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President Buhari to scrap NNPC, PPPRA as he submits new PIB to National Assembly

The President has recommended the scrapping of the NNPC and PPPRA in the new PIB submitted to the National Assembly.

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President Buhari to scrap NNPC, PPPRA as he submits new PIB to National Assembly, Buhari says there is no provision for fuel subsidy in revised 2020 budget, President Muhammadu Buhari to address Nigerians on Monday, receives update and recommendations from PTF, President Buhari earmarks N420 billion for N-Power, GEEP and others under NSIP in 2021

President Muhammadu Buhari has proposed the scrapping of the Nigerian National Petroleum Corporation (NNPC) and Petroleum Product Pricing Regulatory Agency (PPPRA) in the new long-awaited Petroleum Industry Bill 2020 which has just been transmitted to the National Assembly.

According to a report from Punch, the president has proposed the creation of the Nigerian National Petroleum Company Limited that will inherit the assets and liabilities of the NNPC to be determined the Minister of Petroleum and the Minister of Finance as well as the establishment of Nigerian Upstream Regulatory Commission and The Nigerian Midstream and Downstream Petroleum Regulatory Authority.

READ: Nigeria is exploring getting IOCs to refund $21 billion 

The bill proposes that the petroleum minister shall within 6 months from the commencement of the Act, incorporate a limited liability company called the Nigerian National Petroleum Company Limited (NNPC Limited) under the Companies and Allied Matters Act.

Sections of the bill state, “The Minister (of Petroleum) and the Minister of Finance shall determine the assets, interests and liabilities of NNPC to be transferred to NNPC Limited or its subsidiaries and upon the identification, the minister shall cause such assets, interests and liabilities to be transferred to NNPC Limited.

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“Assets, interests and liabilities of NNPC not transferred to NNPC Limited or its subsidiary under subsection 1 of this section shall remain the assets, interests and liabilities of NNPC until they become extinguished or transferred to the government.’’

READ: PIB and its unsurmountable obstacles

“NNPC shall cease to exist after its remaining assets, interests and liabilities other than its interests, assets, and liabilities transferred to NNPC Limited or its subsidiaries under subsection 1 of this section shall have been extinguished or transferred to the government.”

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 “The minister shall be at the incorporation of NNPC Limited, consult with the Minister of Finance to determine the number and nominal value of the shares to be allotted which shall form the initial paid-up share capital of the NNPC Limited and the government shall subscribe and pay cash for the shares.’’

It also states that the “ownership of all shares in NNPC Limited shall be vested in the government at incorporation and held by the Ministry of Finance incorporated on behalf of the government.”

READ ALSO: Oil: International oil companies scale down on Nigeria operations   

The bill also states that the proposed Nigerian Upstream Regulatory Commission will be responsible for the technical and commercial regulation of upstream petroleum operations while the new Nigerian Midstream and Downstream Petroleum Regulatory Authority shall be responsible for the technical and commercial regulation of midstream and downstream petroleum operations in the petroleum industry.

The new bill technically scraps the PPPRA with the creation of the new agencies that will now carry out the PPPRA’s functions.

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Nairametrics had reported last week that President Buhari was expected to submit the Petroleum Industry Bill (PIB) to the National Assembly early this week following his approval.

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READ: NNPC, Chinese firm conclude plans to commence AKK project 

The PIB which is an oil reform bill has been in the works for about 20 years starting with the administration of former President Olusegun Obasanjo and is key to the repositioning of Nigeria’s Oil and Gas Industry under its post-COVID-19 agenda as the main laws governing oil and gas exploration have not been fully updated since the 1960s due to some contentious issues like taxes, payments to local communities, terms and revenue sharing within Nigeria.

Successive administrations have tried without success to pass the bill that is supposed to reform the oil and gas sector.

READ: Covid-19: Timeline of every pronouncement made by Nigeria to support the economy

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), had disclosed that the delay and non-passage of the bill have made international investors start losing confidence in the country’s oil and gas industry.

During President Buhari’s first term, the Eighth NASS split the bill into four parts namely the Petroleum Industry Governance Bill (PIGB), Petroleum Industry Administration Bill, Petroleum Industry Fiscal Bill and Petroleum Host Community Bill — in a bid to fast-track its passage into law.

