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NNPC’s N287bn declared profit: Mischief or manipulation of figures?

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3 years ago

September 9, 2021

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By Ifeanyi Izeze

The public announcement of a net profit of N287 billion by the Nigerian National Petroleum Corporation (NNPC) for the first time in its 43years plus history was made by the President, General Mohammadu Buhari though by proxy through a press statement. And if he expected applause from Nigerians he must have been thoroughly disappointed because rather, Nigerians have been applauding the God of miracles that can turn overnight the loss and sleaze-infected NNPC into a profit declaring venture.

How do reconcile that the Petroleum Industry Act signed into law and just few days from that, the next big announcement is NNPC declaring profits for the first time in almost 44 years? The sudden profitability of NNPC proves that miracles can happen anywhere, including boardrooms and inside the presidential villa. This is what Nigerians are saying!

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It would be recalled that on 19 April 2021, it was reported that the total revenue generated by the NNPC from crude oil and gas exports plunged by 45.98 per cent in 2020 amid the COVID-19-induced collapse in price and demand.

Nigeria’s revenue from the exports of crude oil and gas also fell to $2.62bn in 2020 from $4.85bn in 2019. Proceeds from the sale of domestic crude oil and gas also dropped to N1.54trillion in 2020 from N1.57trillion in 2019.

Also, available data show that while the group declared profit of N287 billion, it has current liabilities exceeding current assets by N4.6 trillion, up by N200 billion from the figure in 2019 when it declared a loss of N1.7 billion. Additionally, the group suffered recurring losses throughout the year, resulting in accumulated losses of N1.5 trillion.

So it’s not surprising that industry experts are querying the possibility of an NNPC as an entity which cannot point to any productive or trading activities that it executed in 2020 to generate and report such huge profits of N287bn in 2020 from a consistent 6 years loss positions (2015 to 2020).

The argument is that what the Group Managing Director of the NNPC, Melee Kyari, presented as profit from direct NNPC operations and activities was actually a retention of 20 percent of the profits and dividends paid by independent entities, which the NNPC received on behalf of the federation (Federal, States and Local Governments).

Before now, the Federal Government and the states used to collect 100 percent of all the dividends paid by these independent entities.

However, in 2020, the NNPC decided to retain 20 percent from the dividends paid by the Nigerian Liquefied Natural Gas Limited (NLNG), the Nigerian Gas Company (NGC), the West African Gas Pipeline (Operated by Chevron); Duke Oil; Nigerian Petroleum Development Company (NPDC); Bonny Transport Company; Wheel Insurance amongst other independent entities and consolidated same in their balance sheet and declared as profit.

Dr Nnaemeka Obiaraeri, in his widely circulated comment said, “It is a grave affront to our sensibilities and intelligence for these guys to receive about $2.5billion/N1trillion (using CBN official rates) as combined dividends on behalf of the federation from independent entities established by acts of Parliament for the benefits of the federation, consolidate the retained 20 percent portion of dividends meant for the Federation accounts and then report it (N287bn) as profits made from the activities of a corporation that did nothing, other than, import petrol (PMS) at a loss under subsidies and ignorant people clap away without asking questions.”

Now, from obvious indications, the NNPC as it’s in the character of the organisation deliberately caused the confusion and uproar that greeted the announcement of its declared profit. The corporation should have done more on its own to breakdown how it arrived at the figure declared.

It should have provided details of how they moved from a loss position of N1.7 billion in 2019 to profit of N287 billion in 2020. This would have clarified allegations that it dipped its fingers in the federation account in order to announce a profit of N287bn. Rather the NNPC turned the entire issue into a political celebration of fulfilling the assurance of transparent operation as purportedly engendered by Mai Gaskiya.

Severally, I have canvassed that the NNPC should insist on having and funding its own operational budget rather than the present arrangement of always running to the Presidency and the National Assembly to ask for money for its operations including even buying materials for routine office work.

The truth of the matter is that curiously, all the companies mentioned as “independent business concerns established by Acts of Parliament for the interest of the Federation” are all Strategic Business Units (SBUs) of the NNPC with the corporation majorly owning them or at least holding controlling shares. This is the truth!

Though NNPC deserves the bashing because it has allowed itself to be badly embedded in politics and the apron string of the presidency, the truth is that it is unfair to only attribute the abysmally performing refineries to the corporation forgetting that the refining companies are also independent entities in the bouquet of the corporation’s Strategic Business Units also established by an Act of Parliament.

Why should it be the Presidency in the first instance announcing such feat if it was actually so and using a mere press statement issued by his media aide?

Has Buhari as the substantive petroleum minister ever announced or tried to explain the serial losses in the refineries and the ever-unbalanced accounts of the subsidy and equalisation funds? Are these agencies not under his purview as petroleum minister also?

So the attacks and allegations have life in the circumstances surrounding the declared profit simply because the NNPC for reasons that border more on blind loyalty, eye service and evil genius relegated such important issue to the presidential media aide who had no knowledge of how the money was arrived at.

Interestingly, nobody has contended the revelation that the corporation now keeps 20 percent of the declared dividends of some of its performing investments. The question should be: who permitted the corporation to do that, was the authourity granted by the Presidency or the National Assembly?

So if no eyebrow has been raised over such action, what is wrong in the corporation consolidating the earnings and declaring such as the group’s profit in the year under review?

It was because of the spirit of lies and fraud that strongly bedevilled everything done in the NNPC that’s making Nigerians allege that the unprecedented declaration of profit by the corporation was orchestrated by the clause in the recently passed PIA that ceded 30 percent of the corporation’s declared profit to it for Frontiers exploration in the inland basins.

Also some have alleged that the sudden declaration of profit was to prepare the way for the sale of equity shares by the corporation as indicated by the administrators of the nation’s apex oil concern.

In all these controversies, the NNPC is to be blamed for shabbily handling what could have been cleanly celebrated a feat. But to worry, we are used to the corporation’s serial misdemeanours. God Bless Nigeria!