Nigeria’s national oil company, NNPC Limited, has released its audited results for the full year 2023, showing profits after tax of 3.29 trillion naira.
This is a significant increase from the 2.5 trillion naira profit reported in 2022, representing 31.6% growth year-on-year, making it the highest corporate profit reported by a Nigerian company, according to records by Reporters.
Total sales for the year came to 23.9 trillion naira, or $26.4 billion at the 2023 closing rate of 907 naira/dollar exchange rate.
Revenues from Nigeria amounted to 21.3 trillion naira, accounting for 89.1% of total revenues, indicating that the company earned the majority of its revenues domestically rather than from international operations.
Key highlights
Revenue – 23.9 trillion vs. 8.8 trillion (171.5%)
Total profit – 7 trillion vs. 2.1 trillion (233%)
Operating costs – 3.1 trillion vs. 1.7 trillion (80.9%)
Operating profit – 4.3 trillion vs. 694.2 billion (525%)
Profit before tax – 5.9 trillion vs. 1.8 trillion (227%)
Income tax – 2.69 trillion
Profit after tax – 3.29 trillion vs. 2.5 trillion (30.6%)
Total assets – 246.8 trillion vs. 58.5 trillion (321%)
Net assets – 28.5 trillion vs. 9.2 trillion (200%)
Cash and bank balance – 7.1 trillion naira vs. 2.3 trillion naira (200%)
Cash flow from operations – 10 trillion naira vs. 4.6 trillion naira (117.3%)
Cash flow from investments – 3.7 trillion naira vs. 2.1 trillion naira (76.1%)
NNPC Ltd reports no external borrowings.
Total Assets exceeds Nigeria’s nominal GDP
More noteworthy is the company’s total assets, which are reported to be a staggering 246.8 trillion naira ($272 billion at 907 naira to the dollar and $154 billion at 1,600 naira to the dollar as of August 2024), exceeding Nigeria’s nominal gross domestic product (GDP).
According to the National Bureau of Statistics, Nigeria’s nominal GDP by December 2023 was 229.9 trillion naira.
GDP and total assets refer to two different things in finance and economics, it however highlights just how large the size of NNPC is.
A more understandable indicator is the company’s net assets of 28.5 trillion naira, which is equivalent to NNPC’s book value. This means that its GDP contribution in 2023 is about 12% higher than the oil and gas sector. The oil major’s total assets are significantly larger due to its trade and other receivables amounting to 162.9 trillion naira, and capital assets (tangible fixed assets) worth 67.8 trillion naira, totaling 230.7 trillion naira.
Most of the company’s assets are denominated in dollars, so the increase in the value of trade and other receivables and fixed assets is likely due to the impact of foreign currency conversion.
In addition, NNPC Ltd’s revenues from crude oil sales are also converted into dollars, which likely contributