Nigeria’s state hydrocarbon company Nigerian National Petroleum Corporation, NNPC, says it won’t be pressured to hastily sell its non-performing assets, including refineries, storage depots and dilapidated pipelines, just because a vocal, influential section of the public persistently calls for it.
The company is talking to Afreximbank, it says, and it has won the interest of (Russian giant) Lukoil and some Nigerian banks, to raise billions of dollars to revamp the refineries, after which it will settle into partnership with interested parties, to run the plants.
Last week, the NNPC opened bids by interested private investors to repair the pipelines and depots that are serving the refineries. The winning bidders for the extensive repairs of these pipelines would have to finance them independently and operate for a defined period in order to recover their investment costs with throughput tariffs.
“While we are open to creative ways to run the business”, says Meyiwa Eyesan, the corporation’s Group General Manager for Corporate Planning and Strategy, “what is more pertinent to us is that we run it efficiently and guarantee appropriate returns to our stakeholders who are not only our partners but also the 180 Million Nigerians”.
Speaking at a webinar on Long Term Funding of E & P Business in Nigeria- Strategies For Sustainability, organIsed by the Nigerian Association of Petroleum Explorationists (NAPE) over the weekend, Eyesan recalled the clamour, several years ago, for NNPC to sell its equity in its Joint Ventures with producing companies, in order to pay debts and fund the national treasury. It so happened that the world was going through a low crude oil price cycle at the time, she explained and the NNPC decided it was not a good time to sell. The corporation, instead, sat with its partners and agreed on a strategy to settle over $5Billion cash call arrears which it owed them. “The partners agreed to backstop incremental production to settle the arrears and today, we are over $3Billion settled in the arrears”, Eyesan, an economist by training, told the webinar. “This shows that the financial strategy is working. So, today, I am asking myself now is that questions still relevant, that NNPC needs to sell down, given the fact that the last clamour for sell down came at a time the corporation was not in a good place (oil prices were crashing) and yet the company found a way out of the debt”.
Eyesan said that NNPC had found a way around the hindrance to the revamp of the refineries. ‘We are now making progress, talking to reputable EPC contractors”.