AMID growing debt burdens and uncertainties over its continuous operation, Oando Plc concentrated $2.6 on a company its top directors owned.

Checks by The ICIR show that over the past five years, Oando has been incurring losses in its operational performance and carrying net liabilities.

A company is in a net liabilities position when its total liabilities exceed its assets.

The company’s struggle to stay afloat and its growing debt obligations have again caught the attention of its independent auditor, BDO Professional Services Chartered Accountants.

In Oando’s 2022 audited financial statements, released on Tuesday, April 23, the independent auditor said the $2.6 million drawdown raised audit matters.

The ICIR analysis shows that in 2023, Oando Servco Nigeria Limited, an indirect subsidiary of Oando Plc, entered into a $20 million loan agreement with OODP BVI, a subsidiary of Whitmore Asset Management Limited owned by Jubril Adewale Tinubu and Omamofe Boyo, the chief executive and deputy chief executive of Oando Plc.

The loan was granted at a six per cent per annum interest rate to provide OODP BVI corporate activities funds. The repayment period was 20 years from the utilisation of the last advance of the loan, and there was a 10-year moratorium on the principal repayment.  

Following the loan agreement and disbursement deal, Oando Servco instructed Oando Plc to pay $250,000 to OODP BVI on August 8, 2023, and $250,000 on October 24, 2023.

It further requested that Oando Trading DMCC and Oando Plc pay $1 million and $1.1 million to Ansbury Investments Inc. on July 3 and October 24, 2023.

However, as of the date of the auditor’s report, the $2.6 million loan due had yet to be paid.

Financial loss widens

Analysis of the 2022 performance and financial position of Oando Group and the company followed the trends of losses reported in the last five years.

The ICIR reported in September 2023 that the independent auditor expressed worries over Oando’s ability to continue as a going concern.

Since 2022, the multinational oil company has faced delisting, which is yet to be perfected, arising from the huge losses suffered in 2020.

In the review year, the company recorded a comprehensive loss of N41.7 billion from N28.1 billion in 2021.

Its current liabilities exceeded current assets by N273.9 billion relative to a net current liabilities of N231.4 billion in 2021.

The company also reported net liabilities of N243.9 billion compared to net liabilities of N202.2 billion in 2021.

The group recorded a comprehensive loss of N56.8 billion from a total comprehensive profit of N30.6 billion in 2021.

Its current liabilities exceeded its current assets by N818.7 billion relative to a net current liabilities of N668.4 billion in 2021.

The Group also reported net liabilities of N197.2 billion compared to net liabilities of N129 billion in 2021.

According to the independent auditor, the reversal of this trend depends on the successful outcomes of its planned actions to refinance its debts to manage the funding gap of N3 trillion and the attainment of revenue in the Group’s forecast for the year ending 31 December 2024.

It said that if the planned actions were successful, they would only address 32 per cent of the Group’s projected funding gap, leaving the management to address the 68 per cent funding gap shortfall.

The independent auditor pointed out that no written agreements were currently in place for such funding plans, and there could be no assurance that they would be available in the immediate future.

“These conditions, together with other matters, indicate the existence of a material uncertainty that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern and, therefore, may be unable to realise its assets and settle its liabilities in the ordinary course of business.

“The financial statements are yet to include any adjustments to the amounts and classification of assets and liabilities that may be necessary, should the Group not continue as a going concern as there has neither been any intention by the Directors to liquidate or cease the operations of the Group nor is there any legislation to cause the same. Our opinion is not modified in respect of these matters,” BDO Professional Services submitted.

Facing N1.2trn pending litigation

Several legal suits are outstanding against the Group, amounting to N1.2 trillion in 2022 and N3.07 trillion in 2021, which the Oando legal team claimed might not have any material effect on the Company.

Commenting on the results, Oando’s Group Chief Executive, Wale Tinubu, blamed the Company’s losses and poor performance on pipeline vandalism and operational negligence.

“The heightened militancy and pipeline vandalism acts within the Niger Delta region dealt a substantial blow to our upstream operations, resulting in a marked reduction in our crude production volumes due to the protracted shut-ins for repair following each incidence. This was further compounded by a major gas plant fire incident which also necessitated a lengthy downtime.

“Furthermore, a rise in our net interest expense due to increased interest rates on several of our major facilities in line with global rates increases, also contributed to our Loss after Tax position,” Tinubu said.

He, however, hinted that the Company has put in place definitive measures to bolster production, cash inflows, and return to profitability, hinting that part of the effort is to collaborate with partners to institute a security framework to curb pipeline vandalism permanently.

He said, “We have also implemented a strategic restructuring of our key facilities to ensure they align with our cash flow dynamics.”