Saturday, July 31st, 2021

10 Points to Note from NNPC Audited Account

The Nigeria National Petroleum Corporation (NNPC) published an audited financial statement of the multi-billion dollar enterprise and it is being celebrated as a milestone achievement. Here are ten (10) important talking points of the NNPC Audited Account that OgaCeo has researched upon to bring to your esteemed reading pleasure.

  1. The Nigerian National Petroleum Corporation (NNPC) is the Oil Corporation through which the federal government of Nigeria regulates and participates in the country’s petroleum industry. The NNPC business operations are managed through Strategic Business and Corporate Services Units (SBUs/CSUs) in diverse locations across Nigeria. It was founded 43 years ago, in the year 1977 to be precise. As stated earlier, it is a state-owned enterprise and its products include Crude Oil, Gas, Petroleum products and petrochemicals.


  1. The NNPC Audited Account covers the entire Nigerian National Petroleum Corporation Group which comprises of the NNPC Board, the Group managing director’s office, seven operational units as listed below. Each of the Unit is headed by a chief operating officer (COO). Its Divisions are headed by Group General Managers (GGM) while its subsidiary companies are headed by Managing Directors. NNPC has several subsidiaries, two partly owned subsidiaries and 16 associated companies. Autonomous Business Units: Upstream Company, Downstream Company, Refining Company, Ventures Company and the Gas & Power Company. Then, there is the Corporate Services Units: Finance and Accounts and the Corporate Services.
  1. The man at the helm of affairs is no other person than Mele Kolo Kyari. Mr. Kyari is born 8 January 1965. He is a Nigerian geologist, crude oil marketer and the 19th Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC). Before this appointment, Kyari was the Group General Manager, Crude Oil Marketing Division of the NNPC and the Nigerian National Representative at the Organization of Petroleum Exporting Countries (OPEC) since 2018.


  1. The NNPC Audited Account comprises of the annual reports and financial statements for the year ended December 31, 2018, and were for 20 of the state-owned national oil company’s subsidiary companies operating within and outside the country. This is the first time in the history of the establishments after 43 years of operation that such reports will be published publicly.
  1. The companies covered in the NNPC Audited Account published in the corporation’s website included the Nigerian Petroleum Development Company (NPDC), Warri Refining & Petrochemical Company Limited (WRPC), Port Harcourt Refining Company Limited (PHRC), Kaduna Refining & Petrochemical Company (KRPC), and Integrated Data Services Limited (IDSL), Nigerian Products and Marketing Company Limited (NPMC), Nigerian Pipelines and Storage Company (NPSC), The National Engineering & Technical Company Limited (NETCO), Nigerian Gas and Marketing Company Limited (NGMC), Duke Oil Services (UK) Limited, Duke Global Energy Investment Limited, Duke Oil Incorporated, NNPC Retail Limited, National Petroleum Investments Management Services (NAPIMS), The Wheel Insurance, NIDAS Shipping Services, NIDAS UK Agency, and NIDAS Marine.
  1. Mr. Kyari upon assumption of office pledged to open the NNPC financial books to the public as part of his management’s commitment to openness, transparency, and accountability in line with the global EITI principles. And since last year when Mr. Kyari resumed office, the Nigeria National Petroleum Corporation has always published the monthly financial and operational reports, including its upstream, downstream and oil and gas export activities. The result that we have today is the NNPC Audited Account.


