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NNPC Explains How N287bn Profit Was Achieved

Ololade Omosan-Agie

Nigeria’s oil industry giant, the Nigerian National Petroleum Corporation, has said that it did not dip its hands into the Federation account to declare N287bn profit in 2020.

The State-owned corporation’s, Group Executive Director, Finance and Account, Ajiya Umar, denied the allegation on Friday during Channels Tv ‘Business Morning’ programme.

For 44 years the NNPC has declared losses until the end of the 2020 financial year.

The corporation recently made public its first ever profit of N287bn amid Covid-19 pandemic induced crude oil glut.

The NNPC posted a 19.76 per cent decline in revenue of N3.718trn as against N4.634trn recorded in 2019.

But critics have accused the country’s biggest oil player of dipping hands into the Federation Account to declare profit.

“That is a false statement. It is impossible for NNPC to deep its hands into the federations revenues. First of all, there are inter-agency reconciliations every month as to what revenue accrued to the federation from the joint venture crude sales,” said Umar in response to critics.

He continued, “Secondly, we have a resident revenue director from the office of the Accountant General of the Federation in the NNPC Towers who monitors what accrues to the federation on behalf of the Accountant General.

“Thirdly, There is the pre-federation Accounts Allocation Committee (FAAC) post mortem meeting to which reconciliations are done and finally at FAAC meeting where the Commissioners of Finance of all the 36 States and the FCT meet to review contributions from all revenue generated.

There is also the Auditor General of the Federation who annually reviews what has accrued to the Federation and what has been remitted and any shortfalls.

“Of course, the National Assembly steps in from time to time when the accounts are sent to the Public Accounts Committee to review how much each revenue agency including NNPC has brought into the coffers of the government.

“So, with all these layers of control, it will be impossible for NNPC to dip its hands, NNPC will account for the revenues of the Federations and only deduct what is allowed and what has been appropriated by the National Assembly in relation to cost of bringing the barrels out as well as cost of other projects that are being done on behalf of the Federation.”

He explained that the NNPC profit stems from the write back (Net impairment reversal/(loss) on financial assets) of N713.4bn. This is from a negative figure of N273,6bn in 2019.

He said, “This has to do with an impaired revenue which was actually reclaimed against the federation and this was subjected to forensic audit and subsequently reviewed by an inter-ministerial agency committee and finally of the National Economic Council (NEC). Such revenue was now recognised in the 2020.

“By virtue of the International Financial Reporting Standard guidelines, we could have recognised that in our books until such monies or revenues are received within the cofffers of the federation.”

Apart from the write back and aggressive cost cut, he explained that the corporation was able to raise $1bn from the international market.

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