In an unprecedented and overwhelming achievement, amidst the challenging operating environment that has tested the resilience of institutions and businesses globally, the Nigerian National Petroleum Company Limited, NNPCL has continued to weather the storm by recently posting its second straight annual profit after tax of N674.1 billion in 2021 thus showing a significant increase of 135% against N287 billion it recorded in 2020.
NNPCL posted its first profit of N287 billion in 44 years of its existenc during the 2020 financial year.
The positive result is coming as global economies continue to struggle with the recessionary forces and weak economic outlook around many businesses globally.
In spite of a tough and volatile operating environment, NNPCL’s investment strategy proved resilient and enabled the national oil company to deliver favourable outcomes as shown by the 2021 financial statement.
The group’s account was audited by internationally recognied auditing firms, PricewaterhouseCoopers, SIAO, and our prolific, professional chattered accounting firm, Muntari Dangana & Co.
Indeed like Mele Kyari, NNPCL’s Chief Executive Officer said: the company has progressed to a new performance level by making profit and publishing its annual financial report from 2018.
However, NNPCL did explain that three components were responsible for the worst performance previously experienced by the group. They include increase in cost of sales and increase in crude cost; increase in the general and administration expenses, which almost doubled from N474 billion to N894 billion; and an increase in impairment of receivables and other assets in the year by almost 300 per cent.
It is very heart warming to see that NNPC’s rise in profit is mainly occasioned by a significant increase in revenue and a less proportionate increase in the cost of sales resulting in 1,556.9% increase in gross profit.
Other factors that contributed to the high profitability of the NNPCL are the outcome of the N173.7 billion arising from reconciliation with the Federal Inland Revenue Service, a stronger emphasis on performance management, rationalisation of non-essential expenditure and implementation of the transparency and accountability agenda as exemplified by the country,’s leadership under President Muhammadu Buhari.
The group’s performance and subsequent profitability were further bolstered by the positive impact of the N193 billion royalty, which was written back as a result of the reconciliation with the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, emplacement of aggressive cost control measures by management as well as the successes made in the implementation of system-based controls on funds management.
The increase in revenue by NNPCL is also attributable to improvement in the production and price of crude oil during the period under review.
Through efficient management of its affairs, the audited financial statement also showed that total liabilities decreased by 8.3% from N14.68 trillion in 2020 to N13.46 trillion in 2021.
In line with the growth trajectory of the current management, the shareholders’ fund position of the NNPCL Group also followed an upward trend as it rose to N2.81 trillion in 2021 as against N1.815 trillion in 2020 thus representing 144% increase in shareholders’ funds in 2021.
The cost of sales also rose by 46.3% from N3.65 trillion in 2020 to N5.34 trillion in 2021. The increase in the cost of sales is attributable mainly to the increase in crude oil production.
The selling and distribution expenses also increased from N36b billion in 2020 to N52 billion in 2021. This increase is in line with the rise in revenue from petroleum product costs during the year under review.
Since assuming office, Kyari has pursued his Transparency, Accountability and Performance Excellence, TAPE agenda, a five-step strategic roadmap for NNPCL’s attainment of efficiency and global excellence dutifully.
Kyari had said that pursuing TAPE was the only way to turn around the corporation and make it competitive.
Under the roadmap, the Transparency component of the agenda was aimed at maintaining a positive image, and sharing values of integrity and transparency with all stakeholders, while the Accountability segment of the campaign is to assure compliance with business ethics, policies, regulations and accountability to all stakeholders.
In terms of the two-pronged items of performance excellence, Kyari has said the idea was to entrench a high level of efficiency anchored on efficient implementation of business processes, which would also emplace an appropriate reward system for exceptional performance among the workforce.
It is clear that NNPC has today been transformed under Mele Kyari into a profit making company as envisaged by its founding fathers as against what it used to be in the past
I have no doubt whatsoever in my mind that NNPCL’s transformation by the PMB administration into a limited liability company will never be a regrettable action to the government and people of Nigeria.
MUSA ILALLAH
EMEKA ANYAOKU STREET, ABUJA
musahk123@yahoo.com
