Tinubu’s Policy Advisory Council Proposes Sale of NNPC’s Stakes in Oil and Gas Assets

*Targets $17.4bn 

*Seeks merger of NUPRC, NMDPRA, NCDMB

Peter Uzoho

President Bola Ahmed Tinubu’s Policy Advisory Council has proposed the sale of the major stakes of the Nigerian National Petroleum Company Limited (NNPC) in the upstream, midstream and downstream sectors of the oil and gas industry.
THISDAY gathered from the Policy Advisory Council Report dated May 2023, that the federal government will earn about $17 billion from the sale of the NNPC’s majority stakes in the oil and gas assets.

According to the submissions from the Energy and Natural Resources sub-committees of the advisory council, Tinubu’s administration should consolidate the regulatory agencies by merging the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Content Development and Monitoring Board (NCDMB) under a single regulator.
The members of the council include: Austin Avuru, Olu Verheijen, AbdulRasaq Isa, Bashir Bello, Ifeanyi Ajuluchukwu, Doyin Akinyanju, Tinuade Sande, Ahmad Zakari, George Etomi, Nasiru Wada, Mohammed Abbas, and Segun Lawson.

They proposed that the government should work towards achieving some milestones within the first 100 days ending August 2023.
The council advised Tinubu’s administration to re-organise NUPRC and NMDPRA to deliver set milestone goals and headhunt and place capable resources in critical positions in the oil and gas sector.

The council further advised that the president should head-hunt competent, tested, reform-focused leaders in NNPCL and ensure the company discharges its function as a commercial entity as stipulated in the Petroleum Industry Act (PIA).
The council advised that NNPC should also be strengthened and placed in a position where it would be paying taxes, royalties and profits to the Federation Account and properly regulated by NUPRC, NMDPRA and NCDMB.

Though the president has removed the petrol subsidy, the council, which was set up when Tinubu emerged as the president-elect, equally proposed the deregulation of petrol pricing and implementing the Federal Direct Cash Transfer Programme, with the disbursement of $8 billion in Direct Cash Transfer to the poorest 30 million Nigerians.
It advised the president to end insecurity in oil-producing states, particularly in Imo, Delta, Ondo, Rivers, Bayelsa and Akwa-Ibom by engaging key political and community stakeholders.

The council called for the reforming of the operations of the military task force with clearly defined key performance indicators (KPIs) and consequent management to tackle deficiencies.
To improve financing in the oil and gas sector, the council called for a debt repayment framework and a transition to market prices for gas.
It stressed the need for Tinubu’s government to put robust policies in place in order to unlock Nigeria’s energy potential to fuel economic growth and diversification while improving energy security sustainably.

It proposed that the government should work to raise Nigeria’s oil and gas production to 1.8 million barrels per day (mbpd) and 3.5 billion cubic feet (bcf) in the next 18 months ending December 2024.
The advisory council urged President Tinubu to mandate NNPCL, NUPRC and NMDPRA to close out outstanding divestments and contract issues for project delivery clarity.
It further urged the president to strip NNPCL of policy-making roles and keep NCDMB within its mandate as prescribed by the Local Content Act.
The council advised the president to consider integrating NUPRC, NMDPRA, and NCDMB into a single regulator or include all midstream activities into NUPRC’s scope.

The advisory council also called for the expansion of domestic gas reserves and the promotion of the development of a diversified oil and gas industry by implementing reforms in the PIA, including the National Gas Transportation Network Code (NGTNC).
While proposing the development of a sustainable financing model to facilitate boost oil and gas development projects, the council stressed the need for the government to facilitate a third-party gas pricing framework for the export market.

The report further advised Tinubu’s administration to, “Enact Fiscal Enablers for NAG and Deepwater via Finance Act and expand stabilisation in PIA to cover full credit for post-Final Investment Decision (FID) levies and taxes
“Bring ready Brownfield Project onstream from 10 critical gas projects and oil projects at FID,” the report added.
The council also advised Tinubu’s government to achieve a daily crude oil production target of 2.5 million barrels per day and 5 billion cubic feet (bcf) of gas daily by May 2027.

It also recommended the sale of NNPCL’s oil and gas assets and transit of the company to a minority shareholder with a target to raise $17.4 billion from the assets.
The council also recommended that the NNPCL should form global strategic partnerships with other co-venturers.
Tinubu’s advisory council also advised the new government to, “sell down interests in JVs to a minority position and develop an operating model that eliminates cash calls. Sell down/divest interests in the refineries and build the NLNG operating model.

“Bring remaining Brownfield Project on-stream including 10 critical gas projects, oil and gas projects post FDP and pre-FID.
“Bring Greenfield Projects to FID to grow production, such projects included deepwater oil and NAG (Non-associated gas) projects, develop offshore gas hub, and FLNGs (Floating LNGs).”

It also advised the Tinubu administration to restore the nation’s lost revenue by restoring oil and gas production with a view to ensuring that Nigeria Liquefied Natural Gas (NLNG) plants run at 100 per cent capacity and unlock 12 gigawatts (GW) of stranded gas-fired power generation.
The council further proposed that the government should work towards growing the country’s oil and gas production capacity to 4 million barrels per day (bpd) and 12bcf/d to domestic and export by 2030 and 25-30GW of power generation by 2030.

To diversify revenue sources and boost job creation, the advisory council stressed the need for the government to convert oil and gas into industrial products and feedstocks, aggregate demand in industrial clusters and prioritise export-oriented projects to improve bankability.
While proposing the need for Nigeria to transition to Net-zero by 2060, the council advised that gas should be used as a transition fuel to displace diesel and biomass, reduce emissions in operations, and drive energy efficiency.

The report further recommended that “within the first 100 days, constitute a team to evaluate portfolios of upstream, midstream and downstream.
“Decision analysis to carry out a high-level valuation and establish the range of consideration, commence preliminary engagements with potential buyers and financiers.

“In the first 18 months, with assets up to $4.5 billion, the government should appoint an external investment banker, legal advisor and financial advisor to identify and test transaction principles with key buyers.
“They should establish the transaction process and execution timeframe and assess market conditions for the transaction,” the report explained.