President Bola Ahmed Tinubu has given his nod to the Nigerian National Petroleum Company (NNPC) Limited to deploy the 2023 final dividends owed to the Federation to cover the cost of petrol subsidies, even as the company announced a profit of N3.3 trillion for that fiscal year.
The reported profit for 2023 marks an increase from the N2.54 trillion reported in 2022.
The announcement was made by Pius Akinyelure, Chairman of the NNPC board, at a media briefing on the company’s 2023 audited financial statements on Monday.
The President also ordered a halt on the payment of 2024 interim dividends to the FG to help boost NNPC’s cash flow.
A forecast by NNPC seen by the publication, showed that the total petrol subsidy expenses from August 2023 to December 2024 will amount to N6.884 trillion, leaving the company unable to remit N3.987 trillion in taxes and royalties to the Federation account.
Under the Petroleum Industry Act (PIA), the NNPC is obligated to pay taxes and royalties as well as dividends to the Federation, its sole shareholder.
In June 2024, NNPC told Tinubu that the subsidy payments were negatively impacting its cash flow and it was struggling to remain a “going concern”.
The company said it might not be able to sustain petrol imports because of the ballooning subsidy bill, which it blamed on “forex pressure”.
NNPC is now expected to pause the payment of interim dividends for eight months this year from May to December.
Interim dividends, based on inflow projections — are usually remitted monthly into the Federation account and shared by the three tiers of government while the final dividends are paid at the end of the year after reconciliation.
Akinyelure highlighted that the N749 billion rise in profit underscores the company’s financial resilience and strategic foresight. This positive trend is a stark contrast to the losses posted in previous years, with the company recording a loss of N803 billion in 2018 and N1.7 billion in 2019. The turnaround began in 2020, with NNPC posting a profit of N287 billion, followed by N674.1 billion in 2021.
NNPC’s revenue also saw a substantial increase last year, soaring to N24 trillion from N8.81 trillion in 2022.
Akinyelure attributed the company’s success to the implementation of the Petroleum Industry Act (PIA) 2021 and the unwavering commitment of the board, management, and staff of NNPC.
Umar Ajiya, the chief financial officer of NNPC, emphasized that the release of the audited financial statements reflects the company’s commitment to transparency and accountability. He noted that NNPC’s fiscal performance not only demonstrates strategic planning but also operational resilience in the face of challenging economic and operational environments.
“Our fiscal performance reflects both strategic foresight and operational resilience. Despite inherent challenges in our operational and economic environment, we have improved the productivity and the financial performance of this great company,” Ajiya said.
He also mentioned that the company is considering an initial public offering (IPO), pending a decision from its shareholders and board.
Addressing concerns about subsidy payments, Ajiya clarified that NNPC’s role was to cover the shortfall in petrol importation costs between the company and the Federation, debunking claims that the company was paying subsidies.
Oritsemeyiwa Eyesan, the Executive Vice-President of NNPC’s upstream operations, revealed that the company aims to increase crude oil production to 2 million barrels per day (bpd) by the end of the year, driven by improvements in the fight against crude oil theft and pipeline vandalism.
Dapo Segun, the Executive Vice-President of NNPC’s downstream operations, acknowledged the current fuel queues in Lagos and the Federal Capital Territory (FCT) and appealed for public understanding. He assured that NNPC is working with relevant stakeholders to resolve the distribution and logistics challenges causing the delays.
