Listing the NNPC: What NNPC directors must know about IPO liability and global standards (Part 1 of 3)

Introduction: The NNPC paradigm shift

The imminent listing of the Nigerian National Petroleum Company Limited (NNPC) marks a turning point in Nigeria’s corporate and economic history. Moving from a state-owned behemoth to a publicly listed entity signifies more than a funding strategy—it symbolises a deliberate step towards transparency, accountability, and alignment with global market expectations.

The appointment of a new leadership team, including Mr Bayo Ojulari as CEO and notable industry figures like Austin Avuru and David Ige to NNPC’s Board, sends a strong message. It reflects the government’s willingness to reimagine NNPC as a commercially viable, investor-facing institution. These individuals bring with them not just technical competence but experience in operating within the discipline of competitive and transparent markets.

But public markets are unforgiving. Unlike government appropriations or closed-door negotiations, capital markets demand transparency, consistent performance, timely disclosures, and rigorous governance. For NNPC’s new directors, the shift comes with real accountability—personal, legal, and reputational. As the company prepares for an IPO, directors must navigate this transition with their eyes wide open and hands firmly at the wheel.

This article is the first instalment in a multi-part series designed to equip NNPC’s directors with critical insights into the key legal, regulatory, and governance responsibilities that accompany a public listing and highlights their fiduciary roles in the lead-up to, and aftermath of, an Initial Public Offering (IPO).

The role of governance in NNPC’s IPO readiness

Strong corporate governance is foundational to building investor confidence. A listed NNPC must demonstrate that it can function without undue political interference, that its financials are trustworthy, and that its decisions are made in the best interest of all shareholders—not just its government owners.

Reconstituting the board with professionals from the private sector is a promising start. But governance isn’t about individuals alone; it’s about the structures and systems that support independence, transparency, and ethical conduct. Directors must ensure full compliance with domestic codes of governance and international best practices. These include establishing credible audit committees, ensuring proper internal control systems, and maintaining open channels for whistleblowing and redress.

Board independence will be especially critical. Investors will closely monitor whether directors can challenge decisions that appear politically motivated or misaligned with shareholder interest. Similarly, board diversity—across skill-sets, gender, and experience—is not just desirable; it is essential. It sends a message that NNPC is serious about governance and capable of reflecting the values of a modern public listed company.

But governance also extends into strategy. Will the board support long-term investments in renewable energy and technology, or will it be steered by short-term directives? Will decisions around divestments, joint ventures, and subsidy policies be commercially defensible? These questions will test the true depth of governance at NNPC.

Strategic and political risk: Market logic vs. State mandate

One of the less-discussed yet deeply consequential risks facing NNPC directors is the tension between market logic and political directive. As a listed entity, NNPC must pursue efficiency, profitability, and shareholder value. Yet, as a government-linked company, it will inevitably be subject to state priorities, including those that may not align with market realities.

Directors must prepare for situations where political mandates such as subsidy retention, delayed pipeline repairs, or opaque crude allocations conflict with what is best for the company commercially. This challenge will become even more pronounced if NNPC pursues dual or triple listings on leading foreign stock exchanges, where investor scrutiny is unforgiving and decisions must be justifiable in economic (and not political) terms.

The question is not whether political pressure will arise; it will. The challenge is how the board plans to respond when it does. Establishing efficient internal governance frameworks that promote autonomy in commercial decision-making will be essential to maintaining market credibility and investor trust.

The advantage of market experience

In this high-stakes journey, experience matters. The appointment of Austin Avuru, a former CEO of Seplat Energy Plc., to the NNPC board is particularly strategic. Avuru led Seplat’s notably successful dual listing on the Nigerian and London Stock Exchanges, which enhanced Seplat’s profile and access to capital in both markets. He understands the discipline, strategy, and communication required to navigate investor expectations.

His presence on the board can provide a crucial bridge between state ownership and investor confidence—if he and other directors are empowered to contribute meaningfully. It will be important for the board to leverage his valuable insights and experience to guide critical aspects of NNPC’s listing strategy.

