The Nigerian National Petroleum Company (NNPC) Limited’s Chief Financial Officer, Umar Ajiya, has said that the business is open to selling assets as a means of increasing profit margins and generating larger returns shortly.
During an interview, Ajiya revealed this information on the oil company’s audited financial statement for 2023.
He said that in addition to trying to get the most out of certain of its assets, the company is thinking about selling those that aren’t able to be optimized to get higher returns.
“You have a company that is literally just one year old. We started first of July, 2022. 2023 marks our second year of operation.”
“We are going to sweat the assets by bringing in partners to sweat them in. We will also sell those assets that we think we cannot sweat ourselves.”
“That way, we will rebalance the balance sheet in such a way that the assets are maxed out. We expect the rate of returns to be achieved,” Umar Ajiya stated.
The entire Gross Domestic Product (GDP) of Nigeria is not equal to the total assets held by NNPC, which reported a 28% increase in earnings to N3.2 trillion.
NNPC Prepares for Public Offers
Ajiya added that, if stockholders are eager to invest, the oil company is ready for initial public offerings. He pointed out that to reassure investors that the country’s largest energy company is operating profitably, the Petroleum Industry Act (PIA) suggests a two- to three-year financial history.
He stressed that NNPC has already proven to be profitable in its first two years of operation, and he said that investors are expecting the firm to do well once it becomes public and joins the market.
“To go to the public is basically a shareholder’s decision. We are almost there in the sense that we have at least two or three years of financial history to demonstrate to the investors that the company is on a profitable trajectory. We’ve demonstrated that for the first two years.”
“Hopefully, the shareholders will decide how much to sell down and unwind. It’s really the shareholders’ call.”
“The shareholders are now averse to selling down. They are eager to see us deliver with some strong performance and they can ask us to enter the market at the appropriate time,” the CFO continued.
What to note
The company’s profit margin and the amount of equity in its capital structure have come under scrutiny following the release of NNPC’s audited financial report.
Although the national oil firm saw a 28% gain in profit, surpassing Nigeria’s GDP with N3.2 trillion, many observers think NNPC has not completely maximized its equity and assets.
As it gets poised to go public, NNPC responded by saying that, despite being a limited business for only two years, its profitability shows a strong commitment to corporate governance and has already attracted a lot of interest from shareholders and potential investors.
