National Oil Company’s Plan To Sell Stakes In Assets Sparks Reactions

Energy industry experts and stakeholders are of divergent views over reported plans by the Nigerian National Petroleum Company Limited (NNPCL) to divest its stake from multinational oil firms across the country.

Earlier Reuters has reported that the NNPC Limited, is planning to sell stakes in some of its oil and gas assets and has called for bids, citing an invitation document it saw on Monday.

The NNPC owns some assets outright and others in partnership with international oil companies, including Shell, Chevron, Eni and TotalEnergies.

The document did not disclose how much it aims to raise or the size of the stakes on offer, and NNPC did not respond to a request for comment, said Reuters.

While some analysts shared the viewpoint, citing relevant sections of the Petroleum Industry Act (PIA) which provides that the hitherto government controlled firm now operates as a limited liability company and as such reserves the right to take necessary business decisions.

Reacting to the report, a civil rights activist and the executive director of the Civil Society Legislative Advocacy Centre (CISLAC), Auwal Musa Rafsanjani, expressed opposition to the planned sale of such assets.

According to Rafsanjani, the lack of transparency by government in divestment and sale of public assets has been clouded by political corruption and such assets sold under various circumstances and conditions have been traced to political associates.

He said, going by past experiences, through such corrupt practices those assets are undervalued and sold to those political associates without generating any value to the economy.

“We always reject such plans that are lacking in transparency and usually carried out in questionable circumstances. These are public assets and should be protected and treated fairly to ensure sustainable economic value to the public and not sold under any circumstances that are unacceptable” he articulated.

However, on his part, the chief executive officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said, the company, under the law, could  exercise its right to take calculated business decisions to either sell part of its stakes or assets to generate liquidity than borrowing.

Meanwhile, development and energy economist at Adeleke University, Professor Tayo Bello, told LEADERSHIP that the proposal is a welcome development. He said, the proposed divestments align with global best practice if properly executed. He said, from an economic standpoint, portfolio optimisation makes sense. “NNPC should focus on assets where it has comparative advantage and free up capital tied down in underperforming fields. However, the credibility of the process is critical. Investors will only come in if pricing, governance and regulatory approvals are transparent, ” he stressed.

Bello added that, proceeds from the asset sales should be clearly ring-fenced for reinvestment.

“If the funds are used to reduce debt, invest in gas infrastructure or boost production, the macroeconomic impact could be positive. Otherwise, it risks becoming a short-term fiscal fix,” he stressed.

Also, energy economist and industry analyst, Dr Kayode Adeniran, described the move as a reflection of structural pressures facing Nigeria’s oil sector. He said, “Nigeria is struggling with production, rising costs and reduced international oil company interest. Selling stakes could attract technically capable operators, especially for marginal fields that NNPC or IOCs are no longer prioritising.”

He however cautioned that asset sales alone would not solve deeper problems. “Without addressing security challenges, regulatory bottlenecks and contract sanctity, new investors may still hesitate. The divestment must be part of a broader reform agenda, not a standalone transaction.”

As a limited liability company, the NNPCL could diversify its business portfolio, expand business operations and can do so by raising funds through sale of assets that can help advance its growth and operations.

The NNPC had previously outlined plans to sell at least 25 per cent of the equity it holds in select oil and gas fields, either through full divestments or stake reductions, as part of a portfolio optimisation strategy. Oil sector unions opposed the draft plan.

According to the invitation document, which was distributed late last week, interested bidders must register online by January 10, after which pre-screening will follow and qualified firms will gain access to a secure virtual data room.

Prequalification will be based on technical and financial capacity, followed by document evaluation, negotiations and regulatory approvals.

LEADERSHIP reports that PIA 2021 mandated the transition of the Nigerian National Petroleum Corporation (NNPC) into the Nigerian National Petroleum Company Limited (NNPC Limited), a commercially oriented limited liability company operating under the Companies and Allied Matters Act (CAMA).