Olufemi Adeyemi 

Nigerian National Petroleum Corporation (NNPC) has announced that its total assets have reached N246 trillion, a figure that exceeds the country’s Gross Domestic Product (GDP).


NNPC Limited, Nigeria's state oil corporation, has published its audited financial results for the full year of 2023, revealing a profit after tax of N3.297 trillion. This figure marks a substantial increase from the N2.548 trillion profit recorded in 2022, reflecting a year-on-year growth of 31.6% and establishing it as the highest corporate profit reported by any company in Nigeria, as noted by BrandIconImage.

The total revenue for the year reached N23.9 trillion, equivalent to $26.4 billion based on the exchange rate of N907/$1, which was the closing rate for 2023. Domestic revenue accounted for N21.3 trillion, or 89.1% of the total revenue, indicating that the majority of the corporation's earnings were generated within Nigeria rather than through international ventures.

Additionally, the company's total assets were reported at an impressive N246.8 trillion ($272 billion at the N907/$1 exchange rate or $154 billion at N1,600/$1 as of August 2024), exceeding Nigeria's nominal gross domestic product (GDP).

The National Bureau of Statistics reports that Nigeria's nominal GDP reached N229.9 trillion for the year ending December 2023.

While GDP and total assets are distinct concepts in finance and economics, this figure underscores the substantial scale of the Nigerian National Petroleum Corporation (NNPC).

A more tangible measure is the company's net assets, valued at N28.5 trillion, which represents approximately 12% of the GDP, exceeding the oil and gas sector's contribution to GDP in 2023.

The considerable value of the oil company's total assets is largely attributed to its trade and other receivables, amounting to N162.9 trillion, alongside fixed assets (including property, plants, and equipment) valued at N67.8 trillion, culminating in a total of N230.7 trillion.

The rise in the value of trade receivables and fixed assets can be linked to foreign currency translation effects, as a significant portion of the company's assets are dollar-denominated.

Moreover, NNPC Ltd's revenue from crude oil sales is also dollar-based, which likely played a crucial role in the increase when expressed in naira.

The company indicated that its currency translation rate for fixed assets was N907.1/$1, compared to N448.4/$1 in 2022.

For revenue calculations, the average exchange rate used was N644.2/$1, in contrast to N431.3/$1 in the previous year.

Analysis

An initial examination of the findings indicates that the company has achieved a record revenue of N23.9 trillion, marking its highest figure to date.

Crude Oil Sales – The company derives income from various sources, including crude oil sales, petroleum products, natural gas, power, and associated services.

  • Revenue from crude oil sales soared to N14 trillion, a remarkable increase from the N3.5 trillion reported in the previous year. 
  • Notably, Nigeria accounted for N12 trillion of this revenue, while Panama followed with N2 trillion. 
  • In 2022, crude oil sales from Panama reached approximately N2.9 trillion, contrasting with Nigeria's N545.3 billion.

Petroleum Product Sales – The company reported N7.1 trillion in revenue from petroleum product sales, an increase from N4.5 trillion the prior year.

  • These sales encompass fuel, kerosene, diesel, naptha, and other related products. 
  • Nigeria once again led the geographical markets, generating N6.9 trillion compared to N4.3 trillion the previous year, representing about 97% of total petroleum product sales. Sales to the Bahamas amounted to N151.7 billion, up from N129.5 billion the previous year. 
  • The NNPC has maintained its position as the exclusive importer of petroleum products in Nigeria, utilizing its controversial Direct Sale, Direct Purchase (DSDP) model. 
  • Following the elimination of the fuel subsidy on May 29, 2023, NNPC Ltd is anticipated to see increased profits from this sector, as product sales are expected to reflect elevated prices throughout most of the year.
Revenue from Natural Gas – This segment encompasses the invoiced amount for natural gas sold to external parties, which amounted to approximately N2.3 trillion in the current fiscal year, a significant increase from the N683 billion recorded in the prior year.
  • Nigeria emerged as the predominant contributor, providing N1.9 trillion (an increase from N638.7 billion in 2022), which represented 82.6% of the total revenue.
  • The Cayman Islands also played a role in gas revenue, generating N402.7 billion, in contrast to the previous year's contributions of N3.9 billion, N24 billion, and N16.3 billion from the UK, Panama, and the Cayman Islands, respectively.
Revenue from Services – This category includes earnings from seismic contracts, time-based agreements, gas transmission tariffs, shipping, marine, and engineering services.
  • The company achieved a total revenue of N464 billion during the year, a rise from N100.5 billion in the previous year. 
  • Nigeria accounted for N379.2 billion of the service revenue, a notable increase from zero in 2022. Cyprus also made a significant contribution, generating N80.49 billion. 
  • It is noteworthy that the entire revenue of N100.5 billion in 2022 was sourced from the Cayman Islands, which, in 2023, did not contribute any revenue.
Cash Payments - NNPC Limited has announced a significant rise in its cash and cash equivalents, increasing by N5.232 trillion over the year, culminating in a total cash balance of N7.7 trillion.

To the Government: In 2023, the income tax contribution amounted to N497.2 billion, a substantial increase from N102.5 billion in 2022. Cash royalties reached N669 billion, a notable rise from N76.5 billion the previous year. Additionally, dividends distributed to its sole shareholder, the Federal Government, totaled N546.6 billion, a marked increase from zero in the prior year.

Investing: The company generated N230.9 billion from the divestiture of property, plants, and equipment.
Conversely, it invested N2.5 trillion in acquiring property, plants, and equipment. 
Furthermore, N370.2 billion was allocated for the acquisition of exploration and evaluation assets, while N1.2 trillion was spent on acquiring oil and gas properties.

Interest Payments: NNPC Limited indicated that it has no external loans, suggesting that the interest payments are related to legacy loans. Over the course of the year, the company incurred N441.45 billion in interest payments.