Despite declaring a profit after tax of N2.52trillion, the Nigerian National Petroleum Company Limited, and its affiliates as a Group spent more than 76 percent of total revenue realized during the 2022 financial year on the importation of petroleum products and other costs of its services, a review of its 2022 Consolidated Financial Statement has revealed.
Details in the Group’s Profit and Loss Account for the 16 months ended December 31, 2022, showed that out of a total of N8.82 trn reported as revenue for the period, a total of N6.71 trn, or 76.1 percent went to various cost centres.
The cost did not however include another N1.7trn on general and administrative expenses bordering on staff welfare and employee benefits security transport and travelling and other operational costs incurred during the year.
Details
An analysis of the financial statement obtained on Friday revealed that the Group’s revenues came mainly from crude oil sales (N3.53trn); petroleum products sales (N4.5trn); natural gas sales (N683bn), and provision of services, such as seismic contracts. gas transmission tariffs, shipping, marine, and engineering (N100.53bn).
A breakdown of the various cost components showed that during the period under review, the Group spent about N4.76trn on the importation of petroleum products, including the sale of premium motor spirit (PMS), popularly called petrol; dual purpose kerosene (DPK), also known as diesel; Automotive Gas Oil (AGO), Naphtha, lubricants, and other products.
Out of the amount spent on the supply of petroleum products, the report said under-recovery cost on the supply of petrol gulped about N2.4trn as at December 31, 2022, while about N251.97bn was spent on crude handling and port charges, and another N22.88 bn on selling and distribution expenses, including thru’ put charges, tariff and marketing and distribution expenses.
Other costs incurred by the Group during the period included about N618.8bn on payment of royalties to the Federal Government; N145.92bn on depreciation and depletion of oil and gas assets; N103.05bn as losses from gas flaring as well as N266.01bn for other direct costs.
Also, the report said other costs included freight, insurance, and other charges; amortization of intangible assets; direct oil well expenses; safety, environment, and pollution control; Niger Delta Development Commission levy; rig site and simulation expenses; allocated technical and production costs;; variation in crude oil stock; pipeline maintenance costs; insurance and security expenses; labour costs; flow-station expenses, production costs; technical and consultancy charges; write-off of oil and gas assets, and write-down of inventories.
Details of the general and administrative expenses included N266bn on settlement of employee benefits; N267.98 bn on security; N193.31bn on transport and travelling; N144.28bn on repairs and maintenance and N496.36bn on other expenses.
Apart from about N311.099bn it recouped as a result of net impairment reversals on some financial assets, the Group said it made an operating profit of about N694.296bn, added to other incomes totaling N1.17trn, including foreign exchange gain of N296.04bn; gain on variation in crude oil stock N501.4bn); sundry incomes N166.5bn; management fees (N51.2bn) and income from penalties and fines (N45.5bn) and N10.75bn from finance income. A total of N1.81trin was reported as profit before tax, after deducting about N73.1bn as finance costs.
With about N1.79trn recorded as deferred tax, the Group said a balance of about N717.07bn was realized as tax credit as a result of the payment of about N1.01trn as current tax charge, made up of company income tax, petroleum profit tax charge, education tax, NASENI levy and police trust fund, current tax charge,
When the balance of N717.07bn tax credit was added to N1.81trn profit before income tax, the Group said it realized about N2.52trn as profit for the period under review, with about N2.52trn attributable to the owners of the company, while N1.79 bn was reserved for the non-controlling interests.
With the Group and company’s total assets value at N58.65trn and N39.5trn respectively, and total liabilities at N49.36trn and N31.13trn respectively, experts say both the Group and company have demonstrated positive strengths as going concerns, although there was still room for improvement.
From loss to sustained profit
The performance of the Group reflected a significant departure from its past records, which showed a build-up from a colossal loss of over N803.9bn in 2018 to a remarkable improvement to a loss of just N2.3bn in 2019, before climbing to a profit after tax of N287bn in 2020 and about 134.8 percent jump to about N674.1bn profit after tax in 2021.
Although the latest consolidated financial statement is coming behind schedule, as it should have been released in 2023, those familiar with the system said apart from its transition to a public limited liability company regulated under the Companies and Allied Matters Act (CAMA), this was the first time the company would be publishing its accounts in line with the provisions of the Petroleum Industry Act (PIA).
Analysts, however, commend the Group Chief Executive of the NNPC, Mele Kyari, for keeping faith with his promise on assumption of office in 2019 to ensure the regular publication of the financial accounts of the company under his Transparency, Accountability, and Performance Excellence (TAPE) agenda.
