Amid low investment arising from the onslaught in energy transition, the management of the Nigerian National Petroleum Company Ltd is sharply transforming the firm into a super-power with a record-breaking rise in assets by 322 per cent to N246.8tn.
The NNPCL silenced critics when it released its 2023 Audited Financial Accounts and declared a record pre-tax profit of N5.98tn and a net profit of N3.29tn. The state-owned oil firm also paid a tax valued at N2.69tn and declared a dividend of N2.1tn.
Against all odds, the NNPC Ltd grew total assets by 322 per cent from N58.48tn in 2022 to N246.8tn by 2023, a feat major state-owned oil companies could not achieve in 2023.
Last year, Saudi Aramco declared a 15.4 per cent rise in its assets from $576bn in 2022 to $664.7bn in 2023, which is far below the percentage growth recorded by the NNPC Ltd year-on-year.
Aramco also saw a 24.7 percent decline in profit as net income dropped from $161.07bn in 2022 to $121.25bn in 2023.
“The decrease mainly reflects the impact of lower crude oil prices and lower volumes sold, and weakening refining and chemicals margins,” Aramco said.
Meanwhile, another oil giant, PetroChina Co. Ltd. saw a dip in its assets from $392.6bn in 2022 to $384.6bn in 2023 due to economic headwinds.
However, the management of the NNPC Ltd led by the Group Chief Executive Officer, Mele Kyari, scaled through the challenges experienced by oil and gas players and was able to deliver value for Nigerians in terms of profits and asset growth.
The NNPCL also faced domestic obstacles like oil theft and naira devaluation, which has significantly impacted the dollar valuation of most Nigerian firms.
NNPC Ltd’s resilience to domestic and global shocks has crowned it to emerge as one of the superpowers in the global oil and gas industry. Some experts believe the NNPCL has become the ‘Jewel of the oil industry.’’
A broader look at NNPC Ltd’s books showed that the company’s non-current assets rose by 101 per cent from N36.9tn in 2022 to N74.17tn in 2023, showing a stronger ability to undertake long-term investments that contribute to its operational capabilities and future growth.
From N9.29tn in 2022, shareholder’s equity surged by 206.9 per cent to a surprise N28bn by the end of 2023. This underpins the commitment to change the narrative despite the pressure in the global oil and gas industry.
The NNPC is owned by the Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated in equal portions on behalf of the Federal Government.
The Chief Executive Officer of Cowry Assets Management Ltd, Jonhson Chukwu, said the performance was mind-blowing.
“I was quite impressed. Do you know why? Everything we’ve heard in the recent past is all negatives about the general industry, what is going on and that. And then today we’re looking at how NNPC had turned the corner,” Chukwu said.
The Cowry Assets boss explained that the NNPCL could record the performance because the management is applying the standards applicable to private sector enterprises.
Chukwu said, “They would have instilled some level of performance in different arms of NNPC Ltd. They have also escalated their level of reporting, and now do you have a detailed financial statement from an NNPC. For years, we did not have a detailed financial statement from an NNPC.
“So, I think NNPC is an incorporated company, like what we have in NNPC Limited, unlike what you have in Nigerian National Petroleum Corporation, when it was a corporation, and then there was no level of accountability.
“What has been brought to bear are the standards that are applicable to private sector enterprises, in terms of performance-based, board of oversight functions, budgeting, and then appraisals that actually measure performance against targets.
“And I think those things have been institutionalized and which is why we are seeing consistency in terms of their profitability and we’re seeing a steady growth in their profitability over these past few years since they turned the corner. I believe those are the factors that were brought to the bear that made the company turn the corner.”
The Chief Economist and Chief Executive Officer of Analytics’ Data Services Resources Ltd, Dr. Afolabi Emmanuel Olowookere said NNPC Ltd’s performance showed that the company has huge potential to rank among the best state-owned corporations.
Olowookere said, “It is good news that NNPC has not only been able to increase revenue significantly but very importantly, the profits it has been able to generate in the last three years.
“One major thing it has also shown is that there is potential for increase. That means if it is possible for NNPC to be profitable in the last three years, it can be profitable, and the country can continue to benefit from that, especially the post-Petroleum Industry Act.”
The expert said NNPCL would have achieved better growth in revenue, profit, and assets base if “there was no oil theft.”
Olowookere said, “In the case of NNPCL, oil theft is there, vandalism and other factors are there. When you look at this, NNPC has done far better than it used to in the last five years but could have done better. Imagine we were able to address oil theft and vandalism. We would have had better results.”
Ukpe Philip writes from Abuja.