  1. In the NNPC Audited Account, the refineries didn’t do well as they returned poor results. Kaduna Refinery and Petrochemical Limited posting the worst performance, with an accumulated loss of over N423.43 billion compared to over N359.093 billion in 2017. Apart from an operating loss of about N64.55 billion, Kaduna refinery reported administrative expenses of about N64.68 billion during the year, down from about N114.347 billion in 2017. The bulk of the losses were attributed to direct operational costs, despite that none of the four refineries in the country has been functional for years. Port Harcourt Refining and Petrochemical Company Limited posted a loss of over N46.62 billion during the year, although better than over N57.8 billion loss reported in 2017. Although the refining company earned about N1.455 billion as revenue during the year, about N22.6 billion was recorded, as gross loss for the year, with about N24.04 billion incurred as processing expenses, even with petroleum refining operations still closed since 2017. The bulk of the losses declared by the company were administrative expenses of about N24.03 billion, including salaries and other remunerations paid to its workers. The Warri Refinery posted operating loss of about N45.399 billion against N85.136 billion the previous year, with the cost of sales during the year dropping from N14.54 billion in 2017 to N12.745 billion during the year and gross loss from N13.29 billion in 2017 to N10.757 billion. Operating expenses stood at about N34.642 billion, down from N71.847 billion in 2017. Salaries, wages, and allowances took about N13.756 billion in 2018 against N12.9 billion spent for the same purpose in 2017, while directors remuneration gulped about N270.1 million compared to N353 million spent in 2017; travels and hotel expenses took N758.9 million against N471.8 million in 2017. About N10.354 million was written off as bad debt.
  1. The Nigerian Petroleum Development Company, NPDC, is one of the few companies that turned in some positive report in the NNPC Audited Account. The company reported earnings of N1.38 trillion as revenue against N82.4 billion in 2017; its cost of sales was about N1.05 trillion, from N483.73 billion in the previous year. Its gross profit was N339.1 billion compared to about N398.7 billion in 2017, while its operating profit was N278.7 billion, up from N252.2 billion in 2017. Also, finance costs dropped to N19.93 billion, from N34.7 billion in 2017. Total comprehensive income for the year stood at N799.7 billion against about N179.3 billion in 2017
  1. Before now, the Nigeria National Petroleum Corporation, NNPC has had several corruption allegations. Some of which are; KPMG Report: In December 2011, the Nigerian government permitted a forensic report conducted by KPMG to be published. The audit, commissioned by the Ministry of Finance following concerns over the NNPC’s transparency, detailed the NNPC’s sharp business practices, violation of regulations, illegal deductions of funds belonging to the state, and failure to account for several billions of naira that should go to the federation account. Auditors found that between 2007 and 2009 alone, the NNPC over-deducted funds in subsidy claims to the tune of N28.5 billion. It has not been able to account for the sum ever since. Willbros Group Inc.: In May 2008, Willbros Group Inc, a US company, admitted to making corrupt payments totalling over $6.3 million to officials at the NNPC and its subsidiary NAPIMS, in return for assistance in obtaining and retaining contracts for work on the Eastern Gas Gathering System (EGGS). ABB Vetco Gray: In July 2004, ABB Vetco Gray, a US company, and its UK subsidiary ABB Vetco Gray UK Ltd, admitted to paying over $1 million in bribes to officials at NNPC subsidiary NAPIMS in exchange for obtaining confidential bid information and favourable recommendations from Nigerian government agencies. Trafigura and Vitol: In November 2013 after a report was published by Swiss Non-governmental advocacy organization – Erklärung von Bern – allegations of heavy fraud surfaced, placing the NNPC under suspicion of siphoning off $6.8 billion in crude oil revenues. Unremitted funds (2013–2014): On 9 December 2013, a letter from the Central Bank of Nigeria (CBN)Governor, Sanusi Lamido Sanusi to the President of Nigeria, Goodluck Ebele Jonathan, dated show of 25 September 2013 details that the NNPC had not remitted over $49.8 billion proceeds of crude oil sales to the Government surfaced.[20] On 13 December 2013, NNPC responded that no money was missing. Reconciliation Committee (comprising representatives of (i) CBN (ii) NNPC (iii) DPR (iv) FIRS (v) OAGF (vi) The Budget Office of the Federation (vii) Federal Ministry of Finance (viii) Federal Ministry of Petroleum Resources) was set up. The Reconciliation Committee estimated unremitted funds at $10.8bn on 18 December 2013 while CBN changed its claim to $12bn. CBN then informed senate committee on Finance on 4 February 2014 that NNPC needs to account for $20bn as the CBN could only confirm receipt of $47bn out of $67bn revenue for the period under review.[22] The then Finance Minister recommended the conduct of an independent Forensic Audit and PwC was officially appointed by the office of the Auditor General of the Federation (AuGF) to conduct a forensic audit into the allegations.


  1. Words of praises and commendations have since been flowing from all corners to celebrate the transparent style of management adopted by the Mr. Kyari led team. Some of which are; The Executive Secretary, Nigeria Extractive Industries Transparency Initiative (NEITI), Waziri Adio, congratulated the Group Managing of the NNPC, Mele Kyari, for keeping his promise to publish the audited reports. “Having such disclosures is good for transparency and accountability. I congratulate @MKKyari and his team and urge them to make this a regular practice and in open data format,” Mr Adio said through a tweet with his personal twitter handle, @Waziriadio. Also, the Kaduna State Governor, Mr. Nasir Ahmad El-Rufai who said in a tweet that; “Mele Kyari’s heart is in the right place! His tenure shall be the game-changer that NNPC and Nigeria needs. He is competent, confident and rapidly plugging leakages, repositioning the corporation towards greater transparency and accountability. The Oil cabal will certainly  attack him!”

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: