·Discloses 67,000bpd pledged for $1bn loan on PH refinery
·No Subsidies paid to any marketers in 9 years, NNPCL CFO
·Says firm handling shortfalls, not paying subsidy
·Underpayments on petrol projected to hit N6.8tn by December ·Company to begin sale of crude in naira to Dangote in October
·Atiku: alleged payment of oil subsidy another chapter of opaque governance under Tinubu
Emmanuel Addeh, Chuks Okocha, Ndubuisi Francis in Abuja and Peter Uzoho in Lagos
Nigerian National Petroleum Company Limited (NNPCL) yesterday released its 2023 Audited Financial Statement (AFS), declaring a net profit of N3.297 trillion at the close of the financial year, which ended in December 2023. NNPCL said this amount represented an increase of over N700 billion or 28 per cent compared to the 2022 profit of N2.548 trillion.
Yesterday, also, the federal government announced that NNPCL would begin sale of crude oil to Dangote Refinery on October 1. According to a post in the official X (formerly Twitter) handle of the Federal Ministry of Finance, Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, disclosed this at a meeting of the Implementation Committee in Abuja.
However, former Vice President and the presidential candidate of Peoples Democratic Party (PDP) in the 2023 general election, Alhaji Atiku Abubakar, described as opaque the allegation of continued payment of oil subsidy by the President Bola Tinubu government.
Giving a breakdown of the national oil company's results in Abuja, NNPCL's Chief Financial Officer, Mr. Umar Ajiya, said when the new management took over, the company was a loss-making corporation, but NNPCL was able to break even at the end of 2019.
Ajiya stated, "By 2020 we had produced the first profit ever for this company, which is N287 billion. The following year, in 2021, the company's profit grew to N674 billion. By the third year, in 2022, the profit jumped to N2.5 trillion.
"Now, in 2023, the profit has also grown by 28 per cent, from N2.5 trillion to N3.297 trillion."
On the asset side, in 2019, Ajiya said the national oil company held an asset base of N8 trillion, and N9.5 trillion in 2020, but by 2021, following the movement of the Joint Venture (JV) assets to the company, the non-current assets grew to N15.3 trillion.
"The transfer of the assets in 2022 saw us grow from N15.3 trillion to N37 trillion of assets. And that has doubled in 2023, resulting from investment and translation difference," Ajiya added.
Part of the presentation made by NNPCL also showed that it pledged a total 67,000 barrels per day (bpd) for its $1 billion debt on the rehabilitation of the Port Harcourt refinery under "Project Yield". The commencement of the refinery had been postponed about six times.
NNPCL also indicated that it had a 21,000bpd pledge on an NEPL loan of $0.950 billion under "Eagle 2 Project" for general corporate purpose while under Project Gazelle, it pledged 90,000 bpd for a $3.3 billion debt for forex stabilisation.
The data equally showed that the 35,000bpd pledged to Dangote refinery for a $1 billion debt under project Bison had been fully offset. It was the same for Project Brogues, wherein 8,000bpd was pledged for $0.3 billion loan amount, but had been settled.
According to Ajiya, NNPCL is expected to produce its financial statements in dollars and translate it to Naira. He explained that the key summary highlighted that NNPCL had a N23.9 trillion revenue, which resulted in a gross profit of N7 trillion, net operating profit of N4.3 trillion, and profit before tax of N5.9 trillion.
He pointed out, "Consequently, we ended the year with N3.297 trillion as profit after tax. On the asset side, because of sizeable amount of receivables, the total assets position stood at N246 trillion. Of course, when we look at the other side of the balance sheet, total liabilities equate to the same. In terms of cash and bank holding at the end of the year, we had N7.7 trillion in the banks."
Ajiya stated that the final dividend was declared last Friday, with the shareholders' funds amounting to N 2.1 trillion, net and interim dividend at N536 billion, and net profit margin for the group at 14 per cent, while the operating profit margin stood at 18 per cent.
With N200 billion share capital, NNPCL pegged earnings per share at N16.49 per share, while dividend per share stood at N11.11, and dividend pay-out was 80 per cent.
Ajiya added, "And the return on equity is at 12 per cent. And the current ratio, which shows our ability to settle our current liabilities, is at 1.1 per cent. So it means we have sufficient near limit assets to settle our current liabilities 100 per cent. In terms of debt to assets, it's literally 1.8 per cent, so long-term survival of the company is assured."
The chief financial officer stated that it was unlike in the past, when, as a corporation, NNPC had to get a going concern sustainability letter from the Federal Ministry of Petroleum Resources.
He said, "So in totality, in 2023, we will say that the government, all types of government, the government take from this company of yours stood at N8.6 trillion. N537 billion has been paid as interim dividend. There is now N2.1 trillion dividend finally declared for payment.
