CPPE Hails Move to Make NNPC Autonomous Enterprise

Dike Onwuamaeze

The Centre for the Promotion of Private Enterprise (CPPE), has commended the federal government for its decision to make the Nigerian National Petroleum Corporation (NNPC) an independent business enterprise.

The Chief Executive Officer of the CPPE, Dr. Muda Yusuf, gave this commendation yesterday in the “CPPE Half Year Economic Review,” where he said that the proposition would unlock the huge investment opportunities in the Nigerian oil and gas sector for the benefit of all Nigerians.

Yusuf said: “This is a good initiative which deserves the support of all Nigerians. The take-off may not be perfect, but we should see it as a work in progress. We should see the initiative as a major step in the transformation of our oil and gas sector.

“We propose a business model that would dilute the ownership of the NNPC with the onboarding of institutional and individual investors and decoupling of the management from political interference and controls.   The company should ultimately be listed on domestic and international stock markets.  This is the vision that we should have and we should support the NNPC to achieve this goal.

 “It is hoped that the models of Saudi Arabian Oil Company (Saudi Aramco) and the Petrobras of Brazil will be replicated with this transformation.

“We, therefore, commend the decision to make the NNPC an independent, autonomous organisation. This proposition would unlock the huge investment opportunities in the oil and gas sector for the benefit of all Nigerians.”

He noted that the Nigerian economy in the first half of 2022 was characterised by diverse economic vulnerabilities that included the unprecedented surge in energy prices, which had a very huge adverse effect on economic players across all sectors and the unprecedented level of currency depreciation and currency volatility.

Other features of the economy during the period under review, according to the CPPE, were increasingly weak fiscal space, acute foreign exchange scarcity with very profound effects on investors across all sectors, rising public debt and debt service burden, worsening security situation and elevated political risk as a result of political transition processes and activities.

In addition, the CPPE said that growing fuel subsidy burden, weak infrastructure, slump in investors’ confidence and depressed purchasing power were among the characteristics of the economy within the reviewed period.

Yusuf said: “All these headwinds have had devastating effects on businesses in the first half of the year. However, the economy continues to demonstrate resilience amid all of these harsh investment environments.”  

He, however, highlighted that the figures released by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, during her presentation of the 2023-2025 Medium Term Expenditure Framework painted a gloomy and disturbing picture of the state of federal government’s finances and suggested that the government is on the brink of bankruptcy because the debt service to revenue ratio for the first four months of the current year was over 100 per cent.  

“The implication of this is that the actual revenue of government over the period is not sufficient to service debt. Therefore, financing of the operations of government like personnel cost, overhead cost, capital expenditure and even part of the servicing of the debt will have to come from additional borrowing. These portend severe vulnerabilities for the Nigerian economy.

“The fiscal outlook is clouded by elevated downside risks in the near term, driven largely by the huge burden of financing petrol subsidy, fiscal leakages, and unsustainable public debt trajectory.  The outlook poses significant risks to macroeconomic stability amid heightened inflationary pressures, depreciating currency and increasing exchange rate volatility,” he said.