas business environment is much less benign for exporters than it was, finance is much less available (from government or from international investors), and there are significant challenges now facing Nigeria,” said the gas document.

It explained: “Rather than trying to continue with a centrally planned national market development, the gas policy proposes a project-based and market opportunity-led approach as a more effective way to grow gas markets.
“Appropriate frameworks will be developed to support gas based projects, including gas transport pipelines and associated anchor customers or demand clusters.”

It said projects would largely be developed by project developers from the private sector, while the government will set the environment and support investors in gas-based industrial projects with appropriate interventions to bring their projects to fruition.

On Liquefied Natural Gas (LNG), the document stated: “The intention is for Nigeria to retain ownership of its national natural gas up to the point of delivery into markets.

“The government therefore intends to move to a tolling arrangement with respect to LNG exports, whereby the LNG liquefaction facility is paid a fee for liquefying the government share of gas produced from its assets, and LNG shippers are paid a transportation fee for transporting it.

“Ownership and title to the gas therefore remains with the government entity up to the point where it is regasified at the export market regasification terminal and sold to shippers.”

The document emphasised that gas development must be undertaken in accordance with Nigeria’s national socio-economic development priorities, adding that the government through the ministry and with support from NNPC and industry will produce a Gas Resource Management Plan.

The Gas Resource Management Plan, it said, would identify gas resources in different geological areas, identify current and potential gas markets, identify infrastructure needs, and analyse how best to access low cost gas for delivery to domestic gas markets.

The document also said that the Gas Resource Management Plan would classify gas resources according to the following categories, low cost assets dedicated for domestic gas supply (National Preferential Assets), assets dedicated for export, National Strategic Gas Reserve (reserved for future development) and optional assets (sole risk assets).

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Markets

SEC To Ban Unregistered CMOs From Operating By Month End

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The Securities and Exchange Commission (SEC) says it will stop operations of Capital Market Operators (CMOs) that are yet to renew their registration on May 31, 2021.

This was contained in a circular signed by the management of SEC in Abuja on Monday.

On March 23, SEC had informed the general public and CMOs on the reintroduction of the periodic renewal of registration by operators.

The commission noted that the reintroduction of the registration renewal was due to the need to have a reliable data bank of all the CMOs registered and active in the country’s capital market.

“To provide updated information on operators in the Nigerian Capital Market for reference and other official purposes by local and foreign investors, other regulatory agencies and the general public, to increasingly reduce incidences of unethical practices by CMOs such as may affect investors’ confidence and impact negatively on the Nigerian Capital Market and to strengthen supervision and monitoring of CMOs by the Commission,” SEC explained.

According to the circular, the commission said CMOs yet to renew their registration at the expiration of late filing on May 31, would not be eligible to operate in the capital market.

It explained that CMOs were required to have completed the renewal process on or before April 30, however, the commission said late filing for renewal of registration would only be entertained from May 1 to May 31.

SEC also said that asides from barring the CMOs who failed to comply accordingly, their names would be published on its website and national dailies.

It added that names of eligible CMOs would be communicated to the relevant securities exchanges and trade associations.

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Crude Oil

A Threat to Revenue As Nigeria’s Largest Importer of Crude, India slash Imports By $39.5B

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Crude oil

Nigeria’s revenue earning capacity has come under threat following the reduction of importation of crude oil by India.

India, Nigeria’s largest crude oil importer, reduced crude oil imports by $39.5bn in April, compared to the same time the previous year, data from India’s Petroleum Planning & Analysis Cell showed.

According to the Indian High Commission in Nigeria, India’s crude oil imports from Nigeria in 2020 amounted to $10.03bn.

This represented 17 percent of Nigeria’s total crude exports for the year according to the Nigerian National Petroleum Corporation, as quoted by OilPrice.com.

As Nigeria’s largest importer of crude oil, lockdowns in India’s major cities from the COVID-19 surge in April had ripple effects on Nigeria’s oil sales.