However, after the passage of the PIGB by the National Assembly, the president declined to sign the bill because of the retention of 10% of the revenue generated by the Petroleum Regulatory Commission which they considered too high and the whittling down of the powers of the Minister for Petroleum.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

1 Comment

1 Comment

  1. 9jaRealist

    September 28, 2020 at 11:49 pm

    Every bill in Nigeria creates one or more MDAs. Little wonder over 70% of the federal budget goes to recurrent expenditure.

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Energy

Nigerian firm set to raise $1.2 billion to purchase electricity meters

MAPCo plans to raise N480 billion to purchase electricity meters and to help the DISCOs plug revenue gaps in their operations.

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The Nigerian Electricity Regulatory Commission (NERC), National electricity grid collapses again, as NUEE suspends strike action , FG to increase electricity tariffs in order to improve power supply, Power: Liquidity crisis-same old story in 2020?, GenCos urges NBET to pay up N1 trillion debt, Electricity Tariff: FG, electricity stakeholders to work on equitable rate , Power: NERC applies "brakes" on hike in tariffs, NERC to sanction 7 DisCos over uncapped estimated billing

A Nigerian firm, Meter Assets Finance and Management Company (MAPCo), has concluded plans to raise N480 billion ($1.2 billion) over the next 3 years, to purchase electricity meters and help the electricity distribution companies (DISCOs) plug revenue gaps in their operations.

This is also in line with the Federal Government’s initiative to ensure that all electricity consumers are metered, which will put an end to estimated billing by the DISCOs.

According to a report from PricewaterhouseCoopers, less than one-tenth of Nigeria’s 41 million households have their electricity consumption metered, and half of those are faulty. As a result, distribution companies have to estimate bills, resulting in constant conflict with the consumers that delay payments.

The Chief Executive Officer of New Hampshire Capital, Onion Omonforma, said the Meter Assets Finance and Management Co. hopes to end the practice of estimated billings by raising funds to purchase and supply meters to consumers.

New Hampshire Capital, FBNQuest and Kairos Investments Africa are helping to package and structure the venture, known as MAPCo, for investors to either buy equity or inject debt into the company.

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What they are saying

Omonformaa said, “The electricity distribution firms will then have the money to go back and buy more meters and the cycle continues, paving the way to close the metering gap. MAPCo will collect the cost of the meters from consumers at a premium over the next 10 years. The meters will be handed over to the power-distribution companies once paid off.’’

While disclosing that MAPCo plans to issue a N100 billion bond in the next year, Omonforma also pointed out that roadshows have been planned for the U.S. and Europe, and will include local institutional investors.

He said, “We envisage that a lot of people who are looking for a long-term instrument will key into it,”

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It can be recalled that apart from repealing the estimated billing methodology in determining tariffs for electricity consumers; the Federal Government had insisted that all consumers must be metered, as part of the condition for a tariff increase.

Also, as part of the agreement reached with the organized labor in respect of the tariff increase; the Federal Government disclosed that the National Mass Metering Programme will be accelerated, with the distribution of 6 million meters to Nigerians for free.

What this means

A huge number of electricity consumers across the 36 states and the FCT are still unmetered by their respective DISCOs. This initiative by MAPCo will help bridge the existing gap, with more electricity consumers acquiring a prepaid meter and doing away with the controversial estimated billing.

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Energy

N1.5trillion accumulated losses of NNPC, a serious going-concern risk – PWC, SIAO Partners

The auditors of NNPC have raised doubts over the inability of the Corporation to continue as a going concern following rising and humongous losses.

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NNPC

According to the recently published 2019 Audited Financial Statements, the Nigerian National Petroleum Corporation (NNPC) Group and Corporation had an accumulated loss of N1.9 trillion and N474 billion respectively. The Auditors of NNPC, made up of Pricewaterhouse Coopers, SIAO Partners, and Muhtari Dangana & Co. have raised serious doubts over the inability of NNPC to continue as a going concern following rising and humongous losses, resulting in the negative capital base.

