Let's Talk About The NNPC Limited 2024 Annual Report

Hey, folks, I'm good evening. Welcome once again to another money space with me carlu Aja. On this space, we're talking money, the economy and of course finance. Want to get those topics important and in front of you so that way you can become a better investor and of course a better citizen. And this week, guys, we're talking crude oil, NNPC and energy in Nigeria. Right and just

Hi.

You doing, sir, it's been yeah, yeah, thanks for always being there where. We don't need your expertise. We do have preducting and not taking for granted. I mean we don't do a quick introduction and then we can just have that conversation of the fastide conversation that we usually have.

It.

It's gonna be a day right now.

That Yeah, but I have a few hats where you know, my name is Kelvin. I consult for.

The government, the national summary side and the executive side, a few companies in private sector, and the few concerns in business as an entrepreneurs.

That that's somewhere gotcha. I mean, we'll take that. We'll take that from you. Kevin will tear from you. So Kevin, Now the backdrop is the four n NPC and our report. But before we get into that, could you just get an overview. Lots of stuff has happened, new laws happening past. I see the GDPs being world because of COULDE oil.

We've got some.

Gas headlines that have been very very good. Even though Dan go to side dang whatte wants to increase output? I heard his bringing into the Americans to do that for him. We'll just give us an overview of the milieu of the Nigron energy ecostom. What happened, what should we put our eyes on? What should we looking out for in the total ecosystem.

As it were? Come A very good question you know.

When the president changed the board and management of hopes are very high in the April that this was finally going to be the.

Beginning of the new year. I remember somebody who is like a senior. We're having a conversations a countment.

This is the final act, this is the last chance that the entity has to actually turn the connor and become the pill in the backbone.

But the biggest problem I've seen that NBC.

Has today is the governor's problem. There's a serious governance problem, and that cascades into all the other issues I had. And the governor's problem is that the State House, the State House, the presidential villa as the seat of power, and all the other people who surrounds the corridors of power, they just do not want to let go of NNPC. And I've said this openly to the government. I've said this in private meetings. I've said this on TV interviews,

Go of n NPC.

The only way to save that entity is to let go of it. Let go sending directives and memos nmpcs limited level company, we have no business taking instructions from the villa.

It's not that a corporation. It's a limited liability company.

The situation where you have membos coming, you know, every week to a limited liability company, it's it's absolved. It's absolved because by organizational structure. If you see the appointment letters, the two appointment letters, because there was only one that was made known to the public that was flying around on social media, you see that what you're do as the coordinating us of the economy who actually signed.

Off on their letters of appointments.

He was the one that signed up, which means that a NPCE is supposed to report to a beneficial owner that is the Ministry of Finance Incorporated. And in the proposed amendments of PI it says that I think sections either sections seven, nine or that six.

If I'm not mistaken, it's going to be amended.

Mistruct Patrolum corporate type will be collapsed and MOFI will get full one hundred percent control as a beneficial owner of an NPCY.

On behalf of the Federal Government of Nigeria.

So for me, I have but a loss at how you still send memos and give directions and orders to a limited liability company. The board and management are supposed to report to the shareholder, and the shareholder is a beneficial owner.

That's Mofie. Mophi reports to the minister.

The minister reports to the shareholders, and the shareholders now and not just the presidency because the federal government is just one of the shareholders. The federal government of Nigeria is different from the federal governments.

A lot of people don't understand the federation Federation.

The federation is made up of the federal states and local governments. So the shareholder is not just the presidency. The presidency represents, you know, the federal government, but you have the states, you have the local governments. So it's not the job of the presidency to give orders the limited library to the company and break that chain of command in the organizational and governance structure of the entity.

That's the biggest challenge that it faces today.

So I mean, that's that's that's the key one there. In terms of like you said, n NPC is still under the the we've done the pay per change, but operationally it's still an at m of the quote and quote presidency that that is fantastic. Do you want to turn into the report now? And the last time you were here we talked about the a k K. I'm still wanted their upjects on that. I saw a report in the papers that AKKK had crossed the river and was now sort of like in has now started to

The pipeline.

You know, obit three fits into AKK because obit there is supposed to provide gas goes from the southern side in the those states and then from the eastern side you know river states, Aogo across the River Niger. You know, they did resumed our directional drilling what is called HDD, and we're able to cross the river Niger. Finally after spending a shiploads of money, the AKK projects that links they will be three down to.

Cannon. You know, they're still working on the Cardinal leg I think they're not done yet.

Is one of the most expensive pipeline projects I've.

Seen in the world, has four point two million last parkilometer.

It's it's double what it costs to even build an export pipeline. You know, I think last time I was we're talking about pipeline construction costs, and I mentioned that when Russia was going to build there was a practicship between the Russian government and the Chinese government rose Nefts gas from and SNOC. They built a five thousand kilometer pipe from Russia through Siberia and Mongolia to China to take the expot gas from Russia to China, and they

Process at four two million dollars parkilometer.

You know, it's the most expensive pipeline project for six hundred fourty kilometers.

But is their progress on it though, So we're moving along. The is going to get this gas.

The most difficult part of that was the crossing of the river Niger, which they've done with horizontal directional. Really that's the most difficult part of it. But then you still need to inject. You still need figures to inject into those pipes and ensure that.

There is.

You know, up time for the pipeline and there is high pressure of the pipes.

To supply gas.

You know, there's going to be a pressure metery and reduction station Gogalada because n NPC has an I p P which Chinese EPCs that is building an IPP in Goglead.

You know, gas and power parts of an MPC wants to go into business. Yeah, yeah, I don't know about midle Gree, you know midle Gree. Yeah, it's in terms of security is just better than what it was when years ago. But I'm still you know, I don't know what the security situation is and how that to affect.

Because you know, brandies keep vander and terrorists, they keep vanalyzing power, power lines.

And transmission infrastructure in the Barner States. So I don't know how they're going to manage with that.

But I think the addition of an IPP in Abuja is really going to beneficial for ADC, you know, and.

Part generation in the city and surrounding areas.

And you know, I've always said that the power business is one business that NNBC has what they call a comparative advantage with because of.

Gas, you know, but it needs to build the pipeline.

Infrastructure, you know, and they needs to also be a serious round table because you know, the bonds that the government set up to pay the part generating companies, I think over for trillion NUR they hit an impasse. The government is asking the generation companies to write off nearly two trillion night of the moneys that were that they claim have been old.

You know, the power companies are saying, no, that you're not going to write it off.

It's going to set them back, you know. So thats it an impass and call. If you look at the power if you look at the power value chain, you know, you see that there are several issues There are several issues, but there's a major issue with pricing for gas, pricing for power, and theft, theft, commercial thefts, technical losses. Right, Nigeria does not have strong legislation and enforcement for people who still power deliberately. Number one, there's issue with technical losses.

Then there's the issue of pricing for power.

You have a situation where for band by two d in Nigeria, for example, it's about thirty four cents pack in Roberts. You know, this is a political issues, so I don't like getting into it because whenever you bring up this issue and you bring up the economics of it and the reality of the economics of it, people are always very in their feelings.

I don't blame Nigerians because the Nigerians.

Are going through the ricer The economy is tough for a lot of people. A lot of people cannot afford to play house rights. You know, people are struggling to eat, people are struggling to do basic stuff. So you know, they have a right to complain about increasing power courts. But the reality on the ground and this is this is the result of inflation and effects revaluation and how that has affected the price of power over the last five to six years. Is that par are thirty to

To pay for gas, it also means that the aggregators will not be able to meet up or have.

An incentive to invest or sustain you know, maintaining high pressure on those pipes because you know, gas goes through processes. For onshore gas, you have to if you're not rejecting it to do well optimization, you're trapping, you're selling it to know, to calibrate pressure, you're selling it to central

One way of the PI gas is two.

Dollars tatisents par and standard keeping fit pipeline transportation because it's one dollar tatan sense per standard clibic fit.

So you're looking at anywhere.

Around maybe thirty dollars sixteen cents per standard cubic fit.

You know.

So these three problems are the major problems for power. Now, if you come back to the issue about NNPC IVP, my biggest worry for an NPC going into power, which is a very good business for them and they.

Have comparative advantage with, is how can you manage these.

Financial modeling issues and structural issues that the government lacks a political will to address because it's afraid that if it goes ahead and says that we're.

Going to increase the price of power, there's.

Going to be a protest for good reason, because the government has just carry reckless.

By the way, you know, all right, all right, so let's look that that's a good way to introduce the whole topic. Let's go into the NNPC report. You know, as a bit civilian, right, I look at this report. I see net income at five point four trillion David and four point three trillion any esper Shure twenty seven. This is better than any results I've seen from Nigerian banks with angles cement anyone. You know, natural grass production

You know, if you look at the coastal sales you you will have a good lave. Yeah, you look at the custom sales.

For that's the that's the that's the good one first, because there has something good?

Is there? Is there a good one? Is there a good one?

Saying they did that's a billion dollars in sales? And then you did about seventy four percent cost of income?

