THE Nigerian National Petroleum Company Limited (NNPCLtd) has disclosed it made a profit after tax of N674 billion for 2021.
The Group Chief Executive Officer, NNPC Ltd, Mele Kyari, announced the results in Abuja today via the microblogging site, Twitter.
Kyari said, “Today I’m happy to announce that the Board of NNPC has approved 2021 audited financial statements & NNPC has progressed to a new performance level, from N287 billion profit in 2020 to N674bn profit after tax in 2021, climbing higher by 134.8 per cent year-on-year profit growth.”
GCEO @MKKyari: "Today I'm happy to announce that the Board of #NNPC has approved 2021 audited fin. statements & #NNPC has progressed to a new performance level,from N287Bn profit in 2020 to N674Bn profit after tax in 2021,climbing higher by 134.8% YoY profit growth."
Details… pic.twitter.com/xS9oDxdWoD
— NNPC Limited (@nnpclimited) October 4, 2022
The turning around of the oil company seems to be gradually unfurling after poor mismanagement in the past years.
Running it was merely gulping huge funds for many years, with no returns.
The NNPC board and management had chosen to pump an equivalent of 4.5 per cent of Nigeria’s 2021 budget into the refurbishment of the Port Harcourt Refinery Company, which comprehensively lost N152.89 billion between 2017 and 2019.
In 2019, for example, the refinery did not record any revenue. Yet, it reported N25.19 billion in expenses. Six directors collected N59.65 million in fees during the year, meaning that each of them received an average payment of N9.94 million a month in 2019 from a company that recorded no revenue.
To buttress the level of financial recklessness at the Port Harcourt refinery, the total number of staff in 2019 was 675. Their salaries, wages, allowances, redundancy and pension costs amounted to N22.195 billion. What that means is that, on the average, each staff member received N32.88 million in 2019 from a company that made no revenue. This amounted, on the average, to N2.74 million each month.
In the case of the Warri Refining and Petrochemical Company Limited, checks by The ICIR revealed that the firm generated a revenue of N4.429 billion in three years, but incurred expenses of N144.140 billion within the same period.
The NNPC had been borrowing to fund activities at the Warri refinery, even when its operations did not show any capacity to pay back.
Credit: NNPC
In 2019, the refinery’s liabilities (tax, debt, lease) stood at N485.96 billion, whereas total assets amounted to only N79.43 billion.
In 2018, liabilities were estimated at N383 billion, while the company had assets of N19.36 billion.
With its total assets valued at N43.92 billion in 2017, its liabilities were valued at N333.43 billion.
The old government-owned Nigerian National Petroleum Corporation was recently transformed into the new NNPC Ltd., in line with the provisions of the Petroleum Industry Act 2021, with private investors expected to be allowed to own shares in the new limited liability company.
President Muhammadu Buhari, who spoke at the unveiling ceremony on July 19, 2022, at the State House in Abuja, said the change was expected to signal a new era of transparency, accountability and energy security for the country.
The favourable 2021 results could start reducing doubts among some oil and financial experts, who still harbour reservations on Buhari’s optimism that the commercialisation would bring in the expected gains.
Speaking on a television programme, the Dangote Group Executive Director on Government and Strategic Relations, Mansur Ahmed, asked the management of the new firm to jettison the moribund refineries.
Ahmed said in the alternative of the managers retaining the refineries, they must thoroughly examine themselves whether they have the right structure and competence not only to run them, but to make them profitable.
He said, “NNPC cannot carry the burden of keeping refineries that are not working. It should identify which of the portfolio will need support. It is not about shedding its assets; we have to see if we have the right structure to manage NNPC Limited.
“Do we have the competence to manage this company? We must look consciously, and we hope that NNPC has the courage and commitment to take the decision that would generate sustainability.”
Ahmed hoped the process would not be reversed, as was done when former president, Olusegun Obasanjo, privatized the refineries during his administration. He tasked the government to develop the NNPC in the long-term so it can generate wealth and opportunities for expansion across the entire country.
A petroleum engineer and oil and gas analyst, Mr Bala Zakka, explained that failure for the nation to move from importation to the exportation of petroleum products would only lead the ‘new’ firm to failure.
Zakka said, “Would Nigeria refineries work or be as functional as the refineries in Indonesia, Libya, Iraq or Iran or China? So far, the Nigerian refineries have been docile. Our expectation is that this new company will lead Nigeria to start having functional refineries, and instead of being importers, it should be exporting refined petroleum products to other parts of the world and sub-region of Africa. If this is not achieved, the entire celebration would be a failure.”
Experienced Business reporter seeking the truth and upholding justice. Covered capital markets, aviation, maritime, road and rail, as well as economy. Email tips to jolaoluwa@icirnigeria.org. Follow on Twitter @theminentmuyiwa and on Instagram @Hollumuyiwah.