"We also have royalties paid from our own operations of N2.15 trillion. We also have taxes, levies, and statutory deductions amounting to N2.6 trillion.
"To clarify and to make it very clear, we have seen also information out there that the company is over-leveraged. That is false."
Ajiya explained that NNPCL will announce an Initial Public offer (IPO) once the shareholders and board made a decision.
In apparent response to earlier reports, which went viral, that Tinubu had approved fuel subsidy payments by NNPCL, Ajiya said the company was only taking care of petrol importation shortfalls between it and the federation. He state that NNPCL had not paid any subsidy to any company in the past nine years. "No marketer has received any money from us in the name of subsidy payment in the last eight or nine years, not a dime."
Speaking earlier, Chairman of NNPCL board, Chief Pius Akinyelure, said the performance came as the fruit of the Petroleum Industry Act (PIA) 2021, as well as the commitment of the board, management and staff of the company.
Akinyelure added that the shareholders of the company had since approved a final dividend of N2.1 trillion in line with PIA 2021 provisions.
In her remarks at the briefing, Executive Vice President, Upstream, Mrs. Oritsemeyiwa Eyesan, said with improvements witnessed as a result of the renewed vigour in the war against crude oil theft and pipeline vandalism, NNPCL was targeting two million barrels per day crude oil production by the end of the year.
NNPC to Begin Sale of Crude Oil in Naira to Dangote October 1
NNPCL will begin the sale of crude oil to Dangote Refinery on Ocober 1, the federal government disclosed on Monday.
Edun had last week inaugurated a technical sub-committee tasked with developing the framework for the sale of crude oil to local refineries in naira.
However, the tweet, where the development was announced, was silent on when sales to other local refineries in naira will commence.
The post was captioned, "HM Wale Edun Presides Over Meeting on Crude Oil Sales in Naira Implementation."
It read, "The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, today (Monday) led the Implementation Committee meeting on the transition to Crude Oil Sales in Naira.
"The meeting reviewed progress on key initiatives, including the upcoming commencement of Naira payments for crude oil sales to the Dangote Refinery starting October 1, 2024.
"Dr. Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service @FIRSNigeria and Chairman of the Technical Sub-Committee, reported that the first PMS delivery from Dangote is expected next month under existing agreements. "
It stated that key roles were outlined for stakeholders, including the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Central Bank of Nigeria (CBN), Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and African Export-Import Bank (Afreximbank), to ensure smooth implementation.
Updates on the Port Harcourt and Dangote refineries were also provided, with significant production increases expected from November 2024.
The post further disclosed the Edun emphasised the need for transparency and directed the technical sub-committee to finalise details and prepare a report for the president, confirming that his directives are on track for implementation from September.
The Federal Executive Council (FEC) had on July 29 approved Tinubu's proposal for NNPCL to end the sale of crude oil to local refineries in foreign currency, culminating in the approval that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, with Dangote refinery as a pilot.
Following the development, Edun inaugurated a technical sub-committee last Thursday in Abuja, chaired by him.
Atiku: Alleged Payment of Oil Subsidy Another Chapter of Opaque Governance under Tinubu
Atiku described as opaque the payment of oil subsidy by the Tinubu administration.
The former vice president said iin a statement, "The latest revelations circulating through credible media outlets regarding the federal government's covert continuation of the subsidy on Premium Motor Spirit (PMS) represent another chapter in the opaque governance under President Bola Tinubu's administration.
"This development starkly contrasts with the president's firm assertions in a national broadcast, which followed closely on the heels of public protests decrying poor governance, where he declared the subsidy regime concluded.
"However, disclosures prior to his announcement have consistently indicated a resurgence of subsidy payments, albeit through less transparent means."
According to Atiku, "This dissonance between the president's words and his actions not only undermines the moral fabric of his leadership but also significantly erodes the credibility of his administration.
"At a time when the nation grapples with severe fuel scarcity and escalating energy costs, the continued delays in the re-operation of the Port Harcourt refinery stand as a national disgrace -- a failure that rests firmly on the shoulders of President Tinubu, who also holds the office of the Minister of Petroleum Resources."
Atiku also said, "The persistent denials by NNPC Limited only exacerbate the plight of Nigerians, who endure severe difficulties due to fuel shortages and resultant price inflations."
He explained that amid a contentious dispute between local investors favouring refinery operations and those advocating imported PMS, the president's silence was profoundly disconcerting.
According to Atiku, "It is paramount that the president, who is intrinsically responsible for overseeing and intervening in such critical disputes to safeguard national interests, steps up to fulfil these expectations.
"The veil of secrecy shrouding the downstream petroleum sector, coupled with alarming reports of NNPC Limited diverting funds intended for other purposes to cover subsidy payments, adds layers of confusion that are unbearably unsettling.
