By Bassey Udo
The Nigerian National Petroleum Company Limited (NNPCL) says its profit after tax in the 2021 fiscal year stood at about N674.1billion.
The Group Chief Executive Office of the company, Mele Kyari said the profit grew by about N387bn, or 134.8 percent, from about N278 billion realised in 2020.
Kyari who disclosed this is a series tweets through his verified Twitter handled, @MKKyari on Tuesday described the result as an impressive performance despite the challenges in the industry.
“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% Y-o-Y profit growth,” Kyari announced in one of the tweets.
Kyari said in spite of the challenging operating environment, the NNPC, which became a public liability company regulated under the provisions of the Companies and Allied Matters Act (CAMA) by virtue of the enactment of the Petroleum Industry Act (PIA) 2021 2021, has continued to weather the storm, by posting its second consecutive year of profit after a series of losses since its inception.
“The positive result is coming as global economies continue to struggle with the recessionary forces and weak economic outlook.
“In spite of a tough and volatile operating environment, the NNPC Group’s investment strategy proved resilient and enabled the National Oil Company to deliver favourable outcomes as shown by the 2021 financial statement.
“For instance, the NNPC Group grew its profit from N287 billion in 2020 to N674 billion in 2021.
As a CAMA company, with plans to enlist in the capital market new year, part of the requirements to meet the conditions for enlistment is consecutive and consistent profitability for at least three years.
Kyari said the NNPC’s Group Account was audited by PriceWaterhouseCoopers, SIAO, and Muntari Dangana Accounting Firms.
The NNPC Group CEO said the N674bn profit posted by the company during the financial period made it the fourth consecutive years the NNPC would be making its Audited Financial Statement public.
Making the operations and financial operations of the company public was one of the innovations introduced by the Kyari-led administration when he took over the helms of affairs of the National Oil Company in 2019.
In 2018 when the NNPC first made public its Audited Financial Statement public, it recorded a loss of over N803.9billion.
A review of the reports said three components of the publications were responsible for the poor and woeful performance of the Group over the period.
These were increase in cost of sales, specifically increase in crude production cost; increase in the general and administrative expenses, which almost doubled from N474 billion to N894 billion, and increase in impairment of receivables and other assets in the year by almost 300 percent.
In 2019 when the NNPC Group Audited Account was released, the loss position had reduced drastically, to just N2.3billion.
But with the reforms implemented by the NNPC boss, the loss position was reversed in the 2020 financial period, with the NNPC posting about N287 billion profit, its first in 44 years.
Since then, the Company has bounced back to reckoning with impressive financial performance of N674bn in 2021.
The company attributed the rise in profit to the significant increase in revenue, and less proportionate increase in cost of sales, due to prudent management of resources, resulting in about 1,556.9 percent increase in gross profit.
Other factors that contributed to the high profitability of the NNPC Group, the company said, was the outcome of the N173.7 billion arising from reconciliation of accounts with the Federal Inland Revenue Service (FIRS), stronger emphasis on performance management, rationalization of non-essential expenditure and implementation of the transparency and accountability agenda.
“The impressive profit performance recorded by the NNPC was further bolstered by the positive impact of the N193 billion royalty payment, which was written back as a result of the reconciliation with the upstream petroleum industry regulator, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Similarly, the NNPC said the emplacement of aggressive cost control measures by the management as well as the successes made in the implementation of system-based controls on funds management also boosted profitability of the company.
Further analysis of the NNPC Group Audited Financial Statement showed that revenue rose by 72.6 percent to N6.42trillion in 2021 as against N3.72 trillion in 2020.
The increase in revenue, the company said, was attributable to the improvement in the production and price of crude oil at the International Market during the period under review.
In terms of total assets, the The audited financial statement further revealed an increase of 2.6 percent from N15.86 trillion in 2020 to N16.27 trillion in 2021.
“Through efficient management of the affairs of the company, the Audited Financial Statement also showed that total liabilities decreased by 8.3 percent from N14.68 trillion in 2020 to N13.46 trillion 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 N2.81 trillion in 2021 as against N1.15 trillion in 2020. This represents 144 percent increase in shareholders fund as of December 31, 2021.
“The cost of sales also rose by 46.3 percent from N3.65 trillion in 2020 to N5.34 trillion in 2021. The increase in cost of sales is attributable mainly to the increase in crude oil production,” the statement said.
The selling and distribution expenses, the company stated, also increased from N36 billion in 2020 to N52 billion in 2021, in line with the rise in revenue from petroleum products cost during the year under review.
However, it said the net impairment loss on financial assets dropped to N65 billion in 2021, against the impairment reversal of N713 billion in 2020.
On assumption of office, Kyari promised to pursue his Transparency, Accountability and Performance Excellence (TAPE) agenda, a five-step strategic roadmap for NNPC’s attainment of efficiency and global excellence.
During the inauguration of the administration, Kyari said pursuing TAPE was the only way to turnaround the company’s fortunes and make it competitive.
Under the roadmap, the NNPC said the transparency component of the agenda was aimed at maintaining positive image, sharing values of integrity and transparency to all stakeholders, while the accountability segment was to assure compliance with business ethics, policies, regulations and accountability to all stakeholders.
On the two-prong item of Performance Excellence, Kyari said the idea was 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.