You know, so five point four net income to you? If I mean I'm pining doubles advocated. If if a drunk company is doing five point four net, let's just cash to the John Federation for the five trillion.

It's it's colors, it's it's it's insane.

It's okay from five trillion five point four percent for five point four trillion nine especially when you look at the cost of sales, it doesn't make any sense. And really it doesn't make any sense. It's because and I'll break down the cost of sales, you know, from the cost of sales. When I break down the cost of sales, you begin to see all the loopholes and see all the issues.

And then I will try to do an X ray of day of.

The group, the major areas of the group, and talk about what I've observed, what the holes are, you know, and how I think that this financial statement is just is like complete window dressing for a very very horrible and.

Bad situation that they have. They deleted this report for.

A long time because I'm aware this report, this a non financial statement, has been ready since July August, and it's been delayed until now.

And I don't know why it.

Was delayed until now. You know, if you if you look at flu station expenses CALU flu station expense first of all, in twenty twenty four, I think I'm not exactly sure, but total crudeoily lifted for all for all the operators JV Partners, PSC Partners, JV Partners, Direct Producing and NPC FTSA to crudely lifted.

Was around five hundred sixty six million barrels.

And an MPC says that what it lifted as a share of that is turned round two point three million virals, which means actually be net of royalties and tax oil.

That's what it says, Okay, calub The share of an.

MPC on a cumulative average basis, if you look at it, is anywhere between around fifty third point six percent growth of royalty and tax oil. So how are you lifting two around two point thirty million virus from five hundred and six six million.

Viruls of crew. That's the first question I have for them as a first question.

So essence in essence you are seeing the lifting is when I getting the fee income or listening is the volume is too small? Ultimately very the volume.

Needs to be orditaied your general or federation of This is job. This is work.

This is job of your general feduction to look at it properly, to review all the contracts and not just rely on the accounts for REGI revenue generating agencies or the accounts. Is his job to look at it properly, to do a thorough forensic audit. Look at the calibration of the lacked units, these accountability costly transfer units. Look at all the flow bitters, flow stations, look at the

It's ridiculous. That's the first question.

So the question is you ask, is what they are reporting?

Is it actually what it is? That's the first question.

If you ask number two, even at what they are reporting fine sixty six.

Million barrels two hundred and two point three million.

Barrels, which should be net of royalty oil to the UPRC that goes to the Accomptient General of the Federation.

Lets the cost of.

The management fee for UPRCY and then that's oil that goes to federating narvenue service. Yeah, is it what actually is due to the fedration? That's the second question wh you ask number three calub all crude.

Oil that is due to an npc PSC oil JV.

Oil direct production oil goes training EMPIACE trading and this crude that goes training EMPISCE trading, a commissioner, a fees charged per for trade minutes, whether it's.

Going to dangle t Dangote is paying.

Dangote is paying an average of two dollars perblate bar barrel as a separate fee outside of the cost of the crude oil on the global markets. And which is what he has always complained about that how does it make sense that n MPC is a share role that in my company you have seven percent if within the company you're still selling cruders the million dollars.

And attaching his he an extra commission.

So emphasis charging itself invariably.

You're charging yourself invariably.

Yeah, and then the crude oil. In fact, in fact, on this issue this year, the Chief Commission Executive NUPS intervened and asks an emphasis trading to cap the commission it charges.

For barrel to fifty cents. They did it for you. Well, then they reverted.

So if for example, you're charging an average of two dollars for barrel for trading the crude oil that belongs to the federation, it means that on two hundred and two point five million barrels, you should have ended at least at least four hundred and four million dollars at

Right, where is the.

Commissions end on crude oil traded for the oil that belongs to the federation. Why are they not paying pacts on that commission?

Less there their expenses to the Nigerian government. The same thing goes for the for.

The other companies, the all the IOCs, the independence you know that are listing oil from Nigeria then gooting for example, the same thing. In fact, it's even how if you look at the cost sheets for the different blends of crude, there's evenly a blend of Coude Bunger on Bunger crude. Yeah, it plays about five dollars twenty cents per barrel as commission separate commission, which means that if he's buying one million barrels of bunger's paying an extra five point two

How do you now classify that in your what's it called your.

Crackspread like you imagines as a refiner when you're going to translate it to pricing in the local markets, how do you not translate that extra commission into the markets.

Okay, let me ask a question. Let me ask a question. Eler this year presenting both said that the c minster who was it the CBN should take over the revenue returns from the n NPC that felt like they should report to the CBN. I think it was this year he said last year. Does that have any beer into this numbers? We are seen.

How many how many people in the Central Bank of Nigeria, you know in hair have the technical depth and knowledge of the oil and sector and actually have people on the ground, so they are they are live because they're as.

Good as it's what an MPC gives them that they will take.

That day on the ground to see what is going on on the ground. At day on the ground, If an mp says this is what came to us, that's what they would take. That's why I've always said that the government needs to set up and account the firm and miter and and creates its end to end for measuring output on a daily basis. Really you don't need

It's so it goes into your revenue structure automatically.

So the question I have for you is.

Does the city and have people on the ground to actually measure and say this is what they give us in payer reports and this is what is on the ground and the comparison it matches.

Do they have people on crowd so it's what they give them that they take.

Okay, so you've talked around the report's let's go where do you want to go to next? Because we skipped to five. I'm reviewing the constant you know, Okay.

Because you know, because you know you say, say they do for the five trillion, for five six trillion.

Gross profitable twelve point something trillion, then.

The dimlet of five point four, and we have things like flull station expenses. You know, I wouldn't want to start going and breaking down all the things line items are goes into managing fuel stations, you know, but one point seven billion dollars as flull station expenses two.

Point five trillion in the coating dollars one point one point billion dollars.

What do you have here as full station experences is two point five trillion There for three hundred and sixty five callent, that is for managing one hundred eighty seven full stations. And not all of them are I SIS. Not all of them are in SIS one of that it's seven flu stations. What you have here is two point five three and which which is the equipalent of one point seven billion dollars on two hundred and two.

Million barons of code. Okay, I just want to have you have direct well expenses.

Now, let me explain.

Direct well expenses are expenses on producing wales from Wales that NMPC goes on represents that it has FTSS on because NMPC has a company does not have the capacity right now to drill crude and trap gas by itself, so it goes through contracts and brings in companies through what they called Financial and Technical Service Agreement ftss YEP those direct will expenses.

N MPC said that in twenty.

Twenty five, twenty four it spent two point five trillion.

Nine on direct well expenses. That's another one seven billion dollars.

Do you know what it was before? So we can have a context to the numbers, like if it's one point one billion dollars and the world doing maybe two hundred, then we know it is high.

We don't have to look at what it was before. What we have to look at is how many blocks do they have? Does any p L from my MPDC has direct control of that they are classifying direct well expenses on yes, And then we go to the technical engineering site and say these are.

Planning items for you know, managing wells real time. You know this is a benchmark for other places.

You know, the terrains are different, so it's not going to be the same because of producing in Nigeria or managing the weld in Nigeria is not going to be the same. But because of managing the well in Guyana or in Texas, they're different. Nigeria is moical terrain. But even at that, you know, if you do benchmarking, you can almost always tell if this costs are reasonable or not. How much crew that you produce it. Any pl is not doing more than fifty.

Thousand barrels a day.

So are you saying that you spent the more for seven billion dollars on wales that are opposing more than tow hundred fifty thousand barrals a day?

Does it make sense? Gotcha?

So the volume is down, but the cost of managing those wells is up or staying up. No less the cost is up.

You could could.

Handling and pop charges. They said they spent one billion dollars on crude handling. The handling of coude and judges are pots. If you do a breakdown, you your time will not permit us. So or you know, these these days are very technical. These numbers does doesn't make any sense. It just doesn't make any sense because they are they are benchmarks. There are other companies around the world doing the same business and empth is doing and they have benchmarks.

They actually doing it for audit or they're just following you know what you give to them. What's the job of an auditor?

Gotcha? Okay, So I have a question, John when I don't know when to ask. It's about the investment of an NPC, but I let you continue. But I want to come back to an NPC investment and refineries if you may, but I'll let you finish. We've talked about I look at pipp cost.

Oh five you know.

I you know because I look at the cost of sales. It's high for me. But I'm not an industry guy. I saw what I just picked entertainment. The entertainment cost is more than the cost for host community. That's one thing that I saw that I er point five billion a month. Look at it's more than it's more the host community fund. Yeah, I saw that, and I was like, doesn't look too right. I mean, whose community where you

But that's just me. I'm not upr as.

The Obstume Regulator has not done a lot in opationalizing the whose community Development trusts.

They've not done a lot in doing opationalizing it.

What should they do? The law basically says they pay to a fund, correct, then the fund that the host community then sort of invest in the fund.

Right, there's there's a corporate governance process protocol that is stated out by law that the communities was fullw So to be fair to NPR, I would say I also say some of.

The communities are difficult.

That's if we're meeting up.

Dens and conditions of getting those funds in finite to them.