"If these reports hold true, they portend grave implications for the integrity of our fiscal federalism. It is imperative, therefore, that the Tinubu administration urgently clarify the entanglements surrounding the subsidy policy and the refining of PMS."
Tinubu gives NNPC go-ahead to spend federation's dividend to offset subsidy backlog
Despite persistent denial, President Bola Tinubu approved a request by Nigerian National Petroleum Company Limited (NNPCL) to spend the 2023 final dividends due to the federation to pay for petrol subsidy, TheCable reported yesterday.
Tinubu also gave the go-ahead for the suspension of the payment of 2024 interim dividends to the federation in order to augment NNPC's cash flow, the report added.
But NNPCL insisted yesterday that it was not paying subsidy, but only interfacing with the federal government to manage petrol importation and sorting out differentials when necessary.
Chief Financial Officer of the national oil company, Umar Ajiya, said yesterday in Abuja, "In the last eight or nine years, this company or corporation, as it was, has not paid anybody a dime or N1 as subsidy. No one has been paid a kobo by the NNPC in the name of subsidy and no marketer has received money from us by way of subsidy.
"What has been happening is that we have been importing Premium Motor Spirit (PMS) or petrol, which is landing at a certain cost price, and government is telling us to sell at half price. The difference between that landing price and pump price is what we call shortfall or you call it subsidy.
"And the deal is between the federation and ourselves to reconcile and sometimes they give us money, sometimes we make up."
But the report pointed out that in addition, the national oil company told the president it will not be able to remit taxes and royalties to the federation account for now because of the subsidy payments, which it termed "subsidy shortfall/FX differential".
The report said the cumulative petrol subsidy bill from August 2023 will hit N6.884 trillion by December 2024 -- leaving NNPCL unable to remit N3.987 trillion in taxes and royalties to the federation account.
It said NNPCL was expected to pause the payment of interim dividends for eight months this year -- from May to December.
Interim dividends -- based on inflow projections -- are usually remitted monthly into the federation account and shared by the three tiers of government, while the final dividends are paid at the end of the year after reconciliation.
Under the Petroleum Industry Act (PIA), NNPCL is obligated to pay taxes and royalties as well as dividends to the federation, its sole shareholder.
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In June 2024, NNPCL, the report said, cried out to Tinubu that the subsidy payments were negatively impacting its cash flow and it was struggling to remain a "going concern".
The company said it might not be able to sustain petrol imports because of the ballooning subsidy bill, which it blamed on "forex pressure".
Group Chief Executive Officer of NNPCL, Mele Kyari, was said to have informed the president that when subsidy was removed in June 2023, it led to monthly savings of N400 billion to the federation.
Kyari said that enabled the company to remit its taxes and royalties totalling N2.032 trillion into a sequestered account at the Central Bank of Nigeria (CBN) as at January 2024.
He said the development was short-lived with the devaluation of the naira, which led to month-on-month escalation in the NAFEX exchange rate.
In August 2023, NNPCL moved from surplus to negative in fuel importation costs, incurring a subsidy bill of N52.73 billion, the report revealed.
That increased to N57.59 billion in September and N212.28 billion in October, before ballooning to N665.60 billion in November, when exchange rate had more than doubled from the time subsidy was removed, TheCable report added.
The bill fell slightly to N537.66 billion in December before hitting a new high of N693.67 billion in January 2024.
According to the report, "The bill dropped to N592.09 billion the following month and N497.39 billion in March before rising again to N833.68 billion in April, forcing Kyari to send an SOS to the president.
"He said the situation had continued to exert 'undue pressure' on the NNPC, leading to its inability to remit royalties and taxes into the federation account.
"Kyari further said national energy security was being threatened as the NNPC might not be able to sustain petrol imports beyond July 2024."
In making his case to the president, Kyari was reported to have said NNPC had implemented a number of strategies between August 2023 and April 2024 but the situation was getting out of hand.
The strategies included improving oil production by fighting theft and vandalism, debt rescheduling/forward sales, payment deferrals to suppliers and contractors, deferrals of non-critical projects, and debt recovery.
However, the situation was still not looking good, as projections showed a consistent increase in cash flow deficit, mainly because of the exchange rate.
Whereas an estimated N3.987 trillion in taxes and royalties will be due the federation account by December 2024, NNPCL said it will still be owed N2.897 trillion after reconciliation of its obligations and subsidy shortfall.
Kyari was said to have requested that Tinubu should approve the utilisation of the final dividends due the federation for 2023 and deferment of the remaining interim dividends for 2024 to defray the subsidy costs.
"The president approved Kyari's request on June 6, 2024," the report said.
The situation was made worse because when petrol subsidy was removed in June 2023, the exchange rate was N463/$, but now about N1,500/$, while crude oil prices had also been high, making it a "double whammy" for NNPCL.
