NNPC subsidiaries’ debts hit N30.3tn, raising fresh concerns over liquidity, reforms

The Nigerian National Petroleum Company Limited (NNPCL) is facing renewed scrutiny after debts owed to the company by its subsidiaries and related entities surged by more than 70 per cent to N30.30tn in 2024, despite its transition into a commercially oriented national oil company.

Figures from NNPCL’s 2024 audited financial statements show that inter-company receivables climbed from N17.78tn in 2023 to N30.30tn as of December 31, 2024 – an increase of N12.52tn or 70.4 per cent. The sharp rise has raised concerns about liquidity management, internal financial discipline and the sustainability of the company’s reform agenda under the Petroleum Industry Act (PIA).

An analysis of the accounts indicates that most of the debts are concentrated among NNPCL’s operating subsidiaries, particularly its refineries, trading arms and gas infrastructure units. Of the company’s 32 subsidiaries, only eight were debt-free at the end of 2024, highlighting widespread reliance on funding from the parent company.

The rising debt burden comes even as NNPCL posted strong headline performance. Announcing the 2024 results, Group Chief Executive Officer, Bashir Bayo Ojulari, said the company recorded a profit after tax of N5.4tn on revenue of N45.1tn, representing increases of 64 per cent and 88 per cent respectively over 2023. However, analysts say the ballooning inter-company debts cast doubt on the quality and sustainability of those earnings.

The Port Harcourt Refining Company Limited topped the list of indebted subsidiaries, owing NNPCL N4.22tn in 2024, up from N2.00tn a year earlier. The Kaduna Refining and Petrochemical Company Limited followed with N2.39tn, while the Warri Refining and Petrochemical Company Limited owed N2.06tn, both recording sharp increases from 2023.

Despite repeated turnaround maintenance and rehabilitation spending, Nigeria’s three state-owned refineries have yet to operate at commercially viable levels, leaving them heavily dependent on continued financial support from the parent company.

NNPCL’s trading operations also accounted for a significant portion of the debt. NNPC Trading SA owed the company N19.15tn in 2024, more than double the N8.57tn recorded the previous year. Additional receivables were recorded from gas, pipeline, power and marketing subsidiaries, including NNPC Gas Infrastructure Company Limited, Nigerian Pipelines and Storage Company Limited and several power-generation entities.

On the other side of the ledger, NNPCL’s obligations to its subsidiaries and related entities also increased sharply, rising from N14.17tn in 2023 to N20.51tn in 2024. The bulk of this exposure relates to NNPC Trading Limited, which was owed N16.36tn as of December 2024.

The swelling inter-company balances come amid broader restructuring efforts. President Bola Tinubu had earlier approved the cancellation of about $1.42bn and N5.57tn in legacy debts owed by NNPCL to the Federation Account, following a reconciliation exercise. The company has also signalled plans to divest non-core assets, including stakes in refineries, pipelines and power plants, to improve liquidity and attract private capital.