Nigeria’s state oil company, NNPC Limited, has released its 2023 full-year audited results, showing a profit after tax of N3.29 trillion.
This represents a significant increase from the N2.5 trillion profit reported in 2022, marking a 31.6% year-on-year growth and the largest corporate profit reported by any Nigerian company, according to Nairametrics records.
Total revenue generated for the year was N23.9 trillion or $26.4 billion using the exchange rate of N907/$1 which was the closing rate used for the year 2023.
Revenue from Nigeria amounted to N21.3 trillion , representing 89.1% of total revenue, indicating that the corporation earned the majority of its income domestically rather than from international operations.
Key highlights
- Revenue – N23.9 trillion vs N8.8 trillion (171.5%)
- Gross Profit – N7 trillion vs N2.1 trillion (233%)
- Operating Expenses – N3.1 trillion vs N1.7 trillion (80.9%)
- Operating Profit – N4.3 trillion vs N694.2 billion (525%)
- Pre-tax Profit – N5.9 trillion vs N1.8 trillion (227%)
- Income Tax – N2.69 trillion
- Profit after tax – N3.29 trillion vs N2.5 trillion (30.6%)
- Total Assets – N246.8 trillion vs N58.5 trillion (321%)
- Cash and Bank Balances – N7.1 trillion vs N2.3 trillion (200%)
- Cash flow from operations – N10 trillion vs N4.6 trillion (117.3%)
- Cash flow from investing – N3.7 trillion vs N2.1 trillion (76.1%)
- NNPC Ltd reported that it does not have any external loans.
Total Assets surpass Nigeria’s nominal GDP
Even more remarkable is the company’s total assets, which were reported at a staggering N246 trillion ($153 billion), surpassing Nigeria’s nominal gross domestic product (GDP).
According to the National Bureau of Statistics, Nigeria’s nominal GDP in 2023 was N229.9 trillion.
The significant size of the oil company’s total assets was driven by its trade and other receivables, which stood at N162.9 trillion, and fixed assets (property, plants, and equipment) valued at N67.8 trillion, bringing the total to N230.7 trillion.
The increase in the value of trade and other receivables, as well as fixed assets, can be attributed to the impact of foreign currency translation, as most of the company’s assets are denominated in dollars.
Additionally, NNPC Ltd’s revenue from crude oil sales is also dollarized, which likely contributed significantly to the rise in naira terms.
The company reported that its currency translation rate for fixed assets was N907.1/$1 compared to N448.4/$1 in 2022.
For revenue, the company used an average rate of N644.2/$1, compared to N431.3/$1 in the previous year.
Analysis
A cursory review of the results reveals that the company’s revenue of N23.9 trillion is the largest it has ever reported.
Crude Oil Sales – The company generates revenue from crude oil sales, petroleum product sales, natural gas, power, and services.
- Revenue from crude oil sales reached N14 trillion, a significant increase from the N3.5 trillion reported the previous year.
- Interestingly, in terms of geographical markets, Nigeria generated N12 trillion in revenue, with Panama coming in second at N2 trillion.
- Crude oil sales revenue in 2022 was also higher from Panama, amounting to about N2.9 trillion, compared to Nigeria’s N545.3 billion.
Petroleum Product Sales – The company reported revenue of N7.1 trillion from petroleum product sales, up from N4.5 trillion the previous year.
- Petroleum product sales include the sale of fuel, kerosene, diesel, naptha, and other related products.
- Once again, Nigeria led in terms of geographical markets, generating N6.9 trillion compared to N4.3 trillion the previous year. This represents around 97% of total petroleum product sales, with sales to the Bahamas generating just N151.7 billion (up from N129.5 billion a year earlier).
- The NNPC has been the sole importer of petroleum products in Nigeria for years, relying on imports through its controversial Direct Sale, Direct Purchase (DSDP) structure.
- Following the removal of the fuel subsidy on May 29, 2023, NNPC Ltd’s profits from this division were expected to rise as product sales reflect higher prices for the majority of the year.
Revenue from Natural Gas – This category represents the invoice value of natural gas sold to third parties, generating about N2.3 trillion in the year under review, compared to N683 billion reported the previous year.
- Nigeria was again the major source of revenue, contributing N1.9 trillion (up from N638.7 billion in 2022), accounting for 82.6% of total revenues.
- The Cayman Islands also contributed to gas revenue, generating N402.7 billion, compared to N3.9 billion, N24 billion, and N16.3 billion from the UK, Panama, and the Cayman Islands respectively in the previous year.
Revenue from Services – This includes revenue from seismic contracts, time-based contracts, gas transmission tariffs, shipping, marine, and engineering services.
- The company generated a total of N464 billion during the year, up from N100.5 billion the previous year.
- Nigeria contributed N379.2 billion towards revenue from services, compared to zero in 2022. Another significant contribution came from Cyprus, which generated N80.49 billion.
- Interestingly, the entire revenue of N100.5 billion generated in 2022 came from the Cayman Islands. However, in 2023, the Cayman Islands contributed nothing to revenue.
Cash Payments – NNPC Limited reported a massive increase in its cash and cash equivalents by N5.232 trillion during the year, ending with a cash balance of N7.7 trillion.
To the Government
- Income tax paid was N497.2 billion in 2023, compared to N102.5 billion in 2022.
- Royalties paid in cash amounted to N669 billion, up from N76.5 billion in 2022.
- Dividends paid to its sole shareholder, the Federal Government, were N546.6 billion, compared to zero a year earlier.
Investing
- The company earned N230.9 billion from the sale of property, plants, and equipment.
- However, it paid N2.5 trillion for the purchase of property, plants, and equipment.
- An additional N370.2 billion was spent on the purchase of exploration and evaluation assets.
- Another N1.2 trillion was paid for the purchase of oil and gas properties.
Interest Payments
- NNPC Limited reported that it does not have any external loans, so the interest payments appear to be for legacy loans.
- During the year, it paid N441.45 billion in interest payments.