How NNPC manicured its books to extract N287bn profit
On August 29,2021, Atedo Peterside, founder of Stanbic IBTC Bank, indicted the NNPC in a tweet that there was an allegation the Corporation was dipping its hand into the Federation Account in order to announce bumper 2020 profits.
“They should come clean and publish details of all dividends received by them and tell us which ones they recently diverted from the Federation to themselves,” Peterside tweeted then.
Since the Corporation released its financial statements Wednesday night many doubts have greeted its N287 billion declared as 2020 profit.
To arrive at a profit in 2020, the NNPC declared a net impairment reversal of N713 billion in 2020 compared with a loss of N273 billion in 2019.
According to the notes from NNPC’s audited report, “The impairment reversal in 2020 relate mainly to the recovery of strategic alliance receivable amount from the federation and reversal of the full impairment on receivables which are no longer doubtful.”
Financial experts have questioned how the NNPC was able to revalue a whopping N713 billion initially assumed to be doubtful receivables from the federation account.
These are all exceptional items that won’t happen every year,” Charles Akinbobola, energy analyst at Lagos-based Sofidam Capital, says.
NNPC’s total revenue, which came from the sales of crude oil, petroleum products, gas, and other services, including seismic contracts and gas transmission tariffs declined by 24.6 percent to N3.7 trillion in 2020.
The auditors of NNPC, made up of PricewaterhouseCoopers, SIAO Partners, and Muhtari Dangana & Co. raised “material uncertainty” about the group’s current liabilities exceeding NNPC’s current assets by N4.6 trillion.
In 2020, a detailed breakdown showed NNPC recorded group current liabilities of N10.8 trillion, which outweighed the firm current assets of N6.2 trillion.
The report also explained how NNPC had been sustaining recurring losses over the years, culminating into N1.5 trillion as of December 2020.
“These events or conditions along with other matters indicate that a material uncertainty exists that may cast significant doubt on the group and Corporation’s ability to continue as a going concern,” PwC, SIAO Partners, and Muhtari Dangana & Co say in a joint statement.
