Amidst the nation’s challenging operating environment that has tested the resilience of institutions and businesses globally, the Nigerian National Petroleum Company Ltd has continued to weather the storm by posting its second consecutive year of profit of N674.1billion in the 2021 financial period.
The positive result is coming as global economies continue to struggle with recessionary forces and weak macro economic outlook.
Consequently, NNPC Group’s investment strategy proved resilient as it enabled the national oil company to deliver favourable outcomes in its 2021 financial statement.
The NNPC Group which became a CAMA regulated Company in 2021 following the implementation of the Petroleum Industry Act, grew its profit from N287billion in 2020 to N674billion in 2021.
The Group account audited by PriceWaterhouseCoopers, SIAO, and Muntari Dangana Accounting firms,
saw the N674billion profit posted in the 2021 financial year representing an increase of N387billion or 134.8 per cent when compared with the N287billion recorded in 2020.
Announcing the result on Tuesday in Abuja, the NNPC Group Chief Executive Officer, Mele Kyari said, “Today I’m happy to announce that the Board of NNPC has approved 2021 audited financial statements and NNPC has progressed to a new performance level,from N287billion profit in 2020 to N674billion profit after tax in 2021, climbing higher by 134.8 per cent YoY profit growth.”
The 2021 financial year made it the fourth consecutive years that the NNPC will be making its Audited Financial Statement public. This was one of the innovations made by Kyari when he took over the helms of affairs of the NNPC.
In 2018 when the firm first made public its Audited Financial Statement, it recorded a loss of N803.9billion.
Three components were responsible for the poor and worse performance of the Group ever. They included increase in cost of sales, specifically increase in crude cost; increase in the general and administration expense which almost doubled from N474billion to N894billion; and increase in impairment of receivables and other assets in the year by almost 300 per cent.
In 2019 when the NNPC Group Audited Account was released, the loss position had reduced to just N2.3billion.
But with the reforms implemented by the NNPC boss, the loss position was reversed in the 2020 financial period when it posted its first profit in 44 years of N287billion.
Since then, the Company has bounced back to reckoning with impressive financial performance of N674billion in 2021. The rise in profit was mainly occasioned by significant increase in revenue and less proportionate increase in cost of sales resulting to 1,556.9 per cent increase in gross profit.
Other factors that contributed to the high profitability of the NNPC Group is the outcome of the N173.7billion arising from reconciliation with Federal Inland Revenue Service (FIRS), stronger emphasis on performance management, rationalisation of non-essential expenditure and implementation of the transparency and accountability agenda.
The impressive profit performance recorded by the NNPC was further bolstered by the positive impact of the N193billion royalty which was written back as a result of the reconciliation with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Similarly, the emplacement of aggressive cost control measures by the NNPC management as well as the successes made in the implementation of system-based controls on funds management also boosted profitability.
Further analysis of the NNPC Group Audited Financial Statement showed that revenue rose by 72.6 per cent to N6.42trillion in 2021 as against N3.72trillion in 2020.
The increase in revenue is attributable to improvement in the production and price of crude oil during the period under review.
The Audited Financial Statement further revealed an increase of 2.6 per cent in total assets from N15.86trillion in 2020 to N16.27trillion in 2021.
Through efficient management of the affairs of the company, the Audited Financial Statement also showed that total liabilities decreased by 8.3 per cent from N14.68trillion in 2020 to N13.46trillion in 2021.
In line with the growth trajectory of the current management, the shareholders fund position of the NNPC Group also followed an upward trend as it rose to N2.81trillion in 2021 as against N1.15trillion in 2020. This represents 144 per cent increase in shareholders fund as of December 31, 2021.
The cost of sales also rose by 46.3 per cent from N3.65trn in 2020 to N5.34trn in 2021. The increase in cost of sales is attributable mainly to the increase in crude oil production.
The selling and distribution expenses also increased from N36bn in 2020 to N52bn in 2021. This increase is in line with the rise in revenue from petroleum product cost during the year under review.
The net impairment loss on financial assets dropped to N65billion in 2021 as against the impairment reversal of N713billion in 2020.
Since he assumed office, Kyari has pursued his Transparency, Accountability and Performance Excellence (TAPE) agenda, a 5-step strategic roadmap for NNPC to attain efficiency and global excellence.
Kyari, during the inauguration, had said pursuing TAPE was the only way to turn around the corporation and make it competitive.
Under the roadmap, the Transparency component of the agenda was aimed at maintaining positive image, share values of integrity and transparency to all stakeholders, while the Accountability segment of the campaign is to assure compliance with business ethics, policies, regulations and accountability to all stakeholders.
In terms of the 2-pronged item of Performance Excellence, Kyari said the idea was to entrench a high level of efficiency anchored on efficient implementation of business processes which would also emplace an appropriate reward system for exceptional performance among the workforce.