Legacy liability risk: The baggage of the past

One critical issue that has received too little attention in the IPO conversation is that of legacy liabilities. The old NNPC had unresolved lawsuits, contractual disputes, and potential regulatory penalties. If these are not properly addressed, they could severely affect NNPC’s valuation and long-term performance post-listing.

Directors must ask: Will the new NNPC inherit these obligations? Have they been quantified, disclosed, and accounted for in the company’s financial statements? Will indemnities be issued by the government, and will they be enforceable?

Investors, especially institutional ones, will expect clarity on these matters. Lack of disclosure or poor handling of legacy issues can be interpreted as a red flag—prompting pricing discounts, waning investor confidence, or even complete withdrawal of interest.

Financial reporting and disclosures

A successful IPO hinges on trust—and trust in turn, is built on accurate, timely, and complete information. NNPC’s directors must oversee a positive transformation in how the company collects, verifies, and reports financial data.

Moving to International Financial Reporting Standards (IFRS) is just the beginning. The board must ensure that internal audit mechanisms are functional, that external auditors are reputable and independent, and that financial statements are not just compliant but credible. Directors are ultimately accountable for what appears in the offer documents—and that includes projections, assumptions, and off-balance-sheet obligations.

Overly optimistic forecasts, hidden liabilities, or failure to disclose material information can trigger lawsuits and regulatory sanctions. The market won’t care whether it was a mistake or oversight—directors will be held responsible. The concept is simple: if you sign off on it, you own it. As director, you are responsible. Addressing the accuracy of prospectus content, for example, the law does, however, make some notable exceptions, e.g., where the director (i) withdrew consent before issuance, (ii) was unaware of the prospectus and publicly disclaimed it upon discovery, (iii) withdrew consent after discovering a misstatement or (iv) reasonably believed the statement to be true or relied on the opinion of an expert or official document in good faith. These safeguards ensure that only those who act negligently or dishonestly are held accountable.

Forward-looking statements must be clearly labelled as such, with adequate explanations and disclaimers. Directors must insist on robust internal stress tests to validate assumptions used in forecasts. Understating costs or overestimating expected revenues may attract short-term enthusiasm but may result in long-term legal and reputational exposure.

Reputation risk: The perception minefield

Perhaps the most fragile asset NNPC will carry into the public markets is its reputation. In an era where Environmental, Social and Governance (ESG)-focused investing has become mainstream, perception can be as powerful as performance. And NNPC’s long legacy of opacity and political influence makes it particularly vulnerable to scrutiny.

Investors will be quick to react to stories—real or perceived—about nepotistic appointments, inflated contracts, delayed remittances, or environmental negligence. A single unresolved oil spill in the Niger Delta, or an investigative report suggesting procurement irregularities, can erode millions of dollars in market value and derail the IPO narrative.

NNPC must begin now to rebuild that reputation brick by brick. This includes detailed and clear public communication of reforms, independent audits, strong ESG policies, transparency, and appropriately weighed decisive actions in response to any negative developments or rumours. Fortunately, exchanges like NGX have rules that address how rumours and unusual market activity must be addressed. Directors must lead this charge, not just from the boardroom but in how they shape internal culture and external engagement.

Conclusion

As NNPC prepares to list its securities in the capital markets, its directors must recognise that successful listings go beyond technical compliance. The real test lies in how the company handles perception, transparency, and independence. Legal duties matter, but they are just one side of the coin. Strategic, reputational, and political risks are just as potent—and often more damaging.

Listing the NNPC will not only open the company to capital but also to criticism, comparison, and consequence. Directors must prepare accordingly—not just with knowledge of the law, but with frameworks for integrity, resilience, and public trust.

Ultimately, the IPO is not merely about raising funds; it is about proving that NNPC can thrive in the ruthlessly unforgiving but highly rewarding world of market discipline. The directors will play the most pivotal role in determining whether the listing becomes a transformative success or a cautionary tale.