A data firm, Dataphyte, has spotlighted several issues in its latest performance report on the Nigerian National Petroleum Corporation (NNPC).
The firm pointed out high production costs, high credit sales, high indebtedness, low revenues and low gross profits, declaring that all are linked to the poor financial management of the NNPC and its subsidiaries.
In the report, signed its Programme Director/Managing Editor, Adenike Aloba,
Dataphyte claimed that the subsisting problems resurface as the government-run corporation transits to a private liability company and is recognised forthwith as such by the Corporate Affairs Commission (CAC).
“The Petroleum Industry Act (PIA), which was passed by the National Assembly, and assented to by the President in August 2021, necessitated 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 in the first instance – 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 in light of calls from officials of the executive government for an amendment of the PIA, to provide among other things for the extension of the subsidy regime till June 2023,” the report read.
Dataphyte, in its review of the audited accounts of the activities of the NNPC in the past two years, discovered 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 six problems that the NNPC needs to address as it changed its status 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 contained 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 general public,” the report added.
