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Published On: Wed, Oct 28th, 2020

NNPC on the March to Profitability

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By Etuka Sunday

It there is one thing transparency does to any organization apart from showcasing its honesty and integrity, it helps to boost its performance; it helps to put its managers on their toes to do their best knowing that there is no room to hide their inefficiencies.
This appears to be the story of NNPC whose commitment to transparency is beginning to yield positive results in the form of huge reduction in losses – from N803bn losses in 2018 to 1.7bn losses in 2019
NNPC began its journey in transparency with the coming of Mallam Mele Kyari as GMD in 2018. It has since then recorded a series of firsts on the transparency front. It published its 2018 Audited Financial Statement earlier in the year for everyone to see, rather than the maintaining the old style of surreptitiously submitting it to statutory agencies like the Office of the Auditor General of the Federation. It also got listed as an EITI-partner company thereby officially sealing its commitment to transparency.
When the 2018 AFS was published, many critics came hard on the Corporation calling it a laggard among its National Oil Companies peers. They failed to see the significance of the noble act as a game-changer, a step that could launch it permanently on the path of growth.
The huge cut in losses is indicative of the new era of growth for the Corporation
The feat of huge loss reduction was achieved through improved performance driven mainly by cost optimization, contracts renegotiation and operational efficiency.
One of the key pointers to the fact of cost optimization in the Corporation as indicated in the 2019 AFS is the huge reduction of the General administrative expenses from N894Billion in 2018 to N696Billion showing a positive variance of 22%.
Majority of the subsidiaries, except the refineries which have been shut down for rehabilitation, also recorded huge growth in profit: For example, NPDC recorded N479Billion profit in 2019 compared to N179Billion in 2018 representing 167% increase, IDSL recorded N23Billion profit in 2019 compared to N154Million in 2018 representing 14966% increase, PPMC recorded N14.2Billion profit in 2019 compared to N9.3Billion in 2018 representing 52% increase.
Some critics have argued that the 2019 AFS shows that NNPC was still on the brink of bankruptcy as a going concern since its liabilities were still higher than asset. But that argument fails to take into cognizance the determination of the current NNPC Management to make a difference. That determination has been amply displayed through its commitment to transparency and accountability which in turn is reflecting in excellent performance as recorded in the huge improvement in its financial position – the huge reduction in losses.
If this trajectory is followed, it is possible that 2020 will see NNPC on a solid profit path since Management has continued on the drive to reduce cost, promote efficiency, and rev up profits.
NNPC is indeed on the march to fulfill its glorious destiny as the biggest and most profitable national oil company is Africa.

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