Kelvin Emmanuel, co-founder and CEO at Dairy Hills, has listed six urgent steps the Nigerian National Petroleum Corporation (NNPC) must take to ensure it doesn’t go extinct.
Emmanuel made the suggestion in reaction to the new fuel pump price instituted by the national oil company.
According to him, the NNPC should function like a real business outfit, not a government parastatal.
The six suggestions by Emmanuel are:
1) It has done the first one already- remove its hands from pms subsidy
2) Sell off the government-owned refineries
3) Go to the capital markets to raise either through an IPO (Equity) or Corporate Bond (Debt)
4) Invest in BUA refineries in Akwa Ibom and work with NPA, NMDPRA, and Concessionaires to fast-track the Ibaka Deep Seaport development needed to build the refinery.
This is important because BUA refining at full capacity will add another 14.6m litres to the projected 53m litres daily for Dangote Refineries.
The competition will lower prices further (even though prices across board will depend primarily on the cost of crude oil feedstock and transportation across Nigeria
5) NNPC needs to focus on IV layers in the gas market:
I. Funding the 50% equity contribution for the Nigeria-Morocco Gas pipeline; which is currently in the design phase
II. Funding equity contribution for either floating LNG or Train 8 to raise annual output from 22mta to 45-50mta
III. Invest or Co-Invest in developing LPG processing plants to reduce the share of LPG imported from 70% to below 20%. This is key to reducing the cost of cooking and AC gas, as FX controls the rate for these products right now.
IV. Developing internal transmission pipelines like AKK AND more to increase domestic gas utilization and raise power generation
6) Develop inland basins through the frontier basin exploration fund to raise the 13% derivation host states get from Federation Account and increase the daily output significantly.
Nigeria can go back to when NNPC was remitting $3bn per month to the Federation account at the CBN and even surpassed that significantly AND a key to stabilizing the FX markets is raising the amount of USD NNPC pays to the CBN.