NNPC Shareholders’ Fund Rises By 166%, Hits N1.15trn, Releases 2020 Audited Account

… Drives Down Costs Of Sales By 15.1% To N2.2trn

Contrary to market expectations, the Nigerian National Petroleum Corporation on Wednesday released its audited financial statements for the 2020 financial period with the Group shareholders fund rising by 161 per cent to hit N1.15trn in 2020.

This represents an increase of about N717bn when compared to the N433bn recorded in the 2019 financial period.

The publication of the audited financial statement is coming barely two weeks after the NNPC hinted that it had posted its first profit in its 44-year existence.

In the financial statement released on Wednesday, the Corporation recorded an increase in total current assets by 18.7 per cent, compared to that of 2019.

It also showed that the Group Working Capital remained below the line at N4.56trn in 2020, as against the N4.44trn recorded in 2019.

However, NNPC Group revenue in its 2020 financial year stood at N3.718trn as against the N4.634trn it posted in 2019.

The decrease in revenue was attributed to the decline in the production and price of crude oil due to global impact of Covid-19.

In addition, the NNPC Group’s Cost of Sales decreased from N3.920trn in 2019 to N3.654trn in 2020, which was a decrease of 6.7 per cent.

The decrease in cost of sales was also attributed mainly to the aggressive cost control measures emplaced by management in reality with Covid-19 pandemic.

As disclosed previously, the Group profit increased from a loss of N1.7bn in 2019 to a profit of N287bn in 2020.

This was mainly occasioned by a decrease in cost of sales and impairment right back during the year under review as well as the stronger emphasis on performance management, rationalization of non-essential expenditure and implementation of its Transparency, Accountability and Performance Excellence (TAPE) agenda.

The financial results showed that the Group’s selling and distribution expenses decreased from N46bn in 2019 to N36bn in 2020, which was a reduction by 21 per cent.

This was attributed this to the decrease in petroleum product cost during the year under review.

Net impairment reversal on financial assets stood at N713bn in 2020, as against impairment loss of N273bn in 2019.

This decrease was attributed to a review of commercial arrangements which led to recovery of legacy debts and impairment write-back in the Nigerian Petroleum Development Company (NPDC) as approved by NEC.

The Group’s existing share capital does not support the current level of business activities and the strategic initiatives of the NNPC.
Consequently, this gave rise to the on-going capital injection/recapitalization of the Group.

On the other hand, the corporation’s revenue for the 2020 financial year stood at N2.131trn as against N2.580trn in 2019.

The decrease in revenue was also attributed mainly to decline in the level of activity due to the global impact of Covid-19 pandemic.

Similarly, the corporation’s cost of sales decreased from N2.6ttrn in 2019 to N2.2trn in 2020, which was a decrease by 15.11 per cent.

Likewise, it attributed the decrease in cost of sales to the aggressive cost control measures emplaced by the management of NNPC in reality with Covid-19 pandemic.

The corporation’s performance was turned around from a loss of N107bn in 2019 to a profit of N235bn in 2020.

This was in line with the stronger emphasis on performance management, rationalization of non-essential expenditure and implementation of TAPE agenda.

The corporation recorded an increase in total current asset by 17.5 per cent and total current liability also increased by 6.6 per cent.

Working capital for the corporation stood at (N0.729trn) in 2020 as against 2019 figure of N1.143trn, implying some improvement in working capital.

President Muhammadu Buhari had recently hailed the NNPC for declaring a profit after tax of N287bn for the year 2020, the first in its 44-year history.

The President had further directed the NNPC to ensure it publishes its results timely in line with the requirements of the law and as follow-up to the government’s commitment to ensuring transparency and accountability by public institutions.

Also, the Group Managing Director of the corporation, Mallam Mele Kyari, had said the national oil company had adopted drastic changes in the way its business was conducted before now.

This, he said was responsible for the positive profit it recorded.

Kyari also explained the efforts of the corporation to embrace transparency and accountability encouraged by President Buhari, had started paying off.

The GMD said he attempted to bring in a new perspective in the running of the national oil company and built on what he met, ensuring more efficiency by automating the company’s processes and systems as well as choosing wisely what to invest in.

Added to those factors, the NNPC boss stated that the corporation had also been focusing on staff welfare, saying happy workers would ultimately deliver on the objectives of the company.

“The first principle of course is elimination, that is, you don’t buy what you don’t need. And we simply stopped buying what we didn’t need.

“Also, during the particular fiscal year 2020, whoever we engaged on all our contracts, we insisted on cutting costs by at least 30 per cent.

“This worked and we were able to pull down most of our procurement costs by 30 per cent. We saw the opportunity to be much more efficient by automating our systems and processes and that made us faster and also ultimately it reduced so much of logistics costs that ordinarily would have been additional costs to our business,” he had said about the 2020 audited results.