NNPC’s Reported N5.4 Trillion Profit: A Closer Look at Nigeria’s Oil Giant

The Nigerian National Petroleum Company Limited (NNPC) recently announced a hefty N5.4 trillion profit after tax (PAT) for 2024, alongside a revenue of N45.1 trillion. These figures are certainly eye-catching, representing significant year-on-year growth. Revenue reportedly surged 88%, while profit after tax rose by 64%. Earnings per share also enjoyed a similar increase. It’s a story of impressive gains, but is it the whole picture?

NNPC attributes this upswing to operational efficiencies, downstream market reforms, and a dedication to cost control. Certainly, improvements in these areas would impact the bottom line. Critical gas infrastructure projects like the AKK and OB3 pipelines also get a mention as key revenue drivers. There’s also talk of reviewing refinery viability and a $60 billion investment plan aimed at boosting oil and gas output. The ambition is clear: hit 3 million barrels per day of crude oil production by 2030 and 12 billion cubic feet of gas daily.

Group Chief Executive Officer Bayo Ojulari has laid out some ambitious targets. He’s projecting 2 million barrels per day by 2027, escalating to 3 million by 2030. Gas production is also slated for growth, reaching 10 bcf/d by 2027 and 12 bcf/d by 2030. Major gas infrastructure projects are supposedly on track to bolster domestic supply and regional integration.

Ojulari emphasizes transparency, innovation, and disciplined growth as the anchors of NNPC’s transformation. The aim? To position NNPC as a competitive global energy player capable of sustainable returns. All commendable, but let’s hold that thought for a moment.

Past performance offers some context. In 2023, NNPC declared a net profit of N3.297 trillion. Furthermore, in 2021, the company touted its first-ever profit declaration. Considering previous losses, any profit is progress. Still, these numbers need deeper scrutiny.

A significant factor boosting the 2024 results, according to Ojulari, was the Central Bank of Nigeria’s decision to float the Naira. A weaker Naira inflates dollar-denominated revenue when converted back to the local currency. It’s a one-off gain. So, can we expect similar windfalls in the future? Ojulari himself seems to suggest caution, acknowledging that currency fluctuations might not provide the same boost moving forward. This begs the question: how much of the reported profit is attributable to actual operational improvements versus favorable exchange rate dynamics?

NNPC claims a 15-20% reduction in overall costs through capital discipline, cutting non-critical spending. That’s a tangible improvement. Pipeline performance is reportedly near 100%, enhancing midstream confidence. Efforts to revive refining capacity and expand retail business are also underway.

Yet, Nigeria’s refining capacity has long been a sore point. NNPC plans to partner with private entities possessing operational refineries to revamp its own. This is a pragmatic approach. But the timeline remains uncertain. The GCEO cautiously suggests clarity by mid-2026.

Chairman Ahmadu Kida highlights Nigeria’s potential to meet growing domestic energy needs and play a pivotal role in global supply. He also acknowledges the importance of emission reduction and climate change mitigation. He adds that Nigeria has a chance to leverage its oil and gas resources to finance growth, diversify its energy mix, and invest in cleaner technologies.

Auditors like PwC and SIAO have signed off on the financial statements, confirming they were prepared according to the going concern principle. This offers some reassurance.

Given these facts, a few points warrant further attention.

Currency Effects: The Naira’s fluctuation significantly impacted the profit figures. Future performance will depend on genuine operational improvements. Refinery Revamp: The timeline for bringing refineries back online remains uncertain. The success of public-private partnerships is crucial. Production Targets: Achieving 3 million barrels per day by 2030 is ambitious. It demands substantial investment and operational efficiency. Transparency and Accountability: Sustained profitability hinges on maintaining transparency and accountability across all operations.

NNPC’s reported profits are undoubtedly positive. The company seems to be charting a new course focused on efficiency and growth. Still, a healthy dose of skepticism is warranted. Actual, lasting progress will be measured not just by impressive numbers, but by tangible improvements in Nigeria’s energy infrastructure and the prudent management of its resources. These are challenges I’ve witnessed before; overcoming them requires more than just ambition – it demands consistent action and demonstrable results.

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Keywords: NNPC profit 2024, Nigeria oil, NNPC revenue, oil and gas, AKK pipeline, OB3 pipeline, refinery capacity, Bayo Ojulari