The Saudi Aramco’s $75 billion Dividend – And Options for Nigeria

The Saudi Aramco’s $75 billion Dividend – And Options for Nigeria

Saudi Arabia’s Aramco (its equivalent of NNPC in Nigeria) has declared a dividend for financial year 2020 – and the number is massive: $75 billion. Yes, the company will share $75 billion among its investors. You may see that, and ask for the privatization of  NNPC, but remember electricity and NEPA which post privatization has not delivered a different outcome.

As the government plans to invest $1.5 billion, for rehabilitation, into a national refinery, many prominent Nigerians like Atedo Peterside (founder of Stanbic IBTC) have asked the government to kill the idea, and sell. But I do not just buy SELL these days since typically we invest say $5 billion to build, and then sell at $1 billion, and even after doing that, nothing changes.

With that, the question is this: what should be the playbook for Nigeria and NNPC to unlock the type of value, in proportion, Aramco has delivered in Saudi Arabia?

Oil giant Saudi Aramco reported a 44% slump in full-year 2020 results, but maintained its $75 billion dollar dividend payout, with CEO Amin Nasser describing the last twelve months as one of the most “challenging years” in recent history.

Saudi Aramco, Saudi Arabia’s behemoth state oil firm, reported net income of $49 billion in 2020, down from $88.19 billion in 2019. The result was slightly below analysts expectations of $48.1 billion but still represents the highest of any public company globally.

“In one of the most challenging years in recent history, Aramco demonstrated its unique value proposition through its considerable financial and operational agility,” Saudi Aramco Chief Executive Amin Nasser said in company statement Sunday.

In 2017, I was for “privatize and put in the stock market” when I wrote this, but today, after the mess in the electricity sector, I am not even sure privatization holds the magic wand in Nigeria. Indeed, after years, no one can claim that privatizing NEPA has brought better results in Nigeria’s electricity sector.

Simply, NNPC is still struggling to develop the capacity to reconcile its books with the Nigerian people. This may not be corruption; it could simply be lack of process, within a very complex Corporation, and the interrelationships it maintains with different segments of the Nigerian government, from the Federal Ministry of Finance to the Central Bank of Nigeria. It is a broken process and if General Buhari cannot fix it, it means we need to have a new strategy as a nation.

Yes, there is a way we can deal with this problem: take NNPC public and get its business done in the stock market. That way, all the missed and hidden money will be checked by market dynamics with dedicated experts looking at these numbers, more passionately, because they have fiduciary stakes in them.

 

NNPC Plc – Nigeria Should Take NNPC Public To Boost Transparency

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