NNPC running costs spike as board pay jumps 58% to N4.1bn, staff benefits near N750bn

The cost of running the Nigerian National Petroleum Company Limited (NNPC) rose sharply in 2024, with directors’ fees and expenses increasing by 58 per cent to N4.096bn, while spending on employee benefits surged to N749.7bn, according to the company’s audited annual financial report.

An analysis of the 2024 Annual Report by Punch shows that payments to NNPC directors climbed from N2.593bn in 2023 to N4.096bn last year, representing a 214 per cent increase from the N824m paid in 2022. The report attributes the rise partly to the fact that all 11 board members served for the full financial year without changes.

“NNPC Limited directors’ fees and expenses rose to N4.096bn in 2024, up from N2.593bn in 2023,” the report stated.

During the year, the board was chaired by Chief Dr Pius O. Akinyelure, with Mallam Mele Kolo Kyari as Group Chief Executive Officer. Alhaji Umar Isa Ajiya served as Group Chief Financial Officer until November 2024, before Mr Adedapo Segun was appointed and later joined the board. Other non-executive directors included Ambassador Nicholas Agbo Ella, Mr Okokon Ekanem Udo, Mr Ledum Mitee, Mr Musa Tumsah, Dr Ibraheem Ghali-Mohammed, Prof Almustapha Aliyu, Mr David Ogbodo and Mrs Eunice Thomas.

Most of the directors’ tenures ended on April 2, 2025, when President Bola Tinubu dissolved the board and appointed a new leadership, naming Engr. Ahmadu Musa Kida as chairman and Engr. Bashir Bayo Ojulari as Group CEO.

Despite the increase in board-related expenses, total compensation paid to NNPC’s key management personnel declined slightly in 2024. Short-term benefits for top executives rose to N985m from N818m in 2023, but post-employment pension and medical benefits dropped to N380m from N631m. Overall, compensation for key management personnel stood at N1.365bn, down from N1.449bn the previous year.

NNPC explained that the figures cover only key management staff, defined as the Group CEO, CFO, General Counsel, Company Secretary and Executive Vice Presidents.

Beyond board and executive pay, staff-related expenditure rose significantly. Total employee benefit costs at the Group level increased to N749.7bn in 2024, from N581.8bn in 2023. This included N272.7bn spent on salaries and wages, N79.1bn on staff allowances and N40.5bn on welfare expenses. Pension contributions under the defined contribution scheme amounted to N44bn, while gratuity costs rose to N84.4bn. Post-employment medical benefits stood at N3.3bn, with long-term employee benefits at N4.4bn.

The report also showed that no employee between the ages of 30 and 59 resigned voluntarily during the year for the second consecutive year. All exits from service were due to mandatory retirement between ages 60 and 65, reflecting strong staff retention linked to improved welfare packages since NNPC’s transition to a limited liability company under the Petroleum Industry Act in 2021.

At the company level, employee benefit expenses were put at N192.3bn in 2024, slightly below the N194.56bn recorded in 2023.

Meanwhile, the company’s general and administrative expenses rose steeply, underscoring the growing cost of running Africa’s largest national oil company. Group-level general and administrative expenses jumped to N3.58tn in 2024, from N2.09tn in 2023, while company-level expenses climbed to N1.66tn from N994.08bn.

Major cost drivers included depreciation of property, plant and equipment, which surged to N623.41bn from N101.03bn, and professional and consultancy fees, which ballooned to N699.67bn from N184.2bn. Software licence and maintenance costs rose to N210.06bn, security expenses increased to N271.37bn, and training, travel and entertainment expenses all recorded sharp increases.

NNPC also disclosed N118.78bn in fines and penalties, alongside N98.07bn in impairment charges on assets held for sale.

The sharp escalation in board costs, staff benefits and administrative expenses is expected to fuel renewed public debate over cost efficiency, transparency and value for money at NNPC, particularly amid economic hardship, the fallout from fuel subsidy removal and heightened scrutiny of public-sector spending.

While proponents of the reforms argue that competitive remuneration is essential to attract and retain talent in a commercialised national oil company, critics warn that rising administrative and governance costs risk undermining public confidence at a time of persistent fiscal pressure.