But as irregulator is their job on a daily basis to ensure.

That there's compliance and there's.

Coordination is their job, okay, Because if you don't.

Drives com meeting them with the comporate governance protocol required to have their city funds paid, the money is will pick with the operators, gotcha?

So essentially they they have to send the money to the fund and then sort of push the host community to serve the whole corporate governments where they have a board and then start to invest this money. Is are just lying down with the international oil companies and an NPC. I'm not sure how many host community funds are operational. I know if you are. I'm not sure how many are or who regulates them to say it? Can they be an annual report that reports on all these host communities.

Yeah, they said they paid gas player penalties of one point third trillion.

Dollar in there.

So the gas player penalties goes to the obstream reglata in pairson, So is the job of the General Federation to check with an u PARC and confirm that and then paid one point thirty trillion and gas player and permit the penalties. Then PRC through the Office of the Camperal Federation. That's the job of the Auditor General to confirm then the preciation of a gas properties over time.

They said that took three point two trillion.

Nine But I'm just saying trillions. Let me ask you a question, so as asked me now and this is this is germane the five point four Where does it go to?

The five point four is supposed to you know, net profit is supposed to be paid to the show that that is the federal government of Nigeria. The question is for the accountent general operation has been paid, that's the question.

But if it's paid, it goes to the states.

They remember instead three point two trillion and profit they defrad it for what the government was doing.

The remember, Yeah, we're coming to that, Kevin. That's the next topic. Are coming to. Like this question is so that five point four, if it is paid, it goes to FARK. It's supposed to go to fac Okay, okay, supposed to go to fac Okay, Kevin, Let's come to this question. Is there a subsidy is still being paid? If you read the report, there's something there's seven points one trillion or so, it's not it's not the security

Okay.

So what they're saying is that when they import crude oil, they assume a price, maybe if you dollars a barrel, but when the crude oil or the PMS or whatever it is important, it's then so to the off taker it assumes a different price. The difference between the import price and the price assumed by the off taker is this seven point one, No, eight point six trillion eight point six So please.

Explain that to us. Please, there's nothing like that. There's n NBC is not important crude oils. They don't have a need import crudoid. The competity that has been importing crude oil and has been important up to.

I would say he's been putting up to eight to nine million.

Barrels of crude in the last year is Dangute fifty of the crude oil imports into Nigeria and he uses finder is important into Nigeria, okay, and he spends about maybe ninety ten million dollars in handling costs and then fees to MP, the Master and the likes on a monthly basis. So NNPC has no need to crude. The Vendor Financing Program was terminated late last year because the government collapsed.

The markets had.

Decided to you know, activate sections two five of the PI on prising PMS according to market forces supply and demand, which was the removal of on the recovery or removal of subsidies like people know right.

NMPSC says that the profit.

From two in three was not basic the government because they used it to defray what was owed to them from Vendor Financing Program and the STP So what differential.

Are they talking about? So what is this thing?

Then it's in the report?

Is eight to you?

Let me explain it to you, calum, Let me explain it to you.

Three hundred and twelve thousand barrels of crude on a daily basis in the daily crude allocation goes does not go to the federation. It's supposed to be the subsidy servis and A've said this. You know, I'm not afraid of anybody.

I fear God. I'm not afraid of anybody. I'm not afraid of anybody. I fear God, but I'm not afraid of anybody. Let's where we don't have institutional integrity is Nigeria.

We don't know how to tell ourselves the truths and that's why Nigeria is not moving.

Forward because we don't like the truth.

Three hundred and twelve thousand barrels of crude on.

A daily basis in the crude allocation does not go to the federation account that is supposed to be a subsidy savings. So where's it going to? This is a question you have to ask the government.

Because this was this talk.

Out of the phone round for five thousand barrels of crude interventional stock that they were using for under recovery payment on subsidy.

Yeah, that is not being saved. So where is it being saved to? Why is it not going to be constantly.

They revenue from?

Why?

So where's the money is the question you have to act the government. Is this eight point six trillion?

Why?

Why are you paying the one hundred and ten thousand barrels of cool daily to militaris for pipeline security.

Why no, is that what that is?

For sixty there's a seven point one trillion for part and it's a bit compute. Let me let me share with them.

In twenty twenty four, that's pipeline security fee was seventy.

Eight thousand, one hundred sixty nine barrels day.

Twenty twenty five has been in crystals one hundred and ten thousand barrauls day.

So the question is when you have the navy, you have the DSS, you have then NSCDC, you have the army. You know you have the efforts.

Why are militaris collecting one hundred and ten thousand virus of good day for pipe.

Person seven point one Australion.

So this is a question you have to ask because NMPC is not important CREUS. So there's nothing like export differential and import differential and price that comes to price.

That you give to There's nothing like that.

So what is the g security?

What is it?

It's in the annual report.

I'm giving you pointer as to it. I'm not making any inference.

I'm giving you pointers and I'm allowing you and everyone who is listening this evening to make a conclusion.

Why are you giving crude oil to million times with pipeline security? Why?

Hmm, So there's this s So let me just see what I what I'm hearing you saying. We had this subsidy arrengement before where we took this one hundred thousand barrels and that was our on the recovery payment. Now we have stopped subsidy, but that's one hundred thousand or so barrels have still not gone back to fuck? Am I correct?

So far it is not gone back to fuck?

Okay? Then in the annual report back hasn't gone back that?

Why?

Now, that's why the government is running through the concurreent projects and Billy.

Has up to fifteen percent of his proposed Kate pegs from the project.

Interesting, okay, so that's that's number one. It hasn't gone back to fac Number two, there's a pipe lying payment numbers perits and energy security whatever payment is in the annal report, the pipeline payment. And it's a bit confusing because I see seven point one, I see eight point six. Are they saying that the pipeline thing is the energy security or it's It's not very clear to me as just looking at you as a numbers guy, I'm really

So what is this?

I mean, it's in the annal report.

What is it?

They're signed to say something. That's why they put it there.

You see, this is why we don't have a cultural thoracic or this in Nigiera. We don't have a culture of forensic audits because if you bring a forensic auditor, you have to.

Provide every day and explain.

Okay, you know every items you have in your AFS, all right, if I'm.

Giving you pointers and pointers, okay, where where is going to?

Okay?

Ken, Let's also go to the other part of the front loaded income that the government has done, the financings, the Ego, the Leopads and all that. They are all there. In essence we have sold oil in advance and then we so we're paying them crude oil. But with created money today. What's the impact of impact of that? What happens if oil prices go down to say fifty five or fifty what happens? I mean there are many of them. If you reports project Leopad, Project EGO, Project this and

So in this.

Forced the agreements some of val you don't forking billion dollars. There's not a lot of five billion dollars in the pipeline away that when a hundred one hundred thousand dollars of crew is going to pledge, I don't want to give more details on it, but if that comes true, it means that you know, some of the forced agreements, payments are maturity are expiring, rounding them off, and nums are going to pick up. It means that more crew

That's what it means.

Well, why would it be a for dividends. It's still a sale. It's still a sale, but the money has been taken today.

No, you know that.

What I'm saying is if you do for cel agreements and you you know, give the cruder to a trader, that meant to the banks that.

You're owing money for the for the period of the loan. It means that that dividend doesn't come to the government.

Let's the management fee, I say, then he charges, but on.

The price of crude and the risk of you know, we had the situation some months ago where crew prize drops below sixty dollars, came to about fifty four fifty five pulling back up because of israelservation of Gaza and a round. We had a stitution of months ago, and what happened was.

I saw.

Sheets of about seventy two million barrels of cruder that was stuck that we are located to be lifted, but the companies refuse to lift the crew because for some of the crude, the price of the crude have dropped below.

The strike price. So typically when you start.

For as with agreement, there's always a strike price at which you dh against risk. So if you say X, Y and Z bank is lending thirty billion dollars to a busy corporation.

In Nigeria, they will want to pin a price and say that below this price, I will not take the crew.

If I take the crew, you have to provide more crude to match up the prevalence of that price, that that traget level, that strike level. Above this price, I will take the crew or the different shout and between the strike price.

Okay, let me be more practical. If the strike price is fifty seven dollars or fifty six dollars.

If the price of crude drops below fifty six, they will not take the crude. It will be held at what they call the come. If they take the crud, we have to give them more barrels to match up.

The fifty six. Right.

If the prize of courses above fifty six, that different shot between the strike price fifty six and whatever the prize of crude is, say the prize of crew sixty five or seventy, it will go into a death sevice reserve account operated by the borrower.

So on.

For stele agreements, well, one of the questions have always asked. For example, on project As, a strike prize was anywhere between fifty seven and fifty nine dollars a barrel. Crudinal prizes were steadily above that level for the longest time. What did the government do with the differential between the strike price and the current market price open market creates. They had also the services of account that was set up with the barnas.

What did the government do with those money?

Why was it the National Assembly placed the copy? Why when those money is appropriated.

By National Service? Unknown to the principle of suspere Because.

