Nigerian State Oil Company Will Privatize: Report
Source: MarketWatch, Reza Amanat (3/14/10)
"There is no plan B."
According to the newspaper, NNPC has began talks with investment banks, including Standard Chartered PLC (STAN.LN), JP Morgan and Deutsche Bank AG (DB) to discuss financing options in its aim to become a privatized commercial company.
NNPC, which is hamstrung by a government funding shortfall of up to $6 billion (GBP3.95 billion) a year for its upstream operations with joint venture partners, including Royal Dutch Shell (RDSB.LN), Exxon Mobil Corporation (XOM), Chevron Corp. (CVX), Agip SpA and Total SA (TOT), is determined to "transform or liquidate," general manager director of NNPC Mohammed Barkindo told bankers in London.
"There is no plan B. The government has taken the decision at the highest level for NNPC to reform and we are at an advanced stage in the legislative process," Barkindo is quoted by the newspaper as saying.
Banks have suggested a number of options, including project finance, bond issuance, pre-export finance, commodity-linked financing, the creation of a holding company to offer financial flexibility and also an initial public offering, the report said.
However, any IPO is unlikely to happen for the next five years, senior NNPC officials told the Telegraph.
Barkindo and his senior team have also met Goldman Sachs Group (GS), law firm Latham and Watkins, and Nigerian banks UBA and First Bank of Nigeria to assess the state of the capital markets and how it will prepare to tap them once Nigeria's Petroleum Industry Bill, which underpins its transformation, has become law, the Telegraph added.