READ: U.S. budget suffers a deficit of $3.1 trillion in 2020, as pandemic slams the economy

In their report, the auditors disclosed that there is an existing material uncertainty that casts significant doubts on the ability of the NNPC to escape bankruptcy – as there are serious impairments on the company’s ability to generating sufficient revenues to meet its immediate obligations as at when due.

READ: NNPC reveals survival strategies to cope with oil sector downturn and new normal

What you should know

  • In its joint report to the stakeholders, the auditors gave an unmodified opinion and drew attention to the fact that the NNPC Group and Corporation recorded net losses of N1.8 billion and N107.8 billion respectively in 2019, compared to N803.1 billion and N254 billion in 2018 respectively. While its current liabilities exceed its current assets by N4.4 trillion and N1.1 trillion for the Group and Corporation respectively, compared to N3.3 trillion and N968.7 billion in 2018 respectively.
  • NNPC Group and Corporation’s current assets, according to the financial statements, stood at N5.3 trillion and N4.5 trillion in 2019, while total current liabilities stood at N9.7 trillion and N5.6 trillion respectively.
  • In 2018, NNPC Group and Corporation’s total current assets stood at N5.4 trillion and N4.8 trillion respectively, while total current liabilities stood at N8.7 trillion and N5.7 trillion respectively.
  • The accumulated losses according to the financial statement are approximately N1.5 trillion and N474 billion, compared to N1.6 trillion and N490.7 billion for the Group and Corporation in 2018 respectively.

READ: NNPC explodes, denies custody of $3.5 billion subsidy fund

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What to expect

  • The Management of the corporation is currently executing robust mitigation procedures, as it is receiving the requisite support from the Federal Government to ensure that the Group and Corporation have adequate resources to continue in operational existence for the foreseeable future.
  • To make the Group and Corporation commercially viable, the Federal Government had commenced the elimination of cost drivers responsible for the accumulation of the shortfalls in settling Domestic Crude Obligation; and the introduction of the Price Modulator mechanism in the Petroleum Products Pricing Regulatory Agency (PPPRA) template, designed to eliminate the major cause of the losses.
  • The Federal Government is also minimizing breaches to the country’s pipeline networks; pursuing the passage of the Petroleum Industry Bill, PIB, and its implementation, which would restructure the petroleum industry, improve transparency and governance, and also give the NNPC the autonomy to operate profitably.
  • The NNPC Management further revealed the plans to recapitalize the NNPC with steps to resolving all the outstanding related party payables and receivables and enable a clean slate start prior to recapitalization.

READ: Nigerian Stock market records sixth consecutive losses, investors lose N15.55 billion

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READ: NNPC to end oil-for-fuel swap system

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Energy

FG to inject over N198 billion on capital projects in power sector in 2021

The Federal Government plans to inject N198.27 billion on various capital projects in the power sector across Nigeria in 2021.

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FG Power storage and distribution

The Federal Government plans to inject N198.27billion on various capital projects in the power sector across Nigeria in 2021.

This was disclosed in the 2021 Appropriation Bill, which President Muhammadu Buhari presented to the National Assembly recently.

READ: Buhari presents N13 trillion 2021 Budget to National Assembly

Breakdown:

* National rural electrification, managed by the Rural Electrification Agency, will invest a total of N17.86billion on power infrastructure development in rural communities.

READ: CBN to sanction exporters who default on export proceed number

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* The Nigerian Electricity Regulatory Commission plans to invest N294.1million on capital projects, while capital projects to be handled by the Nigerian Electricity Management Services Agency will gulp N441.1million.

* The allocation for capital projects to be handled by the Transmission Company of Nigeria, as contained in the proposed budget, is N4.69billion.

READ: Buhari earmarks N420 billion for N-Power, GEEP and others under NSIP in 2021 budget

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* The capital outlay projected for 2021 by the Nigeria Electricity Liability Management Limited is N914.87million, while the National Power Training Institute targets to invest N294.1million.

* The total overhead for the entire ministry and its agencies was N1.16billion.

* The amount budgeted for personnel in the power ministry and its agencies is N4.9billion.

READ: Update: Buhari seeks power to freeze accounts, clamp down on money launderers

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