BY EMEKA EJERE
It may take a long time for the Nigeria National Petroleum Corporation (NNPC), to prove beyond doubt that the N287 billion it declared as profit for the year 2020 is not an outcome of manipulation.
This is in the light of strong arguments coming from individuals and groups who insist that “the magic that led to eventual declaration of profit after tax in 2020 for the first time in its (NNPC’s) 44-year history requires explanations.”
President Mohammadu Buhari, who doubles as the Minister for Petroleum Resources, had announced the declaration of Profit After Tax of N287 billion by the NNPC, noting that the corporation’s losses were reduced from N803 billion in year 2018 to N1.7 billion in year 2019 before the eventual declaration of net profit in year 2020.
Buhari said, “I am pleased to announce the declaration of Profit After Tax of N287 billion in year 2020 by the NNPC. This is sequel to the completion of the statutory annual audit exercise for year 2020.
“The NNPC losses were reduced from N803 billion in year 2018 to N1.7 billion in year 2019 and the eventual declaration of net profit in year 2020 for the first time in its 44-year history.
“This development is consistent with this administration’s commitment to ensuring prudent management of resources and maximisation of value for the Nigerian people from their natural resources.”
With a depleted external reserve, Nigeria has been mired in a revenue crisis, which has already plunged the economy into heavy borrowing with about 91 per cent of revenue going into debt service.
Buhari also noted that the development was a fulfillment of an earlier pledge by the federal government to publicly declare the financial position of the NNPC.
For the first time since its establishment, NNPC, in June and October, respectively, last year, made public its Audited Financial Statement (AFS) for 2018 and 2019. It noted in the documents that it had achieved a 99.7 per cent reduction in its loss profile from a whopping N803 billion in 2018 to N1.7 billion in 2019.
According to the documents, although, a number of the corporation’s 21 subsidiaries recorded losses, the general administrative expenses of the national oil company witnessed a 22 per cent decrease, from N894 billion in 2018 to N696 billion in 2019.
Specifically, the NNPC recorded a loss of N20.2 billion in 2019. Details of the consolidated statement of account for the year ended December 31, 2019 showed a comprehensive loss of over N16.3 billion by the corporation and N20.2 billion by the group. In 2018, the corporation recorded over N203.2 billion in losses while the group lost about N68.95 billion.
However, the report said recurring losses by the NNPC over the years had culminated in an accumulated loss of about N1.55 trillion and N474 billion respectively, compared to N1.6trillion (group) and N490.7billion (corporation) in 2018. The report warned that the NNPC may be pushed into bankruptcy by its unsustainable operational processes.
Some of the corporation’s subsidiaries, which posted improved performance in its last audited results, included the Nigerian Petroleum Development Company Limited (NPDC), which recorded N479 billion profit in 2019 compared to N179 billion in 2018, representing a 167 per cent increase.
In addition, the Integrated Data Sciences Limited (IDSL) recorded a N23 billion profit in 2019, compared to N154 million in 2018, representing over 14,966 per cent increase, while the Petroleum Products Marketing Company (PPMC) recorded N14.2 billion profit in 2019, compared to N9.3 billion in 2018, representing 52 per cent increase.
The Minister of State for Petroleum Resources, Timipre Sylvia, described the development as “monumental achievement,” saying that the NNPC worked hard to reach the milestones.
The Group Managing Director of NNPC, Mele Kyari, explained that the company adopted some cost-cutting measures and became more efficient, after renegotiating contracts and bringing initial values down by about 30 per cent, while focusing on accountability, transparency and avoiding elusive projects.
Disclosing that the process that paved the way for the profit started in 2015 with continuous implementation of strategies, Kyari added: “It is a continuous process. When I came on board, I learnt from what was on ground, and also brought in a new perspective, which was to ensure that we build on what had been done.”
He added that the corporation on the heels of the COVID-19 pandemic introduced a technology that drastically cut travel cost through a reduction in in-person meetings and the general automation of processes that enhanced efficiency across the group’s businesses.
But the explanations are still insufficient for those who do not understand how an organization that has run at loss for over four decades suddenly declared a bogus profit in a pandemic year.
On 19 April 2021, it was reported that the total revenue generated by the NNPC from crude oil and gas exports plunged by 45.98 per cent in 2020 amid the COVID-19-induced collapse in price and demand.
According to the report, Nigeria’s revenue from the exports of crude oil and gas fell to $2.62bn in 2020 from $4.85bn in 2019. It added that proceeds from the sale of domestic crude oil and gas also dropped to N1.54tn in 2020 from N1.57tn in 2019.
Little wonder, the Conference of Nigeria Political Parties (CNPP), the umbrella body of all registered political parties and political organisations in the country, has declared that it earnestly doubts the N287 billion profit claims by the NNPC.
In a statement signed by Chief Willy Ezugwu, Secretary General, CNPP, the group described as bogus and doubtful the N287 billion profit after tax the corporation declared for the year 2020.
The statement reads in part: “During the year under review, most businesses globally suffered operational setbacks which also negatively affected Nigeria’s oil export as proceeds from the sale of domestic crude oil and gas dropped to N1.54tn in 2020 from N1.57tn in 2019.
“The magic that led to eventual declaration of profit after tax in 2020 for the first time in its 44-year history requires explanations.
“Like the President expressed joy over the supposed feat, we felt it was good news but the doubts over the bogus figures have continued to linger for days and may never disappear in a hurry.
“Considering the fact that the NNPC is planning to list its shares on the Nigerian Stock Exchange and the timing of the passage and signing of the Petroleum Industry Bill (PIB) into law, the sudden declaration of huge net profit looks more like a script.
On his part, founder of Stanbic IBTC Bank, AtedoPeterside, challenged the NNPC to clarify allegations that it dipped its fingers in the federation account in order to announce a profit of N287bn.
Peterside, in a tweet, said, “There is an allegation that NNPC dipped their fingers in the Federation Cookie Jar in order to announce bumper 2020 profits; they should come clean and publish details of all dividends received by them and tell us which ones they recently diverted from the Federation to themselves.”
Reacting to Peterside’s tweet, @ayotula said, “I knew something was wrong, NNPC for the first time declared profit and next says it wants to sell shares. I knew it was stage managed because of the provisions of the PIA. It is expected that NNPC would have made profits for some years before thinking of shares.”
@FAGalileo said, “PIA signed into law and the next big announcement is NNPC declaring profits for the first time in 44 years. Who is fooling who? The @NNPCgroup should publish the subsidiary and its activities that produced this huge profit margin. Or was this done for the 30 per cent frontier basin?”
However, some stakeholders, including, the Chairman/Chief Executive Officer (CEO) of International Energy Services Limited, Dr. Diran Fawibe, insist that the firm may have repeatedly made profits in the last 43 years, but the funds were misappropriated or misallocated to operations unrelated to NNPC.
Fawibe said, “The owners of a company like the NNPC determine whether the company would make profit or not in the way and manner that they manage it. The question we should ask is, could it be that NNPC made profits in the previous 43 years?
“Over the years, we knew that there were lots of expenditures, lots of deductions in the finances of the NNPC that ordinarily should not have been made. These things have gone on for many years.
“If this expenditures and deductions are written back into the books of the NNPC, definitely there will be profit. It is a sad commentary that a corporation like the NNPC did not make profit for 43 years.”
Available records show that In 2018, Saudi Arabia’s Aramco made a $414.6b revenue; China National Petroleum Corporation recorded $392.9b revenue, $79.45b accrued to Kuwait Petroleum Corporation while Algeria’s national oil company recorded $39b revenue.