Nigeria’s state oil company considers IPO amid higher 2020 profit

NNPC records first gain in 44 years at $698m

Cars drive past Nigerian national flags in Abuja, Nigeria. The country's state oil company NNPC is considering an initial share sale after posting the first profit in its 44-year existence. Reuters / Afolabi SotundeShow less

Nigeria’s state oil company is considering an initial share sale after posting its first profit in 44-year existence.

Legislation signed by President Muhammadu Buhari this month enables the Nigerian National Petroleum Corporation (NNPC) to offer shares to the public, managing director Mele Kyari said at a briefing Thursday in the capital, Abuja. A listing would draw on the experience of Saudi Aramco, the Saudi Arabian oil giant that listed in 2019, he said.

“There is no date on it, but there is a possibility of doing this,” Mr Kyari said.

NNPC reported net income of 287 billion naira ($698 million) in 2020, compared with losses of 1.7bn naira in 2019 and 803bn naira in 2018. The Abuja-based company, which released audited results for the first time two years ago, has for years operated under a cloak of secrecy often mired by allegations of corruption.

“Obviously because you have made profit today doesn’t mean you are ready for IPO,” Mr Kyari said. “It is a very, very long, tedious process.”

Mr Buhari became president of Africa’s biggest oil producer in 2015 with a pledge to improve transparency in government corporations, including the NNPC. Under the Petroleum Industry Act he approved on August 16, the NNPC will be registered as a commercially focused entity.

The new legislation “specifies that the company pay its fair share of royalties, fees, rents, taxes and other payments due to the government, and that it should pay out the bulk of its profits as dividends after retaining 25 per cent for reinvestment,” accounting firm KPMG stated in a report last month.

The Nigerian Stock Exchange has a market capitalisation of 20.6 trillion naira ($50bn). The largest IPO on the bourse to date was Guaranty Trust Bank’s $824m listing in 2007, according to data compiled by Bloomberg.