The Nigerian State-owned national oil company, the Nigerian National Petroleum Corporation (NNPC) transformed from being a liability cost centre in 2018 into a multi-billion profit making entity in 2020 due to new operational processes and systems adopted to ensure transparency, accountability and efficiency, its Group Managing Director, Mele Kyari, said on Thursday.
Kyari was speaking in Abuja during a hybrid media briefing by the Minister of State for Petroleum Resources, Timipreye Sylva to announce what he called “the latest monumental milestone by the NNPC”, by declaring its first profit after tax of N287billion after 44 years of operations.
Sylva who spoke online to the meeting from the United States, where he is currently on a short vacation, said the President, the government and Nigerians were happy with the achievement, particularly coming shortly after the recent passage of the Petroleum Industry Bill (PIB) by the National Assembly and the assent into law of the Petroleum Industry Act (PIA) 2020 by the President.
Earlier, President Buhari, through his Senior Special Adviser on Media, Femi Adesina, announced the publication of the audited financial statement of the NNPC for the year 2020.
In the announcement, the President, who is also the Minister of Petroleum Resources, said the public announcement of the financial position of the NNPC was the first time in the 44-year history of the corporation it would be declaring a net Profit.
“I am pleased to announce the declaration of Profit after Tax of N287 billion in Year 2020 by the NNPC. This is sequel to the completion of the statutory Annual Audit exercise for Year 2020.
“The NNPC losses were reduced from N803 billion in year 2018 to N1.7 billion in year 2019 and the eventual declaration of net profit in Year 2020 for the first time in its 44-year history,” the President said.
“This development is consistent with this administration’s commitment to ensuring prudent management of resources and maximization of value for the Nigerian people from their natural resources,” he added.
How the milestone was achieved
At the briefing by Sylva on Thursday, the NNPC GMD said the achievement of the milestone would not have been possible without the support, guidance and direction of the President.
Apart from consistently reviewing the operations of the NNPC at both the Board and management level, Kyari said the President continued insistence that NNPC could do better if they were transparent and accountable to Nigerians drove their course of action and performance. culminating in the achievement.
“The President almost total lack of interference in the affairs of the NNPC, apart from holding the management accountable to the rule and processes of the company, made the milestone possible.
“This is a very proud moment for the Board and management and to the shareholders that the NNPC is no longer declaring losses, moving from a loss level of N803billion in 2018, by reducing the loss to N1.7billion in 2019, and making a profit after tax of N287billion in 2020.
Although he acknowledged the achievement as a huge progress, Kyari noted that it was not sufficient for the company to rest on its oars.
As the largest corporation in Africa, holding the largest reserve of oil and gas in the whole of Africa, and by ranking across all countries and jurisdictions, he said the NNPC’s potentials are bigger and capable of becoming a trillion Naira profit company.
He expressed the hope that with the cooperation of the Board, coupled with support of the Minister of State for Petroleum Resources and the President, the NNPC would rise to the next level, to be in a position to tell Nigerians that its has come of age to serve all Nigerians and its investors.
“We are proud to say we are no longer a liability to the country. We are adding value and serving the country in very many different ways, including the addition of fiscal value to the country’s fortunes,” Kyari said.
Thanking NNPC workers and their unions as well as the leadership of the Nigeria Labour Congress (NLC) for their cooperation, the NNPC GMD said their support in its effort to realize its objective of making and deepening gas utilization in the country would in the short to long term and ultimately help convert the country into a net exporter of petroleum products.
He said the sed for the seed for the transformation of the NNPC into a success story was sown in 2015 with the coming into office of president Buhari, who introduced series of reforms in the system.
Since then, he said there were drastic changes the way the NNPC handled its business –to cut cost, be more efficient, ensure it was transparent and accountable to Nigerians.
Cutting cost, growing efficiency
To ensure continuity, Kyari said when he was appointed the GMD of the NNPC in 2019, his management not only inherited what was on ground, he brought new perspectives, to encourage building on what were necessary.
Besides, he said he collaborated and took direction of the Board, to cut cost across board, be more efficient with processes and systems and be careful with NNPC’s investments, focusing on the people’s issues to make them happy and work better and more efficiently.
“The combination of all these factors resulted in the reduction of the losses in 2019, before ending with a positive statement of account in 2020,” he said.
On what the NNPC did to cut cost and eliminate wastage, Kyari said the corporation adopted the policy of not buy what it did not need, adding that it insisted that all contractors must cut their cost by at least 30 percent.
This arrangement, he said resulted in most of NNPC’s procurement costs being cut down by at least 30 percent.
Again, he said the NNPC sought more opportunities to be more efficient, by automating its operating systems and processes, which made the company business faster and logistic costs reduced, to eliminate additional costs to the business.
In addition, Kyari said the decision by the NNPC to started borrowing at very low rates in 2020 also resulted in cost reduction and increased profitability.
No decision yet on dividend payment
On plans to pay dividends to shareholders, the GMD said the decision would be considered by the Board of Directors to either add the N287billion to the capitalization of the NNPC, or declare a portion of it as dividend in line with the provisions of the PIA.
On plan for NNPC to list on the Nigerian Stock Exchange (NSE), Kyari said the provisions of the new PIA were clear on the issue after the coming into being of the NNPC Limited.
Although he noted that the PIA did not set the timeframe for NNPC to be listed on the Stock exchange, he said the law allows the opportunity for NNPC shares to be sold to members of the public at the appropriate time.
“There is no date yet for NNPC listing on the Stock Exchange. But there is a possibility of doing it. Because the NNPC has made profit today does not mean we are ready for the Initial Public Offer, considering that it involves a long and tedious process. But it is possible. Having become profitable, NNPC should be open to public investment. We are looking forward to that time,” he said.
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