The Nigerian National Petroleum Company Limited (NNPC) has fallen behind schedule in commencing its initial public offering, failing to meet the set deadline. The quarterly report, released on Monday by the national oil company, highlighted the company’s failure to meet the deadline for its initial public offering.
Following the enactment of the Petroleum Industry Act on July 19, 2022, the company transitioned into a commercial venture. Mele Kyari, the group CEO of NNPC, had earlier declared during a transition ceremony that the company would be prepared to initiate an IPO by mid-year in 2023.
An initial public offering (IPO) is a public offering in which a company sells shares to institutional investors. As per the quarterly report, the NNPC was projected to be prepared for an IPO by the conclusion of the second quarter. However, it is now the third quarter, and no IPO has been initiated yet.
‘NNPC Ltd is making a deliberate effort to properly clean up its books towards recapitalisation,’ the report reads.
‘The PIA provides that NNPC Ltd will be in a position to consider any initial public offer (IPO) in three years’ time.’
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The company said it understands that when ‘you want to get ready for IPO, you need to do things differently.’
‘You need to get your books correct. You need to recapitalise and shape your portfolio,’ NNPC stated in the document.
‘With the declaration of profit-after-tax for the financial years 2020 and 2021 (and with 2022 coming up soon), NNPC Ltd is currently in good stead for an IPO declaration.’
‘Fingers crossed, NNPC will be IPO-ready by the second quarter 2023.’
As stated in the report, the launch of the IPO will enable individuals who are interested to participate and become shareholders of NNPC Ltd.
The quarterly report further indicates that the NNPC intends to allocate 20% of its profits as retained earnings to enhance its business expansion efforts.
Also, the company will implement a fee structure for tasks carried out at the request of the Nigerian Upstream Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
The report also revealed that the NNPC is expected to earn a management fee of 30% of profit oil and gas in relation to production-sharing contracts. Moreover, the company will have access to fundraising options such as loans, bonds, and various financial instruments.