The NNPC was prompted to drop the official standard price of its main export streams, Bonny Light, Brass River, Erha, and Qua Iboe, by 61-62 cents per barrel below its April 2021 prices. They traded at $0.9, $0.8, $0.65, $0.97 per barrel respectively, below dated Brent, the international benchmark, as Oilprice.com showed.

India had been buying the not-too-light and not-too-heavy Nigerian crudes that suited its refiners.

Reuters reported that the Indian Oil Corporation’s owned refineries were operating at 95 percent capacity in April, down from 100 percent at the same time the previous month.

An official at the IOC was quoted as saying, “If cases continue to rise and curbs are intensified, we may see cuts in refinery runs and lower demand after a month.” Hundreds of seafarers risked being stuck at sea beyond the expiry of their contracts, a large independent crude ship owner reportedly told Bloomberg.

India reportedly bought more American and Canadian oil at the expense of Africa and the Middle East, reducing purchases from members of the Organisation of the Petroleum Exporting Countries to around 2.86 million barrels per day.

This squeezed the group’s share of imports to 72 percent from around 80 percent previously, as India’s refiners were diversifying purchases to boost margins, according to Reuters.

India also plans to increase local crude oil production and reduce import expenses as its population swells, according to Bloomberg.

A deregulation plan by the Narendra Modi-led government to boost national production to 40 million tonnes of crude oil by 2023/2024, an increase of almost eight million tonnes, had already been initiated.

According to Business Today, an Indian paper, the country currently imports 82 percent of its oil needs, which amounted to $87bn in 2019.

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Energy

Invest Africa and DLA Piper Partner to Support ESG Best Practice in African Renewable Energy Projects

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Invest Africa - Investors King

The global law firm, DLA Piper, has partnered with Invest Africa, the leading trade and investment platform for African markets, to support the development of ESG best practice in African renewable energy projects.

Clear Environmental, Social and Governance (ESG) targets and measurements have become an increasingly important part of fundraising as investors seek to align their portfolios with sustainable growth. For a continent boasting ample natural resources, this presents a significant opportunity for Africa’s green energy sector. However, renewable does not always equal sustainable and developing and articulating ESG metrics can pose a significant challenge to projects as they prepare investment rounds.

The project will assemble experts from the worlds of impact investment, development finance and law. Across a series of online meetings, participants will discuss strategies to improve ESG practices in African renewable projects from both a fundraising and operational perspective.

Amongst those speaking in the inaugural session on Thursday 13th May are Cathy Oxby, Chief Commercial Officer, Africa GreencoDr. Valeria Biurrun-Zaumm, Senior Investment Manager, DEGOrli Arav, Managing Director – Facility For Energy Inclusion (FEI) – Lion’s Head Global PartnersBeatrice Nyabira, Partner, DLA Piper Africa, Kenya (IKM Advocates) and Natasha Luther-Jones, Partner, Global Co-Chair of Energy and Natural Resources, International Co-Head, Sustainability and ESG, DLA Piper.

Veronica Bolton-Smith, COO of Invest Africa said, “Africa is particularly vulnerable to the impact of climate change despite contributing very little to global emissions. As the price of renewables fall, they will form an ever more important part of Africa’s electrification. In this context, it is essential that projects be given the tools to apply best practice in ESG not only from an environmental perspective but also in terms of good governance, fair working conditions and contribution to social inclusion. I look forward to working closely with DLA Piper on this important topic.”

Natasha Luther-Jones, Global Co-Chair Energy and Natural Resources and International Co-Head Sustainability and ESG at DLA Piper also commented, “Climate change is one of the biggest challenges companies, and people, face today and when we look at its reduction – whether that be in how we power our devices, what we eat or how we dress, where we live or how we work – all roads come back to the need to increase the amount of accessible, and affordable, clean energy. However, renewable energy companies are not automatically sustainable as sustainability is a focus on all ESG factors, not just environmental. We know the need for renewable energy is only going to continue to rise, and therefore so will the number and size of renewable energy companies. The additional challenge is to make sure they are truly sustainable organisations and that’s what we’re excited about discussing during the webinar.”

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