JUST IN: How NNPC Made N287bn Profit For Nigerians Despite Covid-19– Kyari

The Group Managing Director of the Nigerian National Petroleum has explained that one of the strategies the Corporation explored to declare N287bn Profit After Tax for the first time in 44 years is the cutting of costs.

The revelation is coming few hours after President Muhammadu Buhari announced on Thursday that the NNPC posted its first PAT of N287bn.

Advertisement

The President was quoted to have said in a statement signed by Femi Adesina, Special Adviser, Media and Publicity that the NNPC losses were reduced from N803bn in 2018 to N1.7bn in 2019 and the eventual declaration of Net Profit in Year 2020 for the first time in its 44-year history.

While revealing the facts behind the figures at a press conference held at the GMD’s Board Room, NNPC Towers, Kyari said the Corporation did not buy what was not vital to its 2020 operations.

Kyari said, “What we did to arrive at this, I think it is a continuous process. Since this administration came into being in 2015, there was a very drastic change in the way we do our business.

“One is to cut cost, to be more efficient and also to ensure that this company is transparent and accountable to Nigerians and therefore it is a process that started in 2015 on the commencement of the administration of president Muhammadu Buhari who has consistently being the Minister of Petroleum Resources in 2015 till this day and the end result is that, that piloting gave us the opportunity to do things differently.

Advertisement

“And because it is a continuous process, when I came onboard, I learnt from what was on ground and also brought a new perspective which is to ensure that I build on what I met and to collaborate and take the steer and direction of the Board of Directors of this company to ensure that cost is cut to be much more cheaper.

“The combination of all this is the result we posted. First is the reduction of the losses in 2019. It is a collective activity, collective action, but ultimately, the things that we did made it possible.”

In 2020, the country was badly plagued by the crash in oil prices due to the Covid-19 pandemic.

Oil market went lowest in history as the U.S. benchmark price for crude, West Texas Intermediate dropped below zero in April.

But Kyari said, the corporation had to resort to eliminating its cost by not buying what it did not need.

Advertisement

The GMD revealed, “We also particularly in 2020 were able to engage all our contractors and insisted on cutting costs to at least 30 per cent. This worked and we were able to pull down most of our procurement cost by 30 per cent.

“Thirdly, we saw the opportunity to be much more efficient by automating our system and processes, that made us faster and also ultimately it reduced so much of logistics cost that we would have been an additional cost to our business. When you combine all this, and the very fact that we started borrowing at a very low rate in 2020. That was a cost reduction.”

The NNPC boss also said no decision has been made regarding declaring dividend to Nigerians from the N287bn net profit.

According to him, the NNPC has an option to either add the profit to the capitalization of the corporation when it fully becomes a company based on the newly signed Petroleum Industry Act or to declare a portion of it as dividend to Nigerians.

He said, “The N287bn is Profit After Tax that is net profit. So, it will be the decision of the Board of Directors to either add this to the capitalization of this company with the passage of the PIA or declare a portion of it.

“It is a very typical practice in every company that you decide what part of it you are going to add to your capital and what proportion of it you are going to declare as dividend and am sure the Board of Directors are listening to me now and subsequently there will be an engagement to make that decision.”

Leave a comment

Advertisement