Economy Watch

Finance Ministry, NNPC Ltd to Mitigate Impact of Transition on Fiscal Policy—Ahmed

Mrs. Zainab Ahmed, Minister of Finance

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed has said that the Federal Government will work with the Nigerian National Petroleum Company Ltd to mitigate any impact of its transitioning on the aspect of fiscal policies.

Zainab said this in a speech delivered at the official unveiling of the NNPC Ltd.

The unveiling which was done by President Muhammadu Buhari is part of the fulfilment of one of the cardinal objectives of the Petroleum industry act PIA 2021.

The Corporate Affairs Commission had on September 21 last year, completed the incorporation of the NNPC Ltd in accordance with the provisions of the Petroleum Industry Act 2021.

The PIA was signed into law by President Muhammadu Buhari on 16th August, 2021, following its passage by the National Assembly in July of the same year.

With the registration by the CAC, the NNPC Ltd was floated with an initial capital of N200bn making history as the company with the highest share capital in the country.

Speaking at the event, the finance minister said as stipulated in the PIA, under the new dispensation, NNPC limited is expected to become a commercially oriented and profit driven national firm that will be one of the most attractive to different industries players in the energy space.

She said the finance ministry, as an investor in NNPC on behalf of the government of the federation sees this development as an attractive one that will give comfort to local and international investors.

She said with the transitioning, there will be cross over implication to the flow of funds into the federation account, noting that this has made it compelling for the ministry to work with the NNPC to manage the possible fallout and make the transition as seamless as possible.

The Minister said, “There are important things we will be watching in the next few months of the transition. First is the transfer of assets as especially the implication of the toxic assets that will be left behind in the corporation and its implication on both the physical and the sovereign balance sheets.

“The second is the issue of inflow of revenue into the federation accounts. In my capacity as the chair of the monthly federation allocation committee, the cross-over has important implications to the flow of funds into federation accounts of the allocation committee, and the attendance cost that’s been charged to the distributable pool of funds of the corporation.

“In this respect we will work closely with the management of NNPC to navigate all important situations. Relatedly the Federal Ministry of Finance, Budget and National Planning will work closely with the steering committee on the implementation of the PIA especially the work stream of the federation assets to ensure that we manage possible fallout and make the transition as seem less as it could be.

“Lastly, we will work with the steering committee to determine and calculate the risks arising from the transition and management of same to minimize the risk overall on the physical situation of the federal government and other federating entities.”

As a limited liability company with pursuits of returns on investment to its shareholders, Ahmed said it goes without saying that NNPC Ltd is expected to go all out to acquire more oil and gas assets with a view to attaining the status of one of the biggest world class oil firms while employing world class best practice in the petroleum industry sector in the cost of its operations.

With this giant stride, she said there is no doubt that the administration of President Muhammadu Buhari through the Petroleum Industry Act and emergence of NNPC Ltd has achieved a remarkable feat in the face of daunting economic challenges.

Ahmed said that the Buhari administration cannot allow the NNPC to continue living in the shadow of its past, while being unable to meet present expectations of funding the operation of the federation accounts from oil production.

By this transitioning, she expressed optimism that the government aims at opening the space for private player to venture into the oil and gas industry and make NNPC Ltd a global company of choice.

She said, “Even the fast-evolving nature of the gas sector, we expect that the new management and board of this important investment will stir the new firm to take maximum advantage of the energy transition through the neutralization of our natural resource endowment.

“Using our gas resources to address our energy poverty, and more importantly to move to a clean and energy efficient future, this will justify the new slogans of NNPC ‘energy for today and energy for tomorrow.’

“Therefore, we are hopeful that in the months and years to come, the new NNPC will transform its ways of doing business in order to be the global player it is destined to be in this all-important energy space, and most importantly NNPC will provide the expected returns on investment for its shareholders amidst the expectations of shareholders in the energy space.”

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