NNPC’s 2019 Audited Financial Report Shows N801.3bn Reduction in Losses

•Report puts corporation on recovery path
•Says new gas project to generate 2,400MW

Emmanuel Addeh in Abuja and Peter Uzoho in Lagos

The Nigerian National Petroleum Corporation (NNPC) has released its 2019 audited financial statement, about five months after publishing its 2018 report, which was the first in its 43-year existence.
In the second audited financial statement made public yesterday, the corporation achieved N801.3 billion reduction in its loss profile from a whopping N803 billion in 2018 to N1.7 billion in 2019. This represents a 99.7 percentage cut in its losses.

The corporation also said when completed, the Asa North-Ohaji South (ANOH) gas project would be able to fuel power plants to generate approximately 2,400MW of electricity for the country.
Some of the national oil company’s subsidiaries which posted improved performances 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 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 PPMC accounts were audited by KPMG Professional Services and Paul Akinade Adebimpe & Co, and as of December 31, 2019, its revenue stood at N32.5 billion compared to N29.5 billion in the previous year.
Its profit before tax was N14.7 billion compared to 9.5billion in 2018, while the subsidiary paid N163million in taxes in 2019 as against N158million in 2018.

The Nigerian Gas Company Limited (NGC) had its total asset increase from N221 billion to N361 billion, representing about 63 per cent rise in the company’s asset base.
Also, NNPC Retail Limited, a subsidiary established in 2002, recorded a profit after tax of N2.6 billion as against N1.9 billion in 2018.
Among others, the company is engaged in the sale of refined products in the filling stations run by the corporation.

Although some of the corporation’s over 20 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.

For example, Wheel Insurance Limited, which had one of its directors, Mr. Isiaka Abdulrasaq, resigning in 2019, recorded a loss, as its total comprehensive income for the year fell from $18.1 million in 2018 to $7.3 million in 2019.

As expected, the Port Harcourt Refining Company (PHRC) recorded a loss before taxation of N46 billion, higher than the N45 billion recorded in 2018, and a total comprehensive loss of N50 billion in the year under review.

But despite its loss due to the non-functional state of all the refineries in the country, the company stated that it donated N154 million for community development and assistance during the year under review.

The story wasn’t different for the Warri Refining and Petrochemical Company Limited (WRPC), which made a loss before tax of N49.2 billion against N44.4 billion in 2018.
The company, however, has continued to retain its employees despite its total redundancy. But the total number of employees reduced from 585 in the previous year to 515 in 2019.

It had total revenue of N921million in 2019 as compared to N1.9 billion in 2018.
NNPC Health Maintenance Organisation Limited with total revenue of N2.5 billion, however, bounced back from its N6.6 million loss in 2018 to a profit after-tax of N277 million in 2019.
In all, while the NNPC Group had a revenue of N4.6 trillion as at December 31, 2019, the corporation had N2.5 trillion but recorded a loss before income tax of N93 billion compared to 2018 when a total loss of N714 billion was recorded.

Similarly, the corporation posted a loss before income tax of N107 billion in comparison to N254 billion in 2018.
Total comprehensive loss for the group, according to the NNPC audited report, was N20.1 billion in 2019 and N68.9 billion in 2018. But the total loss for the corporation, which was N203 billion in 2018, bounced back to the path of profitability with N16.2 billion income in 2019.

The National Petroleum Investment Management Services (NAPIMS) also recorded a profit of N2.8 billion for the year against N1.2 billion in 2018. But it donated N135 million to various organisations in the year under review.

As for the Nigerian Pipelines and Storage Company Limited (NPSC), the company which provides transportation and storage facilities for the distribution of petroleum products, it recorded a loss of N1.3 billion for the year. This, however, represented a reduction when compared to 2018 when the company lost N2.4 billion.

Earlier, the Chief Financial Officer (CFO) of the corporation, Mr. Umar Ajiya, had stated that the release of the AFS was in keeping with the management’s commitment to transparency and accountability and in consonance with the principles of the Extractive Industries Transparency Initiative (EITI) of which it is a partner.

He said though the NNPC’s refineries had maintained the same level of losses as in 2018, the string of losses would reduce significantly in 2020 due to NNPC cost optimisation drive.
The corporation explained that the improved performance in the 2019 financial year was driven mainly by cost optimisation, contracts renegotiation and operational efficiency.

“The 2019 AFS goes further to demonstrate our unwavering commitment to the principle of Transparency, Accountability and Performance Excellence (TAPE) while the outlook for 2020 looks promising in view of the management’s strong drive to prune down running cost and grow revenues,” the organisation stated.

It recalled that the Group Managing Director of NNPC, Mallam Mele Kyari, had promised to sustain the publication of the corporation’s audited financial statement as part of efforts to deepen transparency and accountability and keep stakeholders abreast of NNPC operations.

New Gas Project to Generate 2,400MW of Electricity, Says NNPC

The NNPC has also said when completed, the Asa North-Ohaji South (ANOH) gas project will fuel power plants to generate approximately 2,400MW of electricity for the country.
The corporation stated that the 600 million standard cubic feet of gas per day project is part of concerted efforts to ramp up gas-to-industries and gas-to-power in the country, noting that it is one of the largest greenfield gas condensate development projects ever undertaken in Nigeria.
Kyari highlighted the gains of the gas project in a goodwill message at 2020 South-east Gas Utilisation Forum in Owerri, Imo State.

A press statement by the Group General Manager, Group Public Affairs Division of the corporation, Dr. Kennie Obateru, quoted Kyari as also commending the imminent completion of the landmark Obiafu-Obrikom-Oben “OB3” gas pipeline project.
He said the OB3 project would help commercialise over two billion cubic feet of gas per day and generate billions in revenue as well as create thousands of employment opportunities for Nigerians.
Kyari, represented by the corporation’s Chief Operating Officer, Gas and Power, Mr. Yusuf Usman, said NNPC as an enabler organisation has since realised the obvious economic importance of gas.

He noted that the corporation has consistently made efforts towards building the right infrastructure and commercial structures, in a bid to deliver value to customers and all stakeholders.
He stated that the laudable initiative of the Gas Aggregation Company of Nigeria (GACN) aimed at facilitating the optimal use of natural gas to drive industrial and economic growth aligns with President Muhammadu Buhari’s aspirations of prioritising gas development for economic growth, power generation and the eventual industrialisation of Nigeria.

While saluting the ingenuity and enterprising spirit of South-east industrialists, entrepreneurs and business leaders, he said the business community was well-placed to support the federal government’s economic development plan to move Nigeria from being a crude oil export-based economy.