The Nigerian National Petroleum Company Limited (NNPCL) has reported a profit of N2.548 trillion in 2022, which is the highest return on its investment since commenced operations in 1977.
The profit as reflected in the company’s ‘2022 Financial Performance Report’ posted online represented a 277.8% increase over the N674.1 billion profit recorded in the 2021 financial year and a major improvement on its financials having recorded losses of N803 billion and N1.7 billion in 2018 and 2019 respectively.
According to the report, in 2020 the state-owner oil company recorded N287 billion profit, which it tagged “Turning Point” while in 2021, its profit grew to N674.1 billion and the management tagged it tagged “Assurance”.
The 2022 financial performance of the company may largely be attributed to its legal transformation from July 1, 2022, into a fully Limited Liability Company whose operations would be fully run in compliance with the provisions of the Companies and Allied Matters Act (CAMA) of 2020.
This is in accordance with the provisions of the Petroleum Industry Act (PIA) 2021.
Specifically, Section 53(1) of PIA 2021 requires the Minister of Petroleum Resources to cause for the incorporation of the NNPC Limited within six months of the enactment of the PIA in consultation with the Minister of Finance on the nominal shares of the company.
The PIA also raised stakeholders’ expectations on the company, even as it availed the Board and the management opportunity to invest more in the oil and gas industry.
Also, Section 65 of the Act encourages NNPC Limited and its joint venture partners to explore the use of incorporated joint venture companies. The NNPC is also required to declare dividends to its shareholders and retain 20 per cent of profit as retained earnings to grow its business like any other incorporated entity incorporated under the Companies and Allied Matters Act, as provided under Section 53(7) of the Petroleum Industry Act.
The Corporate Affairs Commission had on September 21, last year, completed the incorporation of the NNPC Ltd in accordance with the provisions of the Petroleum Industry Act 2021.
With the NNPCL fully transiting into a limited liability entity, the existing contracts and joint operating agreements with the national oil company were evaluated and transferred in line with agreed principles to ensure business continuity.
Also, based on the transition to a new legal status and the provisions of the enabling Act, the company was empowered to increase its investments in upstream assets to increase gas production in line with the Federal Government’s ‘Decade of Gas,’ agenda as well as expand its downstream operations to ensure energy security and the development of modular refineries, amongst other investment options.
Industry experts believe that the removal of the subsidy regime in the upstream market by the present administration will improve the oil company’s financials and by so doing, impact positively on its profit in the 2023 financial year.
