Dataphyte’s Research arm, in its latest NNPC performance report, has spotlighted several issues of concern, such as high production costs, high credit sales, high indebtedness, low revenues and low gross profits, all linked to the poor financial management of the Nigerian National Petroleum Corporation (NNPC) and its subsidiaries.
These subsisting problems resurface as the government-run corporation transits to a private liability company and is recognised forthwith by the Corporate Affairs Commission.
The Petroleum Industry Act (PIA), which was passed by the National Assembly, and assented to by the President in August 2021, caused the transition of the NNPC to a limited company.
Based on the 2019 and 2020 audit statements, this review flags concerns that warranted the change in the governance structure of the NNPC to a private company – issues that if not addressed, may impede the successful operations of the organisation as a private business entity in the short and long term.
These issues, left to subsist, may jeopardise the essence of the Oil sector reforms, given the key role the NNPC plays in the Oil sector business and development.
This is considering calls from officials of the executive government for an amendment of the PIA, to provide for the extension of the subsidy regime until June 2023.
Dataphyte’s review of the audited accounts of the activities of the NNPC in the past 2 years shows that much may not change with the NNPC even as a limited company if the management does not implement best practices in its financial management and governance structure.
The Dataphyte research team identified 6 problems that the NNPC needs to address as it transitions to a limited company. These include the problem of diminished revenue, the problems with costs, credit sales and purchases, financial management, and the problem with the NNPC’s Incapacity as a Growing Concern.
Joshua Olufemi, Founder and Executive Director of The Interactive Initiative for Social Impact (The Interactive), the parent organisation of Dataphyte, described the report as “a timely and insightful intervention from Dataphyte to nudge the NNPC and other stakeholders towards efficient management of Nigeria’s energy interests.
Dataphyte and The Interactive believe the accounting intelligence and analysis in this report would prove invaluable for policy makers taking oversight of Nigeria’s energy sector, stakeholders in the oil and gas industry, Deposit and Development Banks, Civil Society organisations, and the public.
The report can be accessed here.