Nigeria’s state-owned energy firm begins operations as fully commercial entity

(Bloomberg) — Nigeria’s state-owned energy firm will now operate as a commercial entity without relying on government funding and direct controls, President Muhammadu Buhari said on Tuesday. 

The launch of the Nigerian National Petroleum Co. is a “landmark event for the Nigerian oil industry,” Buhari said at a ceremony unveiling the new direction for the company in the capital, Abuja. While still wholly owned by the state, the revamped NNPC is a limited liability company that is intended to operate independently of government and without access to public funding.

“We are transforming our petroleum industry, to strengthen its capacity and market relevance for the present and future global energy priorities,” Buhari said. 

The company operates joint ventures with international oil majors and domestic firms and leases offshore blocks to producers with the resources to commercialize their reserves. It also runs numerous subsidiaries including a unit that purchase fuel for the country’s approximately 200 million people.

The NNPC was reformed after the passage of a long-awaited law last August that overhauled the oil and gas sector in Africa’s largest producer. The government hopes the changes will help the company to expand by enabling it to raise capital more easily.

Nigeria’s extremely limited refining capacity means the NNPC imports all the country’s gasoline, which the firm sells at a steep loss to retailers and wholesalers. The company will no longer be responsible for shouldering the expensive subsidy, NNPC Managing Director Mele Kyari said Monday in an interview with Lagos-based broadcaster Channels Television.

“If the state has maintained that we will continue to put subsidy on petroleum products, we will be happy to do this but as a commercial venture we will have a service level agreement between us and the state,” Kyari said. “This is business for us. We will charge them a fee.”