So the long-awaited Petroleum Industry Bill (PIB) finally made its way to the national assembly as stated by the president of the senate, who confirmed the receipt of the draft copy of this bill as sent by the president.
Senate President Mr Ahmad Lawan promised and expedited consideration of the bill to ensure its passage in the soonest time, as it will be given equal priority as the 2021 budget.
As reported by some oil industry experts, aspects of the PIB will recommend the scrapping or at least the reforming of some major supporting elements of the NNPC like the Petroleum Product Pricing Regulatory Agency (PPPRA) and the Petroleum Equalization Fund (PEF). In fact, as the Minister of State for Petroleum puts it,
“The PPPRA and the PEF will not exist in the form it is today.”
Another major aspect of the PIB will be the commercialization of the operations of the Nigerian National Petroleum Corporation (NNPC) and this process will involve some major restructuring and reorganization. This reorganization and restructuring process will result in an extensive asset audit with several cars and equipment set to be scrapped.
Just like Customs, NNPC will soon be in the business of vehicle auction
For a car that was purchased brand new as is always the case with NNPC and other government agencies, the standard practice has it that such cars will not depreciate to scrap or write-off level in a time period that is less than 15 years. But in Nigeria, most of these cars are even written-off or scrapped after 7 years of minimal usage, in fact, most agencies will even scrap several cars and equipment after 5 years of use.
So as we expect NNPC to go commercial, which will mean the corporation will now be open to market competition and should be independent of government especially in terms of finances, we expect her to begin to balance her books and that will involve letting go of unnecessary liabilities.
A prominent element of these liabilities is cars and heavy machines that lie dormant and depreciate year after year.
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That's why we expect an unprecedented level of vehicle write-off and scrapping. So, begin to plan for a huge vehicle auction by late 2021 when we expect the process of reorganization to begin in earnest.
It is expected that at least six months after the commercialization of this government enterprise, that asset management procedures will be activated and at that time your money will come in handy. So make sure to save a good amount for these vehicles and equipment that will be scrapped.
All roads will lead to NNPC Towers soon
Some of these cars will still be in excellent shape. In fact, most of them will most definitely be way ahead of the salvage-time or write-off time.
This car auction after the NNPC goes commercial will be a marvellous opportunity for those who have the information and connection to access these cars when auctioned.
We at Naijauto will do our best to keep you our wonderful readers up to date with the latest information regarding this.