Because it's revenue right in essense just upon a standard then just says that any revenue you get has to go to farcident is shared by appropriation by National Assembly. Mister Buhari and mister Tinerbo have dodged this by doing they basically go and create a fund, then pay a dividend or a fund into that fund, then spend from

Okay, exactly. So it's like an excess crood account. The only difference is that this express cool account does not have Sydney trees. The think God knows no seccares to it. Okay, you know, like an excess fool account. However, now they set up these accounts. They have a fancy there for it, dead service reserve account there. Sorry, and it's always off show. So your guess is as good as mine.

Okay, Kevin, Let's go to page I don't if you look at they go to page ninety nine. You see this loan to subsidy area. I don't know if you can see that.

Just shaowed.

If you want to follow I just say it on Twitter. We see loans to loans to n NPC Energy Service limited and serve. We're giving it an energy and serve one seventy four is that that would be a billion? But we're getting this money from n n P C E P N E p L. We're getting one O four from ny P L and then from the wheel. Okay, so what is n n PC Energy Service and Serve is according to a report here above us here and serve let.

Men, page ninety nine, page nice nine.

I don't understand what what I'm reading? Just yeah, yeah, just and I showed them on the space on my feet, guys gets on the fall. I've shared the tail on the spacey from the follow as well. Just understand, doesn't it doesn't make that much sense to me? You see it?

So you know n Service is the same entity that.

Is in charge in charge of disposing from the business explorations.

Okay, but let me ask you my question. So if you look this this this table is called loan to a subsidiary. So you see we're borrowing one hundreds we're borrowing money from n n PC, E and P E and P are going to n n PC. If you look at bob E n P is sales here you too, sales. I don't know where I laugh it sales of crude and back charge of expenses. So n n PC e and p hear me again, sales of crude and back charge of expenses. But we're lending it to NPC Energy Serve.

What is n serve?

Let me mean what end service back charge of expenses. So you are borrowing from back choror of expenses and you are led in to back chor of expenses. Doesn't make sense to me.

Explain something, you know. One of the reasons why companies have boards is they come up with.

You know, not just a strategic direction, but they come up with rules the management must play by.

Yes, that's why you have both committees. Correct. Yeah?

Hm, I think up until Musaki that came the Musaki that is beenworking and doing some some good work as the chairman of the board setting on board committees, the management didn't have rules to play by.

Okay, So end Service.

The arm of the group responsible for this bosting Frontier Basic Exploration front I remember from their basin. According to the PI has a share of profit oil and gas that goes into development of six different from their business in Nigeria that will be basing lower penutral you have upper Pernutral which is the core money basin.

You have.

The basin around the whole core. Yes, you have the chat basin. You have the Socoto basin.

Six business. Now the you have three different business that Melod focused on.

You have the core money, you have the chat business, lower chat basins, in jury, local government and barn the states.

And it does I've forgotten the name. Now, then you have the basin the one and nas how the hay. So if any PO say that they're luning money to.

Service and anomally because based on the PIA, a section of profit orlandas goes into the frontier business exploration firm and that fromdly supposed to have billions of dollars in it. But what that backchat means is that any PR is saying they did some exploration and production activities right on those frontier business and that there there's a back.

Charge from that. Okay, but what why is it business exploration front.

Okay, So you're saying that the n n PC Energy, So the guys that give them the money is n n p C E and P.

Limited Exploration and production limited.

So so the guys in billion are lending money to the n n PC and n serve kind of You know why I.

Talked about the board when I was starting, I started answering your question. I talked about the board and board certain rules of management because I wanted you to know that it's an anormally for any peer to be lending money to n considering that base on the PI a percentage of profit oil and gers already goes to front their business exploration.

For that NCEPT manages.

So it's an anormally because NST is supposed to be liquid.

M hm. So any peer lending money to answer this non normally mhmm.

So both I'm following the drift. I do, but again, and I'm talking about.

Money to n.

Because NCEFNCET brought in contractors, it paid money to do what they call exploratory drilling on those business the basic injury local government, the basin between Bouchier and Gone with money to the basin.

They brought in consultants, sorry, companies to do drilling.

So where is any PO back charging. And just to be clear, there's no report doesn't say that NSF gets money to E m P, but it's given money to n n PC and NPCE is giving money to NCF. So it's like E and P give money to n n PC, then n n PC gets money to energy set to NCEF. So to me, it's just a long it's the wrong. I don't know what's going on there. Doesn't make sense to me.

It doesn't make any sense normally because based on the PI. If you read the PI, it will say that a percentage of profit oil and gas goes into frontier business explosion for the development.

Of six business in Nigeria.

Okay, so that was up to BASY the only Basy and lower chat busy if it's up to six okay, interesting, Okay, So let me ask the second question. You're on this page, same page we have the Wheel Insurance. Now, I get that's a simple transaction. The Wheel give any PC money to to they borrow money from it from the Wheel to invest in. I think it's one of those IPPs. I think it's one of the budget the Wheel Insurance Company. They borrowed money from the broad forty eight million from

It's this is this is my point again on both committees.

If you have both audit committees, I'm both risk committees, all of these issues will not happen because there will be governors, proper.

Governors that will guide management. What you're explaining to me a normal list that should not be should not be evident in the group different subsidiaries. I'm not.

And we're here listed as a subsidiary. You know it says loans to subsidiaries listed here.

Why why why do you have?

Why is Annus setting up pernassurance company? That's the first question. Why do you setting up pernassurance company? I'm trying to find exactly what they do. I know I've ready I forget. Why is an NPC setting up an insurance company? Explain the business case to me. You're the expert because because the government is not supposed to approve his license to set up an insurance company, and NBC is the custodian

I'm going to find the exact the transaction. I know they will funded something, but my question for that is just why they are borrowing when they have all this quote unquote p and L profit after tax. Maybe that cash, no profit is not cash. I get that, but I'm just saying that they can gerate all this profit. Why are they're borrowing? Just just a question that maybe that would maybe they will say, oh, I'm going to the pie. They can't. Maybe that's what answered the game, but I don't see it.

So let me come to my.

The NFBC does not have any business as all right, I'm just I'm just asking. I'm just asking you. So I get up and folks are gonna ask to speak, and I'm just waiting for you for a while. Last question, if I letting them you speak, Last question, sir, Page ninety two. The total value of all the front loaded investments, the front loaded sales is about four point nine trill just just call it five trillion, five trillions. If you take Project Falcon, Panther leopard yield Bython.

This is as at.

Twenty twenty three, mind you as a twenty twenty three. Well, I'm gonna page ninety two. It's about four point nine trillions, just a nice five trill as at twenty twenty three. But I haven't added anything that was done from twenty twenty three. This has a cost. Is it conceivable that this four point nine trillion if it is a contract liability? What's the impact of this four point nine trillion with

When you when you structure for agreements, what I've seen so far is that and ither structure for seal agreement which a trading company okay shout trading commodity trader number one, or you can have cool syndicates.

So you have a bank do syndication with a trader. So for example, we.

Do a focil agreement of two billion dollars, the bank is collecting one billion, trader is collecting five hundred million, another one is collected five hundred million, or the bank is collecting everything. So in situations where the bank is the only syndicate, what you have is their point a trader as a collector. Right, they take the crew, they

Management fees and handling fees in that regards.

So in these loans from what i've sym, typically you know, London a bank of fad rates.

Typically for frontier markets anywhere around six percent.

Ban on So Nindria has a country's premium that had in prising these loans when they're doing book building anywhere around thirty four percent sometimes is higher. Were around thirty four percent because the credit rating has improved, which is now b the stable outlook mojsis firms gone from C one to bitter. And then you have facilitation fees, which is strange because I've not seen facilitation fees of anywhere between two to four percent.

Facilitation fee now is going up to four percent, which doesn't make any sense.

So you have anywhere around twelve to fourteen percent pano calum twelve to fourteen percent.

That's the interest that's paid on this on this CROUTE twelve percent.

Yes, project as well was around nine point no project as there was eleven point eighty five percent. When you add the secure DI Finance and Financial rate or libel, you had the country's premium, and then you.

Add the fascitation fees, it came to eleven P eight eight five percent. So CRP has so free was like nine point five.

Between nine and nine point five, the facilitation fee was about two point thirty percent or so.

That goes to consultants.

The consultants and animally the reason why the consultants are a normally because in the book building process there are fixed commissions that are supposed to be paid one of.

Right fixed commissions.

But situation where you have people who will embed themselves as consultants, you know, and they layered themselves into the ending fees.

For the length of duration that facility, then you know that.

You have an Okay, well said, I'm going to come back to you on this because if you look at it, I want to get folks to speak and know Nandi and your mentor and also didn't want to speak, So I'm gonna get him to ask you questions.

But I just have it if a.

Final question for you, but don't answer s just we'll take the folks. There's a page that that answers our question, Section twenty eight Restricted funds. That's on page eighty one. It does say about one point three trillion has been restricted as external funding, and external funding represents the cash balances restricted for funding contractual obligion. Which is a question. I was asking that we're making five point four trillion profit, but it's not really cash because that is profit based

Thank you so much. Kelvin.

