• Tuesday, April 16, 2024
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BusinessDay

What NNPC’s latest audited books says – and why it matters

NNPC, NIPCO Gas partner to establish 35 CNG stations

The Nigerian National Petroleum Company (NNPC), Nigeria’s major FX earner, has recently released its 2022 audited financial statements, shedding light on the corporation’s financial health and operational performance.

The unveiling of these books has sparked widespread interest and speculation, prompting experts and stakeholdersstakeholders to delve into the numbers to understand the implications for the country’s energy sector and overall economic outlook.

Read also: Questions trail NNPC $3.3bn crude-for-cash loan

The new report breaks away from the previous tradition that set the annual financial year end of the oil firm at around August, with subsequent financials likely to follow a 12-month cycle ending on 31 December like most companies.

Key findings

Revenue for the period stood at N8.8 trillion, more than half of that supplied by proceeds from refined petroleum product sales while total assets rose to N58.65trn, an increase of about 260.47 percent when compared to the N16.27trn in 2021 financial period.

A breakdown of the total asset figure of N58.65trn showed that non-current assets was N37trn while the company’s current assets stood at N21.59trn as of the end of 2022.

NNPC also recorded non-current liabilities of N19.98 trillion and current liabilities of N29.3 trillion, resulting in a total liability of N49.35 trillion. This demonstrates an increase of approximately 266.6 percent.

In terms of profitability, the financial statement revealed that the company recorded Profit After Tax of N2.52trn, representing about 274 per cent increase when compared to the N674bn it recorded in 2021.

One of NNPC’s auditors, PricewaterhouseCoopers (PwC) noted that they had no doubt that the NNPC could continue as a going concern without fear of going bankrupt.

The Auditors wrote in the account, “The financial statements have been prepared in accordance with the going concern principle under the historical cost convention.

“Nothing has come to the attention of the directors to indicate that NNPC will not remain a going concern for at least 12 months from the date of these financial statements. At this time, no significant events after the reporting date that may have an impact on going concern have been noted,” PwC said.

The company spent N2.4 trillion on fuel subsidies in 2022, which President Bola Tinubu abolished at his inauguration last May because it had been a big drain on the government’s purse.

Fuel subsidies were the single biggest expense incurred by NNPC during the period, alone accounting for 35.8 percent of the cost of sales.

Under general and administrative expenses which totalled N1.7 trillion, the cost described as “other expenses” remains a grey area needing further clarification from the company, given its significance as the largest cost in this section, gulping as much as N496.4 billion.

The group realised N2.2 trillion from exchange differences in translation of foreign operations, made possible by increased value from earnings in foreign currencies after conversion to naira.

Why its matter

The NNPC plays a central role in Nigeria’s economy as the primary driver of revenue from the oil and gas sector.

Experts said the corporation’s financial health directly impacts the country’s fiscal stability, making the release of audited books a matter of national importance.

“Transparent and well-managed financial reporting can bolster investor confidence,” Aisha Mohammed, an energy analyst at the Lagos-based Center for Development Studies.

She added, “Understanding the extent of NNPC’s financial obligations is crucial for evaluating its overall financial stability and capacity to meet long-term commitments”.