Nigeria: Audit of NNPC's Account Shows Corporation Could Go Bankrupt

9 September 2021

<i>NNPC directors say they are upbeat about the corporation's potential to keep running in the short term.</sub>

Nigeria's state-owned oil company, <a target="_blank" href="https://www.nnpcgroup.com/Pages/Home.aspx">Nigerian National Petroleum Corporation (NNPC)</a>, could be teetering on the brink of bankruptcy as the group's current liabilities outweigh its current assets by as much as N4.6 trillion, the auditors' report of its 2020 financials issued on Wednesday showed.

"The group reported a net profit of N287.2 billion (Corporation: N235.3 billion) during the year ended 31 December 2020 and, as at that date, the current liabilities exceeded its current assets by N4.6 trillion (Corporation: N729.1 billion)," the auditors

NNPC, whose accounts had for years been kept away from public knowledge, announced its first profit in 44 years late August.

That has <a target="_blank" href="https://www.premiumtimesng.com/news/headlines/483891-nnpc-revenue-down-in-2020-but-govt-refund-helps-firm-record-profit.html">provoked curiosity</a> among analysts, intent on knowing how the firm dramatically curbed losses from N803 billion in 2018 to N1.7 billion in 2019 and then the steep swing to a N287.2 billion profit last year.

Despite reporting the profit, accumulated losses in recent years came to N1.5 trillion for the group and N395 billion for the corporation.

Among the moves taken to mitigate the big threat to the continuity of its operations revealed by the audit scrutiny is NNPC's proposed recapitalisation, which Group Managing Director Mele Kyari

It had consummated a <a target="_blank" href="https://www.reuters.com/article/us-nigeria-oil-prefinance-exclusive-idUSKCN24T1QW">similar deal</a> five months earlier when it agreed with Matrix and Vitol Group for a $1.5 billion prepayment to be repaid with 15,000 barrels of crude with each of the parties for five years.

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