The question facing investors now is whether this attempt will be any different because this time the numbers behind it are hard to ignore.
President Bola Tinubu told the leadership of Nigerian Exchange Group on Aug. 6 that the NNPC would eventually be floated on the bourse in its entirety, reviving a listing promise that has hung over Africa’s biggest crude producer after the idea was first documented in 2016 and a 2021 law ordered it.
The Federal Government first planned to list NNPC on the NGX after concluding reforms in the country’s petroleum sector, according to the draft National Oil Policy submitted to the Federal Executive Council (FEC) in November 2016.
“We will do NNPCL reforms to the extent that one day the totality of it, not just arms and legs, the totality of it, will be listed on NGX,” Tinubu said.
This development comes at a time when the bourse is among the world’s best-performing markets, boasting a 57.8 per cent return this year alone.
The mere prospect of an NNPC Initial Public Offering (IPO) has injected fresh optimism into the market. Market capitalisation stood at N158.51 trillion as of the trading week ended Aug. 7, up from N158.28 trillion a week earlier.
“President Tinubu’s affirmation during our engagement that NNPC Limited will be reformed and listed on the capital market is a landmark moment for Nigeria and a significant response to the priorities we presented for translating the strong performance of our capital market into broader economic development,” Temi Popoola, group managing director/CEO, NGX Group Plc, told BusinessDay.
He said the listing of commercially viable government assets, alongside greater participation by leading Nigerian companies through domestic or dual listings, clarity on the capital gains tax treatment of listed securities, and greater use of capital market instruments to finance infrastructure, can significantly deepen capital formation and strengthen the role of the market in national development.
“It forces transparency through mandatory disclosures, expands market cap and liquidity, deters corruption via public scrutiny and democratizes wealth for retail investors,” Brown said.
NNPC’s importance to Nigeria’s economy is difficult to overstate. Every oil company operating in the country, foreign or domestic, is required by law to run its production assets as a joint venture with the state firm, which manages Nigeria’s share of the proceeds.
That structure means NNPC’s leadership, its balance sheet and its credibility with international partners ripple through the entire industry, and through the federal budget, which still leans heavily on oil revenue.
For Tinubu, Saudi Aramco is the acceptable standard for NNPC’s IPO.
“The expansion is all for us, and I could look back and look at Aramco and others and see how the oil-producing company of Saudi Arabia was, the life of a publicly quoted company,” Tinubu said, pointing to Saudi Arabia’s state producer as a model.