NNPCL is a major revenue generating agency in Nigeria, operating as the national oil company in charge of the management, sales, etc, of the country’s crude oil and gas, among other key functions.
In a 5.24 minutes video released by the oil company on Sunday, the CFO explained that petrol subsidy hindered the NNPCL from remitting taxes and royalties to the Federation Account, and made the company not to make profit.
Acording to the documentary, “The lingering constraint of fuel subsidy payment hampered its (NNPCL) growth potential, until a new administration emerged, bringing an end to the subsidy regime and saving the company from bankruptcy and setting it on a path of financial prosperity.”
It stated that this enabled the oil firm to grow its profit from N674.1bn in 2021 to N2.54tn by the third quarter of 2022.
President Bola Tinubu announced during his inaugural speech on May 29, 2023, that the subsidy era was over. The NNPCL, which is Nigeria’s sole importer of PMS, immediately enforced the President’s directive the following day.
The NNPCL’s CFO said: “That action of saying subsidy has gone, literally saved this nation N400bn on average every month. And what that meant was that the totality of the entitlements of tax, royalties and profits were all going into subsidy.
“And that was why we reached a position in 2022 where we literally remitted zero to the Federation Account. It was unpalatable, but we can’t give what we don’t have.
“We were taking NNPC’s cash flows from other operations to augment for products and it could not be sustained beyond June 2023.”
Fuel subsidy gulped over N3.3tn in 2022, as the Federal Government of Nigeria struggled to hold the cost of the product far below its global market price. The cost of the commodity jumped by over 250 percent immediately subsidy was removed by Tinubu.
According to Ajiya, the removal of subsidy had made the company start making remittances into the Federation Account.
He said: “We have now begun to pay dividends to the federation. We are also paying our due obligations in terms of taxes and royalties.”
The NNPCL, also noted that the end to subsidy enabled it to contribute N4.5tn to the Federation Account in nine months.
“For the first time in a long time, NNPC Ltd in 2023 contributed to the Federation Account, accounting for N4.5tn between January and September 2023,” the documentary stated.
Meanwhile, the NNPC Limited said it spent an estimated NN2.9tn on wages, entertainment, bank charges, running cost and others between September 2021 and December 2022.
This was contained in its recently released Audited Financial Statement for 2022.
According to the report, the NNPCL Group gulped a total of N1.7tn as its general and administrative charges for the 16 months period, while the company spent a sum of N1.2trillion.
The financial statement also showed that both NNPCL Group and the company spent a total of N872bn on “other expenses” not clearly specified in the document.
Security expenses by the Group and the company stood at N532bn, while entertainment expenses took N8.35bn.
During the period under review, a sum of N373bn was expended on employee benefit expenses, which include salaries, wages, allowances, pensions and gratuities.
Directors’ expenses gulped N1.2bn, office running costs consumed N1.8bn, while management and facilitation fees took N295m.
The report also revealed that N1.65bn was spent on donations; audit fees was N2bn as fines & penalties took N45bn.
Other expenses include bank charges, N675m; depreciation of other property, plants and equipment, N67.9bn; depreciation of right of use asset, N1.3bn; advertisement and publicity, N4.9bn; legal and professional fees, N8.3bn; printing and stationery, N57.5bn; rents and rates, N35bn; repairs and maintenance N219.9bn; travelling and transport, N354.2bn; minimum tax and levy, N15.65bn, write-off of property, plant and equipment, N139.8bn; postages and telephone, N3.46bn among others.
The audited report also that the NNPCL Group generated a revenue of N8.82tn in 16 months and the company made a sum of N2.9tn from September 2021 to December 2022.
For the NNPCL Group, the profit before income is N1.81tn; income tax credit is N717bn. Profit for the period is N2.52tn, while total comprehensive income for the period is N4.7tn.
As for the NNPCL Company, the profit before income is N1.53tn; income tax credit is N459.7bn. Profit for the period is N1.992tn, while total comprehensive income for the period is N3.77tn.
The NNPCL Group generated N3.53tn revenue from crude oil sales; N.4.51tn from petroleum products sales; N683bn from sales of natural gas N683bn and N100.5bn from services N100.5bn.
“Revenue from crude oil sales is from sales of utilized crude during the period and liftings of equity interest in various oil assets.
“Petroleum products sales include the sale of Premium Motor Spirit, Dual Purpose Kerosene, Automotive Gasoline Oil, Naphtha, lubricants and other related products.
“Sale of natural gas represents the invoice value (transaction price) of natural gas sold to third parties. Revenue from services consists of revenue from seismic contracts, time8 based contracts, gas transmission tariffs, shipping, marine and engineering,” the report added.