The transformation of the Nigerian National Petroleum Corporation (NNPC) into NNPC Limited is one of the most significant reforms in Nigeria’s oil and gas sector in decades. This move, driven by the Petroleum Industry Act (PIA), aims to reposition the company as a commercially oriented and profit-driven enterprise.
The structural change promises greater efficiency and profitability. Yet, questions remain about the true nature of this transformation: the company’s real ownership, its governance and operational independence. How does a wholly owned and operated state corporation of many years transition to a commercially oriented limited lability company? What practical steps are required to ensure NNPC Limited delivers on its promise for Nigeria?
Understanding the New NNPC Limited
NNPC Ltd was incorporated in 2021 as a limited liability company following the passage of the Petroleum Industry Act (PIA).
The intention was clear: to shift NNPC from a government agency to a limited liability company, subject to the same commercial and regulatory standards as private sector players.
President Muhammadu Buhari’s formal announcement on July 19, 2022 marked a public commitment to, and shift to this new commercial orientation.
However, the NNPC Ltd remains wholly owned by the Nigerian government, with shares held by the Ministries of Finance and Petroleum Resources. This ownership arrangement is explicitly mandated by the PIA, which establishes the framework for the company’s operations, governance, and potential future privatisation.
Above all else, ownership continues to cast a dark cloud on the new NNPC Ltd.
It is essential to clarify its ownership and status, in order to establish a strong company.
True transformation requires exposing the company to market forces to drive efficiency and value for Nigerians. If the shift to NNPC Limited were fundamental, we would see a real commitment to operational efficiency, particularly in refinery maintenance – a long-standing weakness. The long-standing cycles of perpetual Turn-Around Maintenance (TAM) cannot continue, with frequent announcements but little real progress, causing persistent delays.
On paper, the PIA envisions NNPC Ltd operating as an independent commercial entity, paying taxes to the government and dividends to its shareholders. For the reforms to be believed, NNPC Limited must, in reality, embrace market discipline by prioritising operational excellence. Only then can it achieve its full potential and serve the interests of the Nigerian people.
Comparative success stories in Africa
The new NNPC Limited can draw
valuable lessons from several African state-owned enterprises that illustrate that government ownership can align with commercial success when supported by strong governance and operational discipline. Ethiopian Airlines, fully owned by the Ethiopian government, reported $7.02 billion in revenue for 2023/2024, a 14% increase from the previous year, and transported 17.1 million passengers despite global challenges.
Kenya Electricity Generating Company (KenGen), with significant government ownership, posted a 79% rise in half-year profits ending December 2024 and has consistently paid dividends to shareholders, supporting Kenya’s renewable energy transition. Similarly, Botswana’s Debswana, a diamond mining joint venture between the government and De Beers, has demonstrated how public-private partnerships can drive value and accountability.
The key success factor lies in how these companies have embraced transparency, efficiency, and robust governance – qualities that NNPC Limited must now prioritise. Even at home, here in Nigeria, the Nigeria Liquefied Natural Gas Limited (NLNG) — 49% owned by the government through NNPC, has paid over $44 billion in dividends since inception, including $1.10 billion in 2022, the highest in eight years.
Moving the new NNPC Ltd forward
These examples highlight the importance of clear ownership structures, professional management, and a willingness to subject state enterprises to market forces. For NNPC Limited, adopting such principles will be critical. as it prepares for greater public participation in its affairs.
One area where progress is urgently needed remains the management of Nigeria’s refineries. Despite significant investments, these assets remain perpetually underperforming. This challenge is the first and perhaps most important litmus test of the new NNPC. The new entity must move beyond structural changes to deliver tangible results for the Nigerian economy.
The path forward requires a firm commitment to operational efficiency, transparency, and strong corporate governance. It must accelerate the transfer of assets, adopting best practices from successful African enterprises, and urgently prepare for a public listing.
By prioritising refinery rehabilitation; committing to and publishing regular financial reports and reducing political interference, NNPC Ltd. can build public trust and attract new investment. Ultimately, these commitments are essential for NNPC Ltd to deliver real value to Nigerians and fulfill its potential as a leading player in Africa’s energy sector.
The transformation of NNPC into NNPC Limited is a bold step toward modernising Nigeria’s oil and gas sector. The PIA has provided a legal and structural framework for efficiency, transparency, and even possible public participation in the future. Nevertheless, given historical performance records of government owned enterprises in Nigeria, faith and confidence in the new enterprise is low.
However, by learning from successful models in Nigeria and across Africa, and by committing to genuine operational reform, NNPC Limited can become a true engine of national prosperity-delivering value not just for its shareholders in government, but for all Nigerians.
