NNPC Employee Benefits Rise 118.7% Y-o-Y, Company Reduces 221,000bpd Staked in $6.5 Billion Debt

Emmanuel Addeh in Abuja

The total employee benefits paid by the Nigerian National Petroleum Company Limited (NNPC) to its workers rose 118.73 per cent year-on-year, the national oil company’s newly released 2023 Annual Financial Statements (AFS) has indicated.

It also showed that the NNPC during the period successfully offset about 43,000 barrels per day, that is 35,000 bpd in the Dangote refinery and 8,000 bpd in OML 86/88 acquisition, out of its of its 221,000 bpd staked in various projects during the period under review.

NNPC’s employee benefits expenses in 2023 hit N583.8 billion when put side by side the N266.9 million in 2022, the audited statement pointed out.

This accounted for almost 20 per cent of general and administrative expenses, the biggest expense after exchange loss, as the benefits included salaries and wages which rose to N226.8 billion in 2023 from N73.6 billion the previous year.

According to the document, salaries and wages increased from N73.7 billion in 2022 to N226.9 billion in 2023, while staff allowances increased from N58.2 billion to N179.8 billion.

Also,  staff welfare expenses increased from N36.8 billion to N77.1 billion in the years under review, while long-term employee benefits, which included long service awards and re-measurement loss/(gain) increased from N226 million in 2022 to N16.6 billion in 2023.

This, it said, was attributable to the increase recorded in long service awards from N462 million to N15.8 billion, even as NNPC post-employment benefits decreased  from N97.9 billion in 2022 to N83.3 billion in 2023.

Gratuity charge stood at N78.4 billion while post-employment medical benefits was N5.3 billion in the year under consideration, with pension costs slowing significantly by 86.8 per cent to N1.8 billion.

Also, out of a total of 221,000 barrels of crude per day pledged by the NNPC to offset its $6.55 billion debt incurred in 2023, about 43,000 bpd had already been repaid, the NNPC audited statement pointed out in the 2023 document.

The ones that are now pending are the $3.3 billion FX stabilisation fund spearheaded by Afreximbank wherein 90,000 bpd was pledged; the $1 billion part debt on the Port Harcourt refinery, where 67,000 bpd was mortgaged as well as the $0.95 billion General Corporate debt where the NNPC pledged 21,000 bpd.

There have been a groundswell of criticisms of recent as to how the remarkably lower quantity of crude oil produced by Nigeria had been mortgaged in forward sales, leaving the economy to struggle.

On the Dangote refinery, NNPC said: “In September 2021, NNPC entered into a forward sale agreement with Lekki Refinery Funding Limited to supply 35,000 bpd of crude oil for the settlement of the $1.036 billion (N426.2 billion) funding received for the financing of investment in Dangote Refinery.

“The interest rate for the facility is three-month LIBOR plus 6.125 per cent . As of 31st December 2023, NNPC limited has paid $625 million principal, while $424 million (N324 billion) is still outstanding.”

It said that initially the investment was managed by NNPC Greenfield Limited, a special-purpose vehicle wholly owned by NNPC.

 However, following the restructuring of NNPC under the Petroleum Industry Act (PIA), the management of the investment, the NNPC said, was transferred to NNPC Downstream Investment Service (NDIS).

According to the NNPC, the restructuring also led to a significant change in the payment structure. “ The balance of the cost of equity investments, amounting to $1.76 billion, was agreed to be paid in cash instead of the originally proposed crude oil discount of $2.5 per barrel on the official selling price of crude oil,” it added.

The NNPC  said in September 2021, it proposed to acquire 20 per cent interest in Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE).

It explained that the interest, worth $2.76 billion, was financed by a forward sale agreement of $1.036 billion from Lekki Refinery Funding Limited of which $1 billion was paid to Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE).

“As at 31 December 2023, NNPC Limited holds a 7.25 per cent interest in DPRP FZE,” the NNPC said.