Afrigather Thirty-two subsidiaries of the Nigerian Nationwide Petroleum Firm Ltd (NNPC) are grappling with N22 trillion debt incurred over a 12-month interval, elevating questions over their viability.
Information gleaned from the most recent financials of NNPC confirmed 32 subsidiaries of the state-owned oil firm grew their money owed by 155 p.c from N8.6 trillion in 2022 to N22 trillion in 2023.
The subsidiaries and three way partnership companions owe NNPC Restricted for actions comparable to funding of operations, again cost of expense, working lease and processing charges charged for the 12 months ended December 2023.
NNPC mentioned the transactions with associated events are made at “phrases equal to people who prevail in arm’s size transactions.”
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“Excellent balances on the year-end are unsecured and interest-free,” NNPC mentioned in its 2023 monetary assertion.
Money owed in Refineries
Among the many most placing modifications, Port-Harcourt Refining Firm Restricted noticed its money owed to NNPC escalate by 144 p.c, reaching N1.97 trillion in 2023 in comparison with N806 billion the earlier 12 months.
NNPC defined that the character of the transactions for the Port Harcourt Refinery was for “funding of operations, working lease and processing charges charged for the interval.”
The debt will increase in Port Harcourt mirror comparable challenges at different main refining models.
The Kaduna Refining and Petrochemical Firm Restricted (KRPC) noticed its debt swell by 127.8 p.c, reaching N1.36 trillion in 2023 from N597.2 billion in 2022. Equally, the Warri Refining and Petrochemical Firm Restricted (WRPC) reported a 140 p.c rise in debt, climbing to N1.17 trillion from N487.3 billion.
Most analysts marvel why NNPC continues to pile up losses, losing assets on idle refining equipment and personnel amid perennial losses, and the apparent lack of capability to handle them.
Regardless of producing zero gas and recording a lack of N50.5 billion, the Port Harcourt refinery raised the fee made as wage and advantages for employees to N22.2 billion in 2019, from N21.76 billion the earlier 12 months.
Six administrators collected N59.65 million in charges, in comparison with N58.7 million obtained in 2018, which means that every obtained a mean fee of N9.94 million a month in 2019 from an organization that recorded no income.
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A 2023 parliamentary report confirmed Nigeria had spent greater than N11.35 trillion ($25 billion) on fixing the nation’s three moribund refineries prior to now 10 years.
The NNPC is pumping practically $3 billion into the revamp of Port Harcourt, Warri and Kaduna refineries.
BusinessDay findings confirmed the six main refineries in the UK belong to the likes of Shell, Chevron, INEOS, and ExxonMobil.
Saudi Aramco owns the 600,000 barrels per day (bpd) Port Arthur Refinery in Texas, America’s largest. Aramco is establishing a 300,000 bpd $10 billion refinery in China. In Canada, the non-public sector operates the 18 refineries there.
“NNPC Ltd didn’t do a lot building of any type within the 30 years between 1990 and 2020 and lots of organisational data has definitely been misplaced on this interval,” mentioned Dimeji Bassir, an oil and gasoline business government.
“We are able to infer due to this fact that the refinery revamp tasks being spearheaded by NNPC are a lot larger than the people main them, notably with little to no operational historical past to leverage—in planning and executing the tasks—together with ingrained cultural inefficiencies to deal with,” he added.
Northern Oil Exploration
NNPC Vitality Companies Restricted’s debt surged by 118.9 p.c to N154.2 billion from N70.42 billion.
Explaining the main points of the money owed, NNPC mentioned N53.33 billion was granted to NNPC Vitality Companies Restricted by NNPC Restricted for Keana drilling marketing campaign, Chad Basin re-entry in addition to different 3D Seismic acquisition tasks.
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“The mortgage was efficient on 16 October 2023 with curiosity accruing at a price of 13.85% Prime Lending Fee (PLR) for naira portion of the mortgage and 4.43% (30-Day Common SOFR) plus a margin of 5.5% for the greenback portion of the mortgage,” NNPC mentioned in its 2023 monetary assertion.
It added, “The mortgage reimbursement is predicted over a 3-year interval. Curiosity of N1.69 billion has been paid on the mortgage, nonetheless, principal reimbursement has not began.”
NNPC had final 12 months introduced it might start drilling the primary oil properly in Obi/Keana Nasarawa State on March 21, 2023.
Elevated Money owed
Different main contributors to the general debt embody: the NNPC Gasoline Infrastructure Firm Ltd, with a debt of N1.86 trillion, and the Nigerian Pipelines and Storage Firm Restricted (NPSC) which skilled a 52-fold enhance in money owed to N236.1 billion in 2023 from simply N4.46 billion the earlier 12 months.
NNPC LNG Restricted additionally reported a dramatic rise in debt, with its obligations hovering by 2201 p.c to N13.9 billion in 2023 from N604 million the earlier 12 months.
Equally, NNPC Medical Companies Restricted noticed its debt develop by 200.5 p.c in 2023, reaching N56.5 billion from N18.8 billion in 2022.
NNPC famous that ‘different associated events’ debt elevated by 175.5 p.c to N14.3 trillion from N5.19 trillion in the course of the interval.
Debt Decreases
However, NNPC Retail Restricted and NNPC Gasoline Advertising and marketing Firm Restricted noticed reductions of their debt ranges. NNPC Retail Restricted’s debt decreased by 21.8 p.c to N38.7 billion in 2023 from N49.5 billion in 2022, whereas NNPC Gasoline Advertising and marketing Firm Restricted decreased its debt by 23 p.c to N20.9 billion from N27.2 billion.
New and Rising Money owed
Whereas some subsidiaries managed to cut back their money owed, others skilled important will increase. As an example, the NNPC Transport and Logistics Restricted, which had no debt in 2022, now owes N28.6 billion.
The Maiduguri Emergency Energy Plant recorded a debt of N71.08 billion in 2023, up from no debt within the earlier 12 months. NNPC New Vitality Restricted additionally recorded a brand new debt of N80 million, as towards no debt in 2022.
Equally, Nikorma Transport Restricted’s debt grew 102 p.c to N4.87 billion from N2.41 billion.
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International Operations
The report additionally highlights the rising monetary burden on NNPC’s international subsidiaries. NNPC Buying and selling SA, as an illustration, incurred a debt of N503.1 billion in 2023, whereas NNPC Buying and selling Companies (UK) Restricted’s debt surged to N730 million from N37 million.
Specialists’ View
Monetary consultants mentioned this can be a pointer to the maladministration that has outlined the NNPC’s operations by means of the years.
“NNPC is meant to rival different nationwide oil firms like Petronas of Malaysia, Equinor of Norway, and Petrobras of Brazil,” Charles Akinbobola, a Lagos-based power analyst, mentioned.
“These firms play pivotal roles within the administration of power belongings and financial growth of their international locations. The NNPC stays a supply of misery for Nigeria,” he added.
A supply who pleaded anonymity mentioned a lot of the NNPC’s woes have been on account of political interference and management.
“It has by no means been run as a enterprise. Its funds have been used as a supply of patronage with sweetheart offers and contracts given to complement a privileged few,” he defined.
