Journalism of Courage

Just in: Despite distraught operating environment, NNPCL announces impressive N674.1bn profit in 2021

… published 2021 Audited Financial Statement shows an increase of N387 billion or 134.8 per cent against the N287 billion recorded in 2020

In spite of the challenging operating environment, the Nigerian National Petroleum Company Ltd (NNPCL) has posted a profit of N674.1 billion for 2021 financial period for the second consecutive year.

The N674 billion profit, described as impressive by industry watchers, represents an increase of N387 billion or 134.8 per cent against the N287 billion recorded in 2020.

The NNPC Group Chief Executive Officer, Malam Mele Kyari, disclosed this on Tuesday in Abuja, said the 2021 financial year is the fourth consecutive year that the NNPC will be making its Audited Financial Statement public.

Persecondnews recalls that the NNPC Group which transited to a CAMA company in 2021 following the implementation of the Petroleum Industry Act (PIA) has grown its profit from N287 billion in 2020 to N674 billion in 2021.

NNPC’s Group account was audited by PriceWaterhouseCoopers, SIAO, and Muntari Dangana Accounting Firms as one of the innovations introduced by Kyari on assumption of office on July 7, 2019.

Kyari said: “Today I’m happy to announce that the Board of NNPC has approved 2021 audited financial statements and NNPC has progressed to a new performance level from N287bn profit in 2020 to N674bn profit after tax in 2021,climbing higher by 134.8% YoY profit growth.”

Industry watchers noted that the positive result is coming as global economies continue to struggle with the recessionary forces and weak economic outlook.

It will be recalled that in 2018 when the NNPC first made public its Audited Financial Statement, it recorded a colossal loss of N803.9 billion with the poor and worse performance, the first ever, hinged on three things: Increase in cost of sales, specifically increase in crude cost; increase in the general and admin expense which almost doubled from N474bn to N894bn; and increase in impairment of receivables and other assets in the year by almost 300 per cent.

When Kyari took over in 2019 and the NNPC Group audited account was released, the loss position was reduced to just N2.3 billion.

Also, the reforms implemented by the NNPC boss, the loss position was reversed in the 2020 financial period when the NNPC posted its first profit in 44 years of N287 billion.

The poorly run company has since bounced back to reckoning with impressive financial performance of N674bn in 2021.

The rise in profit is mainly occasioned by significant increase in revenue and less proportionate increase in cost of sales resulting to 1,556.9 per cent increase in gross profit.

Other factors that contributed to the high profitability of the NNPC Group is the outcome of the N173.7bn arising from reconciliation with Federal Inland Revenue Service (FIRS), stronger emphasis on performance management, rationalization of non-essential expenditure and implementation of the transparency and accountability agenda.

NNPC’s impressive performance has been further bolstered by the positive impact of the N193 billion royalty which was written back as a result of the reconciliation with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

Similarly, the emplacement of aggressive cost control measures by the NNPC management as well as the successes made in the implementation of system-based controls on funds management also boosted profitability.

A further analysis of the NNPC Group Audited Financial Statement also shows that revenue rose by 72.6 per cent to N6.42trn in 2021 as against N3.72trn in 2020,  attributable to improvement in the production and price of crude oil during the period under review.

Also an increase of 2.6 per cent in total assets from N15.86trn in 2020 to N16.27trn in 2021 was recorded while total liabilities decreased by 8.3 per cent from N14.68trn in 2020 to N13.46trn in 2021.

In line with the growth trajectory of the current management, the shareholders fund position of the NNPC Group also followed an upward trend as it rose to N2.81trn in 2021 as against N1.15trn in 2020. This represents 144 per cent increase in shareholders fund as of December 31, 2021.

NNPC also recorded a raise in the cost of sales by 46.3 per cent from N3.65trn in 2020 to N5.34trn in 2021, attributable mainly to the increase in crude oil production.

The selling and distribution expenses also increased from N36bn in 2020 to N52bn in 2021. This increase is in line with the rise in revenue from petroleum product cost during the year under review.

The net impairment loss on financial assets dropped to N65bn in 2021 as against the impairment reversal of N713bn in 2020.

Persecondnews also recalls that on assumption of office, Kyari initiated and pursued his TAPE agenda — Transparency, Accountability and Performance Excellence,  a five-step strategic roadmap for NNPC’s attainment of efficiency and global excellence.

Kyari had said pursuing TAPE agenda was the only way to turn around the then corporation (now public liability company) and make it competitive.

The Transparency component of the agenda was aimed at maintaining positive image, share values of integrity and transparency to all stakeholders, while the Accountability segment of the campaign is to ensure compliance with business ethics, policies, regulations and accountability in its dealings with all stakeholders.

In terms of the two-prong item of Performance, Excellence, Kyari had said: “The idea is to entrench a high level of efficiency anchored on efficient implementation of business processes which would also emplace an appropriate reward system for exceptional performance among the workforce.’’

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