NNPCL is a major revenue generating agency in Nigeria,
operating as the national oil company in charge of the management, sales, etc,
of the country’s crude oil and gas, among other key functions.
Ajiya, in a 5.24 minutes video released by the oil major on
Sunday, said fuel subsidy stopped the revenue generating firm from remitting
taxes and royalties to the Federation Account, as well as halted the company
from making profit.
Also, NNPCL, in the documentary, said, “The lingering
constraint of fuel subsidy payment hampered its (NNPCL) growth potential, until
a new administration emerged, bringing an end to the subsidy regime and saving
the company from bankruptcy and setting it on a path of financial prosperity.”
It stated that this enabled the oil firm to grow its profit
from N674.1bn in 2021 to N2.54tn by the third quarter of 2022.
President Bola Tinubu declared during his inaugural speech
on May 29, 2023, that “subsidy is gone!” The declaration by the President was
immediately enforced by NNPCL the next day. NNPCL is Nigeria’s sole importer of
PMS.
Reacting to this, Ajiya said, “That action of saying subsidy
has gone, literally saved this nation N400bn on average every month. And what
that meant was that the totality of the entitlements of tax, royalties and
profits were all going into subsidy.
“And that was why we reached a position in 2022 where we
literally remitted zero to the Federation Account. It was unpalatable, but we
can’t give what we don’t have.
“We were taking NNPC’s cash flows from other operations to
augment for products and it could not be sustained beyond June 2023.”
Fuel subsidy gulped over N3.3tn in 2022, as the Federal
Government struggled to hold the cost of the product far below its global
market price. The cost of the commodity jumped by over 250 percent immediately
subsidy was removed by Tinubu.
Ajiya confirmed that the removal of subsidy had made the
company start making remittances into the Federation Account.
“We have now begun to pay dividends to the federation. We
are also paying our due obligations in terms of taxes and royalties,” he
stated.
The company further stated in the documentary that the end
to subsidy enabled it to contribute N4.5tn to the Federation Account in nine
months.
“For the first time in a long time, NNPC Ltd in 2023
contributed to the Federation Account, accounting for N4.5tn between January
and September 2023,” the national oil company stated.
Meanwhile, the Nigerian National Petroleum Company Limited
spent an estimated NN2.9tn on wages, entertainment, bank charges, running cost
and others between September 2021 and December 2022.
This was contained in the NNPCL’s recently released Audited
Financial Statement for 2022.
In the report, the NNPCL Group gulped a total of N1.7tn as
its general and administrative charges for the 16 months period, while the
company spent a sum of N1.2tn.
According to the report, both NNPCL Group and the company
spent a total of N872bn on “other expenses” not clearly specified in the
document.
Security expenses by the Group and the company stood at
N532bn, while entertainment expenses took N8.35bn.
In the period under review, a sum of N373bn was spent on
employee benefit expenses, which include salaries, wages, allowances, pensions
and gratuities.
Directors’ expenses gulped N1.2bn, office running costs
consumed N1.8bn, while management and facilitation fees took N295m.
It was observed that N1.65bn was expended on donations;
audit fees was N2bn as fines & penalties took N45bn.
Other expenses include bank charges, N675m; depreciation of
other property, plants and equipment, N67.9bn; depreciation of right of use
asset, N1.3bn; advertisement and publicity, N4.9bn; legal and professional
fees, N8.3bn; printing and stationery, N57.5bn; rents and rates, N35bn; repairs
and maintenance N219.9bn; travelling and transport, N354.2bn; minimum tax and
levy, N15.65bn, write-off of property, plant and equipment, N139.8bn; postages
and telephone, N3.46bn among others.
The report showed that the NNPCL Group generated a revenue
of N8.82tn in 16 months and the company made a sum of N2.9tn from September
2021 to December 2022.
For the NNPCL Group, the profit before income is N1.81tn;
income tax credit is N717bn. Profit for the period is N2.52tn, while total
comprehensive income for the period is N4.7tn.
As for the NNPCL Company, the profit before income is
N1.53tn; income tax credit is N459.7bn. Profit for the period is N1.992tn,
while total comprehensive income for the period is N3.77tn.
The NNPCL Group generated N3.53tn revenue from crude oil
sales; N.4.51tn from petroleum products sales; N683bn from sales of natural gas
N683bn and N100.5bn from services N100.5bn.
“Revenue from crude oil sales is from sales of utilized
crude during the period and liftings of equity interest in various oil assets.
“Petroleum products sales include the sale of Premium Motor
Spirit, Dual Purpose Kerosene, Automotive Gasoline Oil, Naphtha, lubricants and
other related products.
“Sale of natural gas represents the invoice value
(transaction price) of natural gas sold to third parties. Revenue from services
consists of revenue from seismic contracts, time8 based contracts, gas
transmission tariffs, shipping, marine and engineering,” the report explained.
The report disclosed that the NNPCL account was audited by
PricewaterhouseCoopers Chartered Accountants, SIAO Partners Chartered
Accountants and Muhtari Dangana and Co. Chartered Accountants.