Investors will scramble for NNPC shares, says expert

The profit declared by the Nigerian National Petroleum Company Limited (NNPC Ltd.) will spur major investors to take advantage of its Initial Public Offer (IPO) when announced.

Dr. Sand Mba-Kalu, an economic expert, said this in an interview with the newsmen on Sunday in Abuja.

Mba-Kalu, however, said if the NNPC Ltd. delayed in announcing the IPO, it might create uncertainty.

Mba-Kalu, is the Executive Director, Africa International Trade and Commerce Research (AITCR).

Supreme News reports that NNPC Ltd. is yet to announce its Initial Public Offer (IPO) after transitioning from a corporation to a limited liability company on July 19, 2022, as provided by the Petroleum Industry Act (PIA 2021).

An IPO is a public offering in which shares of a company are sold to institutional investors.

The NNPC Ltd. disclosed recently in a media briefing that it would announce its IPO once the shareholders and NNPC Ltd. board finalise on when shares would be sold.

“We will see how things unfold in the coming days as investors monitor the trend and scrutinise the financial statement and strategic plans.

“One has to be mindful that Dangote is now a major player, so there will be strong competition.

“The Dangote Refinery’s large-scale production capacity has already brought dynamic competition into the Nigerian global oil markets.

“This will definitely challenge NNPC’s dominant market share, particularly in refining and downstream operations,” he said.

He explained that the viability of NNPC Ltd.’s shares could be strong, but considering the harsh economic situation, most Nigerians at the bottom of the pyramid might not be able to afford it.

However, the expert said that with the declared profit, major investors would take advantage of the opportunity for the IPO.

“Another important factor is that the Nigerian regulatory environment will play a crucial role.

“If the government continues to support NNPC Ltd. through favourable policies, it could enhance its shares’ attractiveness.

“However, any unfavourable regulatory changes could pose risks,” he said.

He said major investors were increasingly considering Environmental, Social and Governance (ESG) factors, adding that if NNPC Ltd. positioned itself as a leader in sustainable practices within the sector, it could attract investment from ESG-focused funds.

Mba-Kalu further said that the Dangote Refinery’s operational success could be seen as a challenge or an opportunity for NNPC Ltd.

He advised that if both entities could coexist and cater to different market segments, the overall growth in the sector could benefit NNPC Ltd.’s stock performance.

The expert also decried the ongoing fuel scarcity, which he said was worrisome.

He expressed hope that Dangote Refinery’s production capacity of 650,000 barrels per day would address the reliance on imported petroleum products and change the dynamics of supply and pricing in the region.

He urged the government to also give other small players the opportunity to thrive and be competitive, adding that there should be a fair playing field for all players in whatever value chain they choose.