Kyari informed that prior to the acquisition of OVH, NNPC Retails Limited’s highest profit was N6. 593 billion in 2021, adding that after the acquisition, a profit of N18.4 billion was recorded in the first quarter of 2023.
The Chairman of the House of Representatives Ad-hoc Committee investigating the illegal acquisition of OVH Energy, Rep. Hassan Nalaraba, has commended the Group Chief Executive Officer of the Nigeria National Petroleum Company Limited (NNPCL), Mele Kyari, for recording a profit of N18.4 billion in the first quarter of 2023.
The commendation came at its resumed investigative hearing, where the NNPCL Group Executive, Mele Kyari, insisted that the organisation did nothing illegal in the acquisition as it was purely a business decision that has begun to yield results.
Kyari said that the company now has over 900 fuel stations spread across the country while controlling 30 percent of the market in the downstream sector of the petroleum industry.
“This company came into existence as a result of the passage of the Petroleum Industry Act, which included the creation of a commercial oil company that will work for all.
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“You also decide that the shareholders of this company will be the federation meaning that the overall 200 million Nigerians are shareholders in this company. The PIA also mandated this company to be the energy guarantor. So, it is not an option for this company to do otherwise.
“It is part of the law that we should protect national interest in a way to guarantee energy security. It is very clear that there is a huge relationship between energy security and national security anywhere in the world. Countries go to war to ensure energy security.
“It is on the basis of this, and to discharge our responsibility as proscribed by the law, we do need to have the capacity to have control over the downstream sector of the economy.”
Kyari continued, “We started NNPC Retail Limited in the year 2000 and until the period of acquiring the OVH chain, we were not able to grow organically. We only had 48 stations that we owned and a mirage of companies that are affiliates all over the country, some of which were not functional fuel stations. They could not serve the purpose because there were dealers who could not pay for the cost of the products and we had locations where we could not guarantee either the quantity or quality of the products sold.
“We failed to grow organically for 23 years. The only way to bridge that gap is to do something strategic and this is very difficult in our industry. You have to acquire other people’s assets. We would wish to grow to achieve the objective of the PIA and grow this company to the business we want it to be.
“The corporation has been a loss-making corporation for many years. With the transformation that came into the company before the PIA and after the PIA, this company is now a net profit company declaring profit for its shareholders.
“We saw the opportunity to acquire this asset and add to our portfolio so that we can meet the requirements of the law. Right now, we are in control of 30 percent of the market downstream by this acquisition. No company will come to the public to announce that it is selling the company except by auction or acquisition.
“Acquisition of companies are always within internal processes of the company and every company has its own internal processes,” Kyari explained.
According to him, there were two options in the case of OVH. “It is either they go to the exchange and sell 100 percent equity or do a management buyout.
“This is not new and this is what OVH opted for. We had no idea that they were doing this. They got to the point of sale. We saw the opportunity and waited for the deal to be closed and then latched on it and we are proud that we made this acquisition.
“We have nothing to hide, but this is a commercial relationship, and we did nothing wrong. We know there are acquisitions that have taken place in this country, far less in scale and value than what we got.
“We have taken this acquisition through all the gamut of processes and procedures established by the Companies and Allied Matters Act, the PIA, and memorandum and article of association. So, there is nothing hidden.”
Highlighting the company’s gains recorded from the acquisition, Kyari said “Five years backward, the NNPC Retails Limited’s highest profit came in 2021, at N6. 593 billion. But in the first quarter of 2023, after the acquisition of OVH, we had a profit of N18.4 billion. It is nothing because, we have expanded, and we have more footprint, have better brand, and greater capacity in terms of our market share.
“We were struggling to reach 15 to 20 percent in 23 years. But, we are hitting 30 percent of the market share in less than one year. This is the dramatic change that has happened to this company as a result of this acquisition. We are proud of this acquisition,” he asserted.
He further informed there are no plans to move the headquarters of the company, adding that it is a private company with a registered head office in Abuja.
According to him, 70 percent of the operation of the NNPPL is done around the Lagos area, “if you move everyone involved in this operation from Lagos to Abuja, it will increase cost geometrically and take you away from your operations.
“What we did was to merge our operations with OVH Limited, move the right people to the right places, and keep the registered head office in Abuja. The biggest market for this operation is in the Lagos area and we did not create this company to lose money. That is why we moved some of our staff to those locations because we have assets there.”
On his part, the House Leader, Rep. Julius Ihonvbare, who represented the Speaker, said the investigation was not aimed at witch-hunting anybody, and explained that “the 10th Assembly is committed to joining hands with the executive to reposition and rebuild this country.
“It is not going to be based on conflict but shared understanding and exchange of ideas, mutual respect, and the commitment to doing the right thing. There is nothing the NNPC will do that will not attract public interest. This is a very critical one. You may have taken the best decision.”
In his ruling, the Chairman of the Committee, Nalaraba noted that the committee will conduct an oversight visit to the OVH facilities to ascertain what is on the ground.