Good to be on a platform with you. Good evening, and I appreciate both of yours insights. So first of all, granted I haven't.

Looked at the details in terms of the balance sheet in the P and R of this recent release, it's clear that this is atrocious as far as the MPC is concerned.

It's clear that abnormal season.

And anomalies within this financial and it's even atrocious the fact that we're having to wait almost an entire year to actually get the end of the year results, et cetera, assuming that the physical year ends in December, which I believe it.

The other thing, and Kelvin, keep you honestly here, because.

In addition to these porous results, the other thing that we're getting wind of is apparently according to some kind of senate investigation I think never won Goes spoke to it. There are some missing accounts from an NPC up to the tune of you know, in the hundreds of billions even trillions.

So once to get your perspective on that.

Then the second thing is that there's anutdotal rulers that we're potentially looking to sell interest joint venture interest that we have so liquid dating certain positions that we have in oil blocks and joint ventures.

Once to get your perspective on that.

But the third thing that I have, which is not a technical question or even a financial question, is that Kelvin, you mentioned that governance is the issue as far as NMPC is concerned. But you know, there's nothing in these results and nothing associated with NNPC that we haven't learned for the last forty years, which is that NMPC has been an informal piggybank for various administrations and presidents in Nigeria and the preponderance of our national wealth continues to

Nor willingness to fix this issue.

And the only other key stakeholder that can possibly intervene is us in civil society, which is, we need a people driven mechanism.

To enforce enforce accountability and transparency of an MPC.

And I've reached out to each of you and said, hey, here's a mechanism that I'm proposing. What do you think about that? Because this is the only way that we can stop this hemorrhaging. And the reason why this is important is that, in my research and my analysis and my writings, I believe that Nigeria is three to five years away from complete state failure, which is that the center will not hold.

And will have anarchy in that country. And that's what's happening today.

And we can no longer trust on any institution, whether it's political, religious, traditional, ETCeteras do it. It's us in civil society, me, you, and the people on discord that have to go and do that, and we have to build the mechanisms to do that. And the reason why this is a sailin point is that you know, when Nigeria falls, it's not going to be because of these actors in a n NPC or the political class, et cetera.

It's going to be because of me, you the people on this score who.

Either were too intellectual, intellectually lazy, or uncourageous enough to mount a counter strategy, right, And I believe that we can actually mount a councer strategy, and that counter strategy is that we need to start going after specific people like, for instance, in the.

NNPC example, the management team go beyond.

Your typical judicial process and all that nonsense.

But we in civil society have related powers that we can use to go after them. One example before I get off, is that you know Paulinoso grown Quo, who is was a general manager at NPC.

He was accosted by the FBI because.

He took money from eight Dogs, which is a subsidiary of Sinopec. I think two point one billion dollars that he was wandering in California buying real estate and they got him. We can absolutely do the same thing with so many of these managers at NMPC because a lot of them are dual citizens in other countries.

So even if we can't get them in the Nigerian context, we get them externally.

So where do you stand on this in terms of a civilian, civil society driven approach to managing this issue, because we're all dying from this.

Okay, yeah, just for Kevin ascent. So just to be clear, it's not when that's keb and that's your opinion, right, it's not a guarantee. Nager's gonna figure. I don't want to make sure that I get that out there. You made a comment and said when feels no, that's not it's not giving anything can happen. But Kevin, go ahead, sir, And I mean he has some two questions at the

Please please don't don't mind me. Can you come back and remind me. The first question was about the money. Is that what that are missing?

Then he said sales. He said sale off some JVS, the JB sales.

Okay, on that. On the missing moneys, I think you have to go back to our.

Document that crewe. I want to speak because I have some information confidence. I don't want to brent to the public. I don't think I'm the right person to the details are to senive, to be honest with you, but there's a history of undocument that could the Niger there is a history. I think there's a presential committee and could recovery at National Economic Council that is in charge of that.

They are working on it, but I can't speak to it. I'm sorry for now. What the National Assembly has.

Been improving, I don't know if it relates to the undocument that could, history of undocument that could and the fact that certificate of quantities that were issued by National Printing and Meeting Corporation issues around certicate of quantities. I won't speak much on it. Then, on the selling down of JVS, I think it's a bad decision. I don't think the solutions sell down the JVS.

I think the path forward is for you to.

Solve first the governor's issue as a governance issue. But as I started to turn, I hope on disabling the State House practically breaks the protocol and by at least the corporate governance structured has been certain place. And if you don't fix that governance issue, you can't fix anything else.

You know, settling down the GVS is not going.

To amount And I think they are just people around the corridors of power, mister President that are interested in cashion in on it for trying to pressure to see that they sell jvs and they use t the companies of bidans interests. I don't think it's for the good or interest of any busy for the jervis so I don't think National oppose it.

But Kell then just to play doubles advocating why not. I mean we need cash, not just cash, we need dollar cash. We have these assets here, why can't we sell them to invest in the coastal roads, railways? Help? Why can I see this question?

So? Could you know? I? I said, yeah, I said that the Minister of Works.

It took him having.

An online and on TV battle with Sating of our CV for him to finally come out and grogingly admit that this is the post cost. Is there a system to first of all, or that the cost pakilter is if you put it on the benchmark, it checks out, considering that it's concrete rud Is there a system to audit what is allocated to ten billion dollars that are locating?

No, there is no, There is none. But if if there was, is the issue if the government came with the firmwork and said we're gonna sell JB, it's going to go to a pt F type phone, it's going to be a ring fence, it's going to be audited, and it's gonna go towards projects. Would you be agreeable to that sort of arrangement, Calum.

You know, I think one of the most consequential funds that most of the funds that have been well managed not they don't good job so far, and was what the Lucia Gua Ganga Shamsudinusman former finance minister and Gazio conjury well set up the Sovereign Wealth Fund and it was the kickback. The Governor's kicked back because it didn't want the easy to be collapsed into even if it was not fully collapsed.

But like the revenues are community easy, they wanted to share the money.

But the sovereign well funders so far well even if I think that, for example, in the reorganization of an NPC shelf and NPC should be given to the Sovereign Well Fund.

You know that's that's what oppains and you know.

Saudi Arabia and the Public Investment Fund in Saudi Arabia was sixteen percent of our article, and they get dividends of edwork the two over fifty billion dollars on a yearly basis to the public Investment Fund, you know, because I don't believe that any dividend, however smaller, that is paid to the show that should be spent fully and totally in every financial year.

So the solution is not to sell down the GVS.

Solution is to focus on governors and reorganize the entity to optimize the assets and you know, bringing more dividends and taxes.

So Kelvin, if I may, then what about a civilian approach, because I think it's clear that the government needle not long.

You know, I don't. I don't.

Unfortunately, I don't support some of the suggestions that you've proposed. I am a believer that there are civil ways to handle issues, and I believe that the justice system should take its course.

You know.

I think this is this year, so should keep on shining light on this is use you know, I keep on exposing.

These issues and work with law enforcements, you know.

But I also think that at the end of the day, expect the people in these entities their human.

Beings just like you and I, and whatever the frailties are, is important to give them their dignity as humanlanes. I respect them and allow the system to do his work. That that's what I believe.

Okay, okay, let's get who's mental your mentor? I think you've been next to thanks naming your mentor. You have a question for Kevin, he's dropped off your mental as back. But let's get ox Lay tech Oxley tech. What's the tech going on? Yea, go ahead, yeah, go ahead.

Okay, yeah, Now what in downlow? When an N not an N N N B D and then that would be but you know when when they're going to finally.

Ken, did you hear him? He's asking when when you think they're going to go public you self equity to manajined investors? Do you have any any insight to that? Kevin? I can't hear if you're speaking, just so you.

Can you hear me? Now? I can hear you? Now? Yes? Can you just come?

He's asking when do you have any insights or when an n PC and Dangote are going to offer their shares for for subscription?

Well, I I understand that Dangote is going to come next year. I don't know which would go. If the fertilizer would go before the refinement, the refiner will.

Go before the fertilizer.

I think the fertilizer will go first because you know, Dangote just signed the partnership with them Onnwell to come in and supervise the process, the busy process for the expansion from six hundred and fifty thousand barols to one point form million barrels and build a second train and I will make it the largest refiner in the world, ahead of reliances refiner in India.

So I think fertilizer go before the refinery because they might.

Want to, you know, build the second train and expand the capacity first before it goes off an IPO, so that I can say that in seven you see an IPO from Dangote, but fertilizer that go first, because fertilizer is a separate business from the refinery, even if they.

Exchange fit stock, you know.

So yeah, yeah, Kevin, question for you just in terms of the business case for the refinery and the petrochemical and the refinery step and the petric colon company. You know, the Petri color company is already exporting to America to Brazil. If I came to you and I had a million eira, I mean, which do you think has a there's no word in better, but which has a better business case the petrochemical side of the refinery side, Which do you think over the next twenty five years is going to

So I can tell you that.

Dannetic currently has a three million tons and store capacity for fertilizer intensive resist of nine million tons. And of course you know the fertilizer business is also with all the other regional businesses, is going to build fertilizer. In fact, there's the EPC for the Dangote fertilizer plant in Goodey in Ethiopia in two point five million pounds by or ten million tons from Normans takes two point five million pounds is started in the city of Godey in Ethiopia.

As a matter of.

Fact, the President the Prime Minister of Ethiopia said in twenty twenty five they've planted forty eight billion seeds in twenty twenty five, forty eight billion seeds in twenty twenty five. So the regional fertilizer businesses of Dangote are warehoused in

So I don't mean I'm not the banker. So I don't know how this is going to structure. If the fertilizer business in Ethiopia.

And the other places where there's going to be fertilizer.

Plants around the continent are going to be warehoused in the group. And if when you do an IPO.

In Nigeria and whatever revenues that comes to the regional fertilizer pressures around the continent are going to be warehoused in the as an entity.

You know, I'm going to report to the group, you know. But I think the fertilizer business is very, very big, you know.

I think there's a plan to grow the fertilizer business about twenty million tons around the continent within the next five to seven years.

But however, when you look at the refinery, you know, you Finiti is the kick.

Finari is a kick because if you go to one point four million and barrals per day, you're going to be doing anywhere around one hundred and thirty to five million liters of PMS on a daily business. And you're going to be doing just nearly a hundred million liters of diesel. You know, that dwarfs any any oppressions around the world.

Anywhere in the world, you're going to be doing.

You're going to be doing anywhere around sixty million liters of vivational field jet A one, you know, and then you have other derivatives. You have non transportation feels like, you know, the Dangote has one of the most sophisticated sulfur recovery units.

In the world.

So you know, when you when you refine crude into NAFTA and then you're distilled with the area. You know, in the refinery you produce sulfur because crude oil has sulfur. Even in Nigerian crude has the lower software in the world, you know as zerop and WULL five percide compared to the sulfurs crude from other places that has up to

That is also a derivative for manufacturing. You know.

Then you have tense like petrochemical phystog that is used for polliating in polyvinal pully, propellan crystals, plastics and all of that stuff. Quite in a long list of manufacturing and piece for B to B. Then you have residual few oils that you can put in the vacuum stallation in the processing to base oil.

You know. So the value chain is very complex and it's huge.

So just final question so to hair, Yeah, the head to head.

The refinery business.

You know, in the long run, you know it's going to give you more value than fertilizer. But fertilizer is just as big because one metric tunel fertilizer traits between thirty seven to four hundred dollars for metric turn and there's a huge amound for you, you know around the world.

Okay, just just full up questions, right, it doesn't matter if he's going to import all his crude, Well, will it change any of the return dynamics or he has to get Does it matter if he uses Nigerian crude? Does the arrow eye change it anyway?

So I'll tell you that your crack spread.

Like I said, Nigerian crude about tech four blades of ninurine crude has a lower.

Level of sulfur in the world API degree of mostly thats one point one.

So the level of sulftware recovery is lower than for the crew that you imports into Nigeria.

And the transportation fuels.

You get from Nigerian crude, which are lighter grade cruds, is actually eighty twenty, so you get around eighty percent transportation fuels and twenty percent non transportation fuels. But for cruise that has density that a higher and then the API degree that is lower.

Than tensity degrees that's one point one degrees, you get transportation fuels of like sixty percent and non transportation fuels like betrochemical fit style presidial fuel oils.

Like your what's it called? Now, you know, we're quite a number of those non.

Transportation fuel derivatives. You get forty percent from crude that has had dansity with.

A low IPI degree. So it's just a matter of you know, the company doing.

Is ecologies and asking himself how much how much transportation fuels do we want a crack spread compared to non transportation fuels, and what makes sense a bat time considering that tavier Great crews are actually cheaper than enlighter great cruits.

You know, and you know do this, but it costs money to.

Bring in crude into Nigeria, and of crude costo money. I was speaking earlier and I said that it's on about six hundred and fifty million barrels of crude, sorry you six hundred and in the six hundred and fifty million dollars sorry worth of crude only on a monthly basis he spends about ten million dollars monthly handling constant.

You know.

So these are the variables that we have to look at the situates and look at and put on the table.

I say, okay, on Nigerian crude, you have lose.

You get more transportation fuels and non transportation fuels, but I'm having to pay and avery your third dollar fifty cents as extra commission to buy Nigeria coulde on the international crude is five to six dollarship ad than Nigerian crude because I don't have to pay those commissions that are imposed on me despite domestical supply opplications. But I get forty percent non transportation fuels and transportation fields.

You know, and the level of software is higher which I.

Can convert into sulphuric acid and sell to B to B companies for other manufacturing MMPs. So all these are things that you know, the management of the finite has to sit down and look at and say what mix sens for.

Us, what's the best? But I'll tell you that there's no way in the world where you have.

Your major producer of crude and then your major flagship refiner.

After all, all crude in the world is refined.

What's the purpose of coude or youth is not put into refinities or refined into derivatives. You know, what's the purpose of it? So why do you have a situation where dan Wood has on came twenty billion dollars and he wants to put an extra five to increase capacity and build the secondry, and he cannot sub scrude from his markets in Nigeria and is having to import crudely for vessels to import.

Crude into the country doesn't make sense. It doesn't make sense.

And you don't have a regulator delay in permits sometimes for him to approve permits for him to bring in his products, his vessels to come or move lead Nigeria.

This is a fact.

So did all these are things I want to ask yourself because one of the reasons why he built them around the first place. You know, it was the comparative advantage of Nigeria being a member of I started not being a member of OPET because you know, I've told you I don't see the economic benefits going forward of staying as.

A member of OPET.

You know, Nigeria being the major crudle producer that I've been doing this business for fifty seven years. What's the point of view having a refinery in Nigeria if you can also scrudle in.

Nigeria, does it make sense?

Why will you have a REFINERYEA and then the import crudle for markets in other continents?

Does it make sense? It doesn't make any sense.

Right India, there's the largest refinery currently. Wish is that it's hard crude, which is the reason why you've seen that despite the sanctions on Russia.

You know, two after what happened happened, and with sanctions, Russia was placed on.

An oil price cup of sixty dollars night is reduced for five. One of the things that the consequences of invading Ukraine was that they expelled Russia from what they called the Swift system that connects about thirteen thousand banks around the world. That SWIFT headquarters is based in Belgium. You know, more than eight hundred and fifty countries are members of the SWIFT system, you know, which means that Russian oil and as companies can open elsi's to export

Blocks for him.

Understand participles considering that any pieces a shoulder in the refinery.

By the way, okay well said, just want to get that context for folks to follow. Let's get who I think it was. Who was a Kilo killer?

Then Labby?

So do killo Labby? Then killer? Sorry, let's go to Kilo.

Kevin.

I sent you indeed just in case killers. Go ahead, Okay, good name Calum.

I I would like to make a comment and also ask a question very ver quickly.

It seems to me that I get all the talk we always do every year about an NPC governance and couple of governors and everything, but I don't think any but it seems fairly straightforward and clear to me that any same governments. I'm not talking with the government that cares about governance, but the government that's exactly moved by politics.

Well not really want to reform the NNPC.

It makes a lot of political sense to keep any PC the way it is as redo the corruption and redo these inefficiencies as it currently is, because it's a way to buy fables from people, move funding in in dodgy is and all of that.

Why give that up when you can.

When when using other apparateses of states can be much more difficult and much more susceptible to.

Accountability and and probing and all of that.

So I I so on the issue of the n MPC, I have sort of tuned off from the whole thing about asking for governors for accountability and corporate governance in the in the organization because it doesn't seem to me that any government is going to do that, not any of the people that are planning for transparency in the political space right now, it doesn't seem to mean that any of them would ever do that because it serves their interest, their immediate interest, to keep its going as it is.

My question now is.

With the with the political economy reality of n NPC, how do we how do we ensure that the NNPC is able to encourage a thriving oil sector, thriving all and gas sector, that incentives are aligned for companies to invest in both the capabilities on your capabilities and also capabilities and also the maintenance of only infrastructure in the country.

Thank you very much, Kevin. That's for you. Great question.

Kelvin Calum Yeah, I like the question back for let me he's basically killo in some ways asking how can NNPC be more efficient for Kilo. If you want to give your own language, you want to see it again your question again?

Okay, my question is giving the political economy realities, being that no compility is ever going to reform the NPC.

We're just doing a lot of intellectual.

Stimulation's intellectually stimulating talk here. How do we ensure that the incentives of that NPC is able to create a thriving of the stimulated No, not driving, It's able to create incentives that will encourage companies to invest in the capability on you and of your especially local oil companies, and also invest in all that's infrastructure in the country.

Thank you.

So, first of all, I think we earlier we spoke about governors for mcgoverness is the biggest problem that has I think if I were getting you right, I think you're talking about how the government has strengthened independent like the relation supplies.

And the likes of the independence that are springing up.

They make up what they called independent Portrayum Producers group.

So, as you point, am I correct, Sorry girls in sorry, So what I'm saying is this, So you know, local companies people always say that they lack the sorry, the ability to do offshield.

Reading and all of that.

So given the opic system, the current system of the NNPC, how do we ensure that they that these local companies able to develop that capacity to be able to do offshore e MP and also to ensure that they invest in the all and that's infrastructure giving the system. I'm not talking of the deals. The stem of what there is accountability and then which I don't.

Think it is great to happen.

So it's first of all, I think finance is the problem for the independent. You know, raising finance is not is not very easy. And the reason I said that is because a lot of them, you know, do p ex flaws, pre expert exam the facility. Yeah, if you look at the acquisition of sales assets or over five of the Wales, I'll tell you that anywhere forty for.

The thirty percent of that.

You know, acquisition was funded by debt death that was given by the company selling.

Two degree the four of them.

So you can imagine four companies community get from a consultum and then in the acquisition model the company is selling gave a debt of an for two percent that is recoverable with gas. So the company will take the gas, some of the associated gas trapped and put it back into the IGVC that processes lergy. You can imagine, so you see that there is a financing problem. That's the first problem that the independents have. I think it's going to get better over time, you know. I think they

But there's also a matter of experience. The IOCs, the six SI Stars, they have the kind of experience the.

Technical debt that the independents don't have because they've been in the business for decades. So it's not just about you, you know, winning big rounds and getting blocks off shore, you know, and raising money.

You also need experience. You know.

I think that experience you cannot buy it with money. But I also think that you cannot fast forward it. You need to allow the process to take its cost, so it will take time for you to see it.

Independence operat on shore and shadow.

What has to actually migrates and graduates at the point where they are able to go off shore to do what them likes of snapcher Eso emp Chevron and the likes are able to do any and they are able to do it to take time. I don't think there's any need for you to rush that process because the independence are they have their legs are shaking, you know, they're not there.

All right, all right, thanks for that. And if you can move to kill to labby, they will do abdul and get to Abdul. Yes, yes it so let's to lobby you go ahead and order. How are you doing?

Okay?

So if you could speak up just a bit, that would be really helpful.

So can you hear? Yes? Okay, So thank you.

So what I think is the issue here is we really talked about the governor's.

Issue related to an NPC.

So and also before that it's one of the political power that government has to fulkill.

What's I do? So my question here is, now you think an f PC can be wrong?

I mean in a better way because movements wouldn't want to give out this this entity because of their political interest.

So just to kind of bring efficiency from the family business.

I'm also looking at the fact that it's coming to the public very soon. I mean as a private investor, I won't have this set of management running a business and also want.

To put my money in there.

I mean an average individual, So what kind of models or I mean business or leadership strategy.

Do you think an NPC can have built and then to kind of be more efficient compared to the other players industry.

Question?

You're you're the NPC rep here, so we have to ask you, did you yeah, yeah, yeah, the np Yeah, the residents expert. So I mean we want to know because I think what people are trying to find out from you is this. We know n n PC is not running the way it's supposed to run, and we want this thing to run properly so there's revenue, so that I'm trying to find out from you what is wrong? In in very so sense, what is wrong? How can it be fixed? Because we don't want it to die.

Is no longer in state corporationion, is governed by Computer Live Matters Acts and is governed by the PIA. Okay is a concessionaire of the oil and assets that belongs to the Federal Government of Naga, which means the gen Is principlesure all that, but.

Now the f GEN does not have direct access by law to decate the day to day management of the entity.

It doesn't.

That's the problem because what you have is a federal government, as specifically the State House of Presidency sending memos and directive to the Limited Library Company thinking that it is still a state corporation and an appendage of the government.

It's not so. That was why the PI is set up.

The Ministry of Finance administr of Petroleum Corporated and.

Movie comes from Finance. Movie comes from Minister of Petroleum.

But now the proposed amendment is going to arrest all of that beneficial ownership to Movie, which means that any communication to an NPC, either the board or the management, is supposed to come from the State House.

The state House represents the federal government.

The federal government is one of only literary shareholders in the MBC.

Remember who is the FGN. FGN is federal state.

Amical government supposed to come from the State House to the Minister of Finance. Minister of Finance who send communications to the beneficial owner Mofie.

Mophie will send communication to the board. That is the structure. If you neglect this structure then there's a governance problem number one.

Number two, the State House, the fineral government of Nigeria National Economic Council is supposed to convey the National Economic Council of Privatization and approve effect memo for an MPC to start the process of going to an IPO and don't do like MPC, and that process will require for you, and I'm going somewhere that present is required for you to do like an audit of your contingent assets and liabilities, evaluation and classification of all your assets across board, upstream, midstreamed,

Prices stock appropriately.

When you get to an IPO, the shareholders will sit on the table and now decide who they want to appoint the board and who they want in executive management.

It will no longer be State.

House press release the President appoints x y z people. This person is EVP, this person is on the board, this person is management. It will not be the President that appoints the GCU or anymore.

It will be the shareholders that will sit down in shareholder's.

Meetings and make a decision on who they want to be in executive management and who they.

Want to be on the board. They will do complete.

Business processor engineering and business transformation and determine what.

You know, subsidiaries in the group are dead, are draining money.

For example, you can see that their finery businesses are dead, completely dead. They dream by their stocking money. They'll be shocking money for the last twenty five years. Right, if you send an MPC to an IPO, any reasonable.

Meeting of shareholders will.

Vote for that NMPC finarity business to be completely act off and instead they'll vote to become shareholders in any commercial entity that is operating financial sat for DANNTI, for example, irreasonable shareholders meeting with vote right for them to increase their shareholding in the danguitary has offered for them to increase their shareholding in your finance twenty percent from several.

Two percents that they have currently has offered for them to buy more shares have been taking up his offer. That's left to be seen, you know.

So unless you have this process done right, you know, you shouldn't expect anything to change.

You're just going to continue to seeing in interference affairs interferes and the management on board will you know, be handicapped and then off the walls to do their own.

Which we just sell the we just selling PC doing PLC or ip O move on and it goes to private sector?

What makes what makes better sense?

Instead of do you say you want to sell don JV for example, what makes better sense is for you to actually send into the market.

And say, okay, we're going to sell thirty percent or forty percent to.

The markets thirty percent so Cetagram will still own it, they will still go on or run it.

Is that what that means?

No, I'm just giving an example. I'm just giving an example.

That's what makes better sense than selling down JG. That's what makes better sense.

Do you send it to an IPO and allow the markets to be the market, allow the markets to learn the way markets run efficiently?

Mm hmm. So can I just real quick? Yeah, it's basically ways. Maybe if it's is sense markets and if energies still retain.

The significance I mean it's centigal.

The audience, and then it's not going to change the leadership and the governance structure.

I mean next is actually the biggest concern And how do you think them in sending.

It to the markets, we change them. It wange, it will change, it will change. If when you have shareholders no shareholders, right, you.

Have probably like a two hundred billion dollar form in the US that was maybe five percent of it. You have quite a number of those phones that can relatively almost like to five percent of it. Because the board blocks in an ipe of private placements and they have a footing block on the board, it would.

Change, it would change. Okay. So Leegi is one of the best run companies in Nigeria. Every if I have questions for them that you know, our thing is that thing. It's one of the best companies in Nigeria. FIST has designated them as one of the most complaints tax paying companies in Nigeria.

Is a niger the government owns for the nine percent doout share any owns fifty one percent?

Related, is the government able to tell an allegin what to do?

No, no, why why forty one forty nine percent?

Exactly exactly present?

Of course they have because when you when you when you relatively owns fifty one percent, you have controlling votes on the board.

Yeah, and that's my view of how any any position should go. It should be so have a technical partner, one as a core investor, then sell the other equity to niger Urians p fees Nigerian individuals. Nigerians own it, but the technical partner then come in to sort of partner roller. Aramco did it, you know, they did it all to get long term funding and technology in. They have the reserves. We boost that, we create jobs. We

That's just my view.

So can you're about to go? I think we have space for just two more questions for you. I've got abdul abdul jabbai ya and I'll just take dexter real quick, guys, say we can just tell Kevin buy and then yes, I can please go ahead real quick.

Okay, So I have two quick questions.

Number one, what about if you do take an epcity to the markets, What about the risk of the government in power going through cronies to acquire a substantials taking and PC just like we've seen in the power sector. My second question is a story off topic about the tax reforms. So while the benefits of the tax reforms are positive, the reforms have no control or leverage over how the government spends the additional revenue and for twenty

Spending it today.

So my suggestion is, in your development levy that are charging for its done and Senny Trust fund, why don't you portion a part of your development levy to your.

Sovereign with fund so that while you have is not really practical to assume that.

The NAJA government will starts spending responsibly overnight.

You have something that when you do have your governments that is that that.

Is spending responsibly, they would have something substantial to spend.

Questions.

Thank you, Yeah, I think your second was just spot on. That's a wonderful idea. Just maybe if it points to zero one, but we'll just take that money give suvery world's phone. I think it's a fantastic solution. I doubt they will do because you know in Nigeria they will tell you that Christians who must share the money and not spend not not say what fantastic suggestion, Kevin? Did

So you remember when your first bank sold by about to the CRUs company. Yeah, and you know, I think with significant control.

PSC was identified as a company that was newly registered in the UK and it raised some concerns. So I'm aware that central Bank is it's prevailing on that entity to resell the shares.

You know, a report risk for personal significant significant control not having Google have gone through the New.

York Customer KYC processes compliance processes that the Central Bank has suited from.

Both the bank and other financial investors acts you know, financial institutions are you know, so.

When it comes to its right there, compliance processes personal significant control that the system has protocol for. The question is will live in first And the reason I broadest example of First Bank is because it gives a perfect picture of what you ask that was, what are the chances that unknown people you know.

Or you know politicians, politically exposed persons who do not learn their money through.

Beneficial owners and offshore accounts to buy all these shares.

You know, if you go through that process, the chances of that happening will be reduced.

So you have a block that goes to the general public in Nigeria, you have a block that goes to soitual investors.

You can apportion that that idea, you know, and you ensure.

That the block that goes to soitual investors goes to soitual investors with the track record you know, not the companies that will set up twenty four months ago, ve months ago with no history, and you have people sitting.

On the board who are like.

Nominal paseholders on behalf of the real owners at the background.

Yeah, I don't know if you answers your.

Question, and Kevin, there also many ways to do this right. You can basically make the shares non voting for a period or non voting forever. So if you have fifty percent shares, you want to start Nagian public and simply say these fifty percent shares are non voting for ten years or non voting forever. So why would I buy your shares if I can then use it to then have a board seat. If I want to buy your

Yeah.

So the last question is it's gonna be from Dexter Dexta Brian, Then will just let's call claims has a stop Dexter. You've got the flow dexter. Dexter has sold themselves out kept in real quickly. I just so will before I let you go, Kevin, let's just come back to our earlier conversations we are having. The wheel is an insurance company sell uping the Bahamas is owned by the NNPC one hundred percent. So NNPC is borrowing money

Reading, sir. In two thousand positions of the company Call Limited in the Cayman Islands.

I have the document from the Government of the Kymans kingston Man Islands, and NPC Engine Limited is responsible for trading some equity.

Lengine on behalf of the group.

So the question I have is why are you setting up a company offshore in the Kman Islands.

Why the might I tell you that, I mean my same iss to raise funds there, because this company is funds are raising there were to do the borrowed n NPC forty six billion for the six billions for the question to ask, is the money is that the companies offshore they had gotten it from the America. The visually own sovereign bonds in in Kyman. We don't know because this is in Bahamas. That's why it's Bermuda. That's why

Is this right?

N a PC is making a trillion in profits, but it's borrowing money from sufts. Is moving the money all around.

You have E E.

M P lending money to and serve. You have the wheel lend them money to.

All the risk.

All right. I mean there's a lot here. The last one really last one size this n NPC refinery in the one in l m A. There's a privacy the company that has gone there to set up a new refinery in Lema. Hear me out. This private company has gone to lem number one and n PC gave them seven billion to buy equity from the company setting up in lem A number one number two. N PC is then investing equity in that company. I believe it's fifteen percent n NPC number three.

Seven billion meant to buy.

So the company is playing rent. But the sampline is the buying the equity and the sweat capital of the company. That's seven to seven with I don't know I'm telling you what I'm reading. I'm don't telling you all that. So let me just give you the whole question. So number one NP is investing some seven billion in this in this company coming to lm A so n p's own company. In fact, the refiner is going to sell

So hear me.

Now, a private company is going to rent a federation asset, then the federation asset is investing in the private company or not that federal agency is investing in this private company to set up a refinery in a federation asset. How does that make any.

Sense without the approval of economic Yeah.

Yeah, but what okay? It's like me if I go to the landlord and I say, lol, lord, how to rent your house, the landlord gives me the house. The landlord invests in my rent, The landlord's wife invests in my in my rent, the landlord's sister buys easy for my house, but I'm in the landlord. Doesn't make any sense. Why can't they end PC simply settle his own, smaller company of their own in its own refinery. Why most a private company come from outside. I'm asking questions, honestly,

Sense to me.

Do you realize that you know the kills rebellionaire and managing the debt refineries that it owns today?

Okay? Really, so why not sell the refinery to this company? Why not sell the entire element refinery to this probate company.

I'll give you an instance. So you remember when there was the whole Pengerson and No peng issue. Pengerson came out and said, oh, that it doesn't make any sense to sell the NMP refineries.

Same Pengerson that said that the refineries are working about nineteen months ago. You know, they they said the engineers, their experts, that they've gone there, they've accessed and they're working, they're producing, they're supplying the markets, you know.

And then you have all these unions who.

Are in the system and bend in the system, whose members benefit from the system. Quite a number of the work has on the payrole of the government or refineries and members of the unions. The government, for example, I'm not holding brief for the government or excusing them from for their mismanagement and efficiency. But in government comes and says we're going to sell the refineries. News it goes and protests, shut down the country, We shut down the

You get the cash.

You say, you're putting the game into an around and as thirty billion dollars wasted over the last six years, nothing came out of it.

Right.

The question you should ask is if any PC was in the hands of the market, not the government, will the show that's vote to keep those assets?

Yes, I is, no, okay, so.

All right, so.

So so Kevin, I dially want to want the questions I need to answer this, but this whole transaction wasn't sit well with me. We're buying we're buying ten percent because if the company is called African Finer Reporter Got Limited, were buying ten percent for some seven billion.

Without the National Economy CONSULM privatization approving.

It doesn't need any sense for you to lease the aspects that belows to the graduation.

It's not it's not a least, it's not well, let's leave it at that. It's this is the thing about the report that there are lots of there's a lot of information the report, right, but it doesn't really make sense if you really look at it, just in accounting or financial management, just common sense accounting. Why why are you paying for this invest When.

An MBC was going to invest in down Finale in twenty twenty one, right, they were supposed to invest for the equivalent.

Of twenty percent. The agreement was that they were going to provide one billion.

Dollars for seven point two percent, which you currently have, and that there raised the forces agreement. They loomed to pay and they were going to now put up the additional twelve point seven eight percent.

At Recruder Fitz stock for a tot all valuable one per seven billion dollars. Now they didn't meet up exercise that's rights.

The right of post refuser through the period that there was supposed.

Exercises that and expired. The evaluation of refiners change because this was pretty produce production operationals have started, the refiners added bringing in revenue, so valuation has changed crassically. You know, there was a council memo from the Federal Executive Council to these effects. There was a council memo.

So if you're going to allow a company to operate in a Federation.

Asset and then invest in that company, you need a Caruncle memo approved.

Okay, So the question is you ask and any where is the cauncle memo from the Federation.

All right, I mean it's I'm just I'm just I'm just saying what I read here. But I mean, Kevin, thank you so much for being here. Like I said, we won't want to exhumes the good, the bad, the unknown in the NNPC report. I think if you've us a lot of deep industry analysis and answers to our questions, where civilians in this. What we really know is that NNPC in the past was very opaque. Now we're at

In fact.

You know, like I asked you, who owns this money? You said, it's own by the federation. So that means that my small state should get a bit of this five point four This money should go towards doing something. I looked up the disbursements for university guys that are going to school. The disbursement. It's not a turndred billion.

Invest in this like this.

Just when I spokes said, take this money as a seed and do something with it. We can't be announcing five point four trillion net profit and people are allowing not to buy pure water pool can feed doesn't make any sense. There has to be real life impact of NNPC in the lives of Nigeria. So let's take this money.

Thank you so much for you know, always a pleasure to be here on the space. You know, this space has been going on for five years. I dare say it's one of the most respected spaces on Twitter.

Thank you, and one of the most consistent spaces. And it's amazing what you do.

The ability to consilicate conversations, critical economic conversations, you.

Know, and.

The consistency you have is married and I'm very privileged and or not to have you know been.

Percent answering questions today on this space, and thank you so much for having me. I wish everyone in lovely we considering that tomorrow is the first of December. In December, compliments of the season and advance. I wish you wonderful end of the year.

Thank you so much that we'll do you're coming in and giving off those ask those questions for us. Like Kevin said, guys, we're in December. The whole year has come to the If you're from Nigeria, the whole year has come to December. This is when you count your assets and your liabilities and ask if you have made it for the whole eleven months. This is where you submit your AGM to your shareholders. So have you made it?

A nation, no way.

If our kids are not in school, it's not going to be possible.

Loan or no loan.

They've closed the schools down, go home because insecurity. So I've got to fix that. Thank you so much, Colvin. I triut you guys for also listening, and I hope I see you guys next week. We'll maybe do our final, we'll do our space again and then we'll see how the next year it will come. You guys, have a great day, have a good week. Week is gonna be a fantastic Monday. Thank you so much. Have a good day guys, and bye.

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