Despite declaring N287.2bn profit, PwC’s audit of NNPC’s account shows corporation could go bankrupt

Auditors at PricewaterhouseCoopers (PwC) have indicated that Nigeria’s state-owned oil company, Nigerian National Petroleum Corporation (NNPC), could be teetering on the brink of bankruptcy as the group’s current liabilities outweigh its current assets by as much as N4.6 trillion.

This is according PwC’s auditors’ report of its 2020 financials issued on Wednesday.

The auditors noted that material uncertainty exists that may cast significant doubt on the group and corporation’s ability to continue as a going concern.

According to them, “The group reported a net profit of N287.2 billion (Corporation: N235.3 billion) during the year ended 31 December 2020 and, as at that date, the current liabilities exceeded its current assets by N4.6 trillion (Corporation: N729.1 billion).

“These events or conditions, along with other matters as set forth in Note 42, indicate that a material uncertainty exists that may cast significant doubt on the group and corporation’s ability to continue as a going concern.”

But NNPC directors said they are upbeat about the corporation’s potential to keep running in the short term.

“The directors assess the group’s future performance and financial position on an ongoing basis and have no reason to believe that the group will not be a going concern in the year ahead,” they said in the report.

NNPC, whose accounts had for years been kept away from public knowledge, announced its first profit in 44 years late August.

That has provoked curiosity among analysts, intent on knowing how the firm dramatically curbed losses from N803 billion in 2018 to N1.7 billion in 2019 and then the steep swing to a N287.2 billion profit last year, Premium Times reported.

Despite reporting the profit, accumulated losses in recent years came to N1.5 trillion for the group and N395 billion for the corporation.

Among the moves taken to mitigate the big threat to the continuity of its operations revealed by the audit scrutiny is NNPC’s proposed recapitalisation, which Group Managing Director Mele Kyari said on Tuesday would come in the form of an initial public offering in three years’ time.

In January, cash-starved NNPC entered a pact with trading partners to pay it $1 billion in advance to finance the refurbishment of the Port Harcourt refinery, its biggest refinery infrastructure, requiring the corporation to pay back over seven years.

It had consummated a similar deal five months earlier when it agreed with Matrix and Vitol Group for a $1.5 billion prepayment to be repaid with 15,000 barrels of crude with each of the parties for five years