Going public? – The Nation

  • NNPC should rather sell its 20 per cent stake in Dangote Refineries to the public

Talk of yet another of Nigeria’s unending contradictions: a national oil corporation that couldn’t get its four refineries running, with the fourth only recently outsourced to a foreign entity for refurbishment – reportedly pushing for a pie in the world’s largest single train plant. That is the story of Nigerian National Petroleum Corporation, NNPC, said to be in talks with Dangote Refineries and Petrochemical Complex for a 20 per cent stake in the $15 billion plant.

The move, according to NNPC’s spokesman, Kennie Obateru “was in line with a Federal Government directive which stipulates the mandatory participation of the corporation in any privately-owned refinery that exceeds 50,000 barrels per day capacity, in keeping with its statutory role of safeguarding national energy security”.

He further averred that “this is a deliberate move to ensure that the risk associated with refinery business does not weigh solely on Dangote Industries and also a bold statement that the government is ready to encourage private investors in building refineries”. In the same vein, he assured that this would not undercut its commitment to the rehabilitation of its own refineries and the strengthening of the domestic refineries sector. In all, the corporation is said to have identified at least six refinery projects in which it intends to seek equity participation.

Well said.

First, it makes eminent sense that the Federal Government would seek to have a share of the behemoth like the Dangote Refinery whose entry into the refinery sector, aside being a game-changer, also constitutes something of a strategic national asset. That the product in question – oil – is the country’s mainstay and hence its life-blood makes it doubly so and with it the need for the government to pay more than a passing interest. Moreover, it is hard to imagine a country with our size and diversity allowing a private entity access to untrammeled market dominance, particularly in a strategic sector like petroleum, without undermining the essence of market efficiency, fairness and competition – the twin pillars of free market enterprise – and the nation’s long-term interests.

We are here talking of an environment with neither perceptible anti-trust tradition nor effective legislative instruments against oligopolistic tendencies. As against what now seems like an afterthought, we would have expected the government to have put such considerations on the front burner from the very beginning. To imagine that this is where the drivers of the liberalisation process are supposed to berth is to appreciate why the government appears rather late in the day in addressing this particular lacuna.

In all, the real issue is why the NNPC, with its historic record of inefficiency and corruption, should be the agency saddled with this task on behalf of the Nigerian people. Here, it seems to us that part of the problem is the inability of the Federal Government and the NNPC to define both the mission and vision of the corporation. It explains why a national oil corporation that started off with a sworn mission to lead the charge in both upstream and downstream sectors of the industry has in the course of the years been reduced to a mere rent collector. The time has come for the corporation to refocus.

And who says that the 20 per cent stake could not be sold to the public even as a prelude to making the company go public in no distant future? We believe that the latter is the way to go if only to guarantee the company’s long-term future and to assure the kind of transparency, confidence and regulatory standards that publicly quoted companies engender.

Whereas the country has seen too many private entities rise and fall with their founders, one of the enduring lessons from their stories is the need to ensure broad-based ownership and succession planning. Without these being in place, permanence and continuity are at once hampered. This is one sector that the Federal Government cannot afford to take chances.

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