The Nigerian National Petroleum Corporation (NNPC) has released its audited financial statements, the second time in about 40 years. Audited by multinational professional services firm PricewaterhouseCoopers (PwC), the financial statements reveal an annual loss contracted to just a few million dollars last year as costs shrank across its operations.
Here are some major takeaways from the report.
Reduced expenses
Although, selling and distribution expenses increased to N46 billion in 2019 from N9.8 billion in 2018, however, general and administrative expenses reduced by 22 percent to N695.5 billion while net impairment loss from financial assets reduced by 41 percent to N273.6 billion.
NAPIMS is a shining star
Income from its National Petroleum Investment Management Services unit — the most profitable division jumped 75percent to N2.83 trillion while earnings at Nigerian Petroleum Development Company Limited (NPDC) more than doubled to N479 billion and so did the Integrated Data Services division with an N23Billion profit in 2019 compared to N154Million in 2018.
Also, the Petroleum Products Marketing Company (PPMC) recorded a N14.2 billion profit in 2019 compared to N9.3Billion in 2018.
Bleeding refineries
Its four decrepit refineries continue to bleed cash roughly at the same level of 2018, losing N 154 billion in 2019 amid shutdown for repairs but the state oil firm said that those losses “will reduce significantly in 2020 due to cost optimization drive.”
Net Cash Outflow on Investment Activities
Net cash flow on investment activities which indicates how much cash has been generated or spent from various investment-related activities in a specific period, increased to N976 billion in 2019 compared to N332 billion in 2018. This was mainly boosted by proceeds from property, plant and equipment worth about N39.5 billion.
Net Cash Outflow on Operating Activities
After movements in working capital, Net cash flows from operating activities which is a section of a company’s cash flow statement that explains the sources and uses of cash from on-going regular business activities increased to N989 billion from N791 billion recorded in 2018.
Liabilities outweighs assets
The company’s liabilities of N9.68 trillion exceeded its assets by N4.4 trillion, raising “material uncertainty” about its operations, the auditors wrote in a note.
Tax
NNPC’s tax position in 2019 was a credit of N91 billion, compared to a tax expense of N88.2 billion for the same period last year.
Reasons for loss
NNPC’s net loss narrowed to N1.7 billion last year from N803 billion in 2018, the Abuja-based company said, citing the impact of contract renegotiations, cost cuts, and greater efficiency across its divisions. Revenue slipped to N4.63 trillion from N4.74 trillion.
Cash and Cash equivalent
Cash and cash equivalents which refer to the line item on the balance sheet that reports the value of a company’s assets that are cash or can be converted into cash immediately settled at N1.7 trillion in 2019 from N1.8 trillion the previous year.
Drive for more transparency
NNPC operates joint ventures with oil majors, which together pump almost all of Nigeria’s crude. It’s also responsible for supplying refined fuel to the nation’s 200 million people.
Earlier this year, NNPC published its 2018 audited financials, as part of a drive for transparency at the company.
The current solution comes after 20 years of political infighting regarding the role and future of the NNPC. The main reasons for this aggressive change of stance seem to be the success of the Aramco IPO, the potential to bring in $200 billion, and the potential to value the NOC at $2 trillion.
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