NNPC’s Expanding Retail Footprints

Robinson Chinwo

The Petroleum Industry Act (PIA), a historic piece of legislation which ushered in the full deregulation of the nation’s oil & gas sector conferred on NNPC the critical role of the supplier of the last resort. In practical terms, what this means is that at any point in time when there are discrepancies in the supply chain of petroleum products, it is the responsibility of NNPC to ensure availability of products until such a time normalcy is restored. Although NNPC was configured to face this huge responsibility, investment lethargy since the establishment of NNPC Retail Limited in 2000 undermined its capacity to fully discharge this critical function.

The vision plan of the management of the company at the time, to establish a petroleum products retail company as a Corporate Business Unit gave birth to NNPC Retail Limited with the core objective of creating access to quality white products and services for Nigerians. Launched in 2000, the company acquired its first retail outlet from Texaco Nigeria Limited at Ikoyi Lagos on January 1, 2002; its Abuja Mega Station commenced operations in December of the same year. The company has evolved over the years from 2009 when it was registered as a company and so also, the scope of its challenges and responsibilities. Under the leadership of Mele Kyari, NNPC is on a trajectory of expansion and growth buoyed by a fierce competitive spirit and determination to strengthen the footprint of the company in the downstream and enhance its vision of making quality products readily available to Nigerians.

The NNPC Retail Limited Mele Kyari inherited had to envision and deploy a bold strategic move to not only operate on a competitive pedestal but unleash exponential profit in its operations. In the words of Kyari, “We started NNPC Retail Limited in the year 2000 and until the acquisition of OVH chain, we were not able to grow organically. We had 48 stations that we owned and a mirage of companies that are affiliates all over the country, some of which were not functional fuel stations, they could not serve the purpose because there were dealers who could not pay for the cost of the products, and we had locations where we could not guarantee either the quantity or the quality of the products sold.

“We failed to grow organically for 23 years. The only way to bridge that gap is to do something strategic and this is very difficult in our industry. You have to acquire other people’s assets if you want to grow to achieve the objective of the Petroleum Industry Act and grow this company to the business we want it to be.”  NNPC’s acquisition of OVH Energy Marketing (OVEM), owner of the Oando downstream assets in 2022 was indeed a masterstroke envisioned to build on existing structure of OVH and operate model service outlets leveraging OVH’s extensive asset base and commercial capabilities. It was a bold strategic move that opened the floodgate of possibilities and solidified the company’s vision of becoming the largest petroleum product network in Africa. In all ramifications, the acquisition of OVH Energy under the Accelerated Network Expansion (ANEX) Initiative was a major coup; it completed the acquisition of OVH downstream assets including Jetty (ASPM) with 240,000 metric tons monthly capacity, eight Liquified  Gas (LPG) plants, three lubes blending plants, three aviation depots and twelve warehouses; it also brought 380 additional filling stations under NNPC brand in Nigeria and Togo, a development which strengthens the possibility of the company attaining 1, 500 filling stations target it had set for itself.  The trajectory of expansion and growth of NNPC Retail limited under the guidance of Mele Kyari is real, impactful and epochal. Today, its filling stations are spread across Nigeria and Togo with plans to expand to other West African Countries. The company has 900 filling stations ranging from Affiliate Stations, Mega Stations and Standard Stations to Leased Stations, Ultra-Modern Stations and Floating Stations. NNPC Retail Limited is about the only retail outlet with eight Floating Stations in the Niger Delta operationalized to bring quality petroleum products to residents of the riverine communities who hitherto had to travel several kilometres outside their communities to buy the products.

The full impact of the transformational vision of the current NNPC management is in plain sight; the growth trajectory from a loss position of N803 billion in 2018 to a recording breaking profit of N3.297 trillion in 2023 bears testimony to the abundant potential of NNPC Limited to lead the process of wealth creation in our nation. According to a recent report, NNPC Retail Limited raked in a total of N255 billion by the third quarter of 2022; it also achieved six per cent year-on-year increase in white product sales, N255 billion revenue, N15 billion EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and N14.14 billion profit as at Q3 (third quarter) 2022.

The report further revealed NNPC Retail limited completed the construction of two standard stations in Kano and Kaduna states and onboarded 71 new stations within the year under review; five of them were leased while sixty-six were affiliate stations, the company also completed Phase 1 Solar Power project and three stations in Borno, Bauchi and Nasarawa States, NNPC successfully carried out rehabilitation and face lift of fifteen company owned stations within the network in 2021. The transformation of NNPC from a loss-making government controlled entity into a vibrant, commercially driven conglomerate is remarkable. The NNPC 2023 Audited Financial Statement (AFS) declaring a net profit of N3.297 trillion at the close of the Financial which ended in December 2023, an increase of over N700 billion (28%) when compared to the 2022 profit of 2.548trillion telling the story of steady growth in poignant terms.

This strong fiscal performance is a reflection of both strategic foresight and operational resilience of the company under the guidance of Mele Kyari. This remarkable achievement was buoyed by the strong record posted by its Strategic Business Units (SBUs), increase in oil and gas production and the devaluation of the country’s currency. For instance, NNPC Trading Limited formerly PPMC grew its profitability by 261 per cent, from N3.59 billion in 2020 to N12.95 billion in 2021 and reduced demurrage costs by 85 per cent.

As a result of the proactive leadership at the helm of the operations of NNPC, its retail arm, NNPC Retail Limited is not only pioneering provision of charging power points for electric vehicles at its stations in the near future, it is also providing Compressed Natural Gas (CNG) as well as conversion of vehicles for the use of CNG for interested car owners in the country. As a highly ambitious company with eyes firmly fixed on the future, NNPC Retail Limited is determined to play the critical role spelt out in its core mandate and even surpass it. The company pioneered the Liquefied Petroleum Gas (LPG) cylinders and partnered with LPG dealers to sell LPG across the country, leading to greater penetration of LPG use in the country. In spite of these significant accomplishments, systemic issues continue to challenge its ambitious vision of building the biggest petroleum product network on the continent. The vulnerabilities that continue to impinge on its lofty objective include insecurity, multiple taxation and lack of investment in the energy sector due to uncertainty in the business environment; in the last ten years less than three per cent of the total investment flow into Africa came into Nigeria. This depressing Statistic notwithstanding, the company is determined to break new grounds. With Mele Kyari, the intrepid corporate leader in the saddle of the NNPCL group, it is a matter of time.

Robinson Chinwo, a Public Affairs Analyst Contributed this piece from Woji town, Port Harcourt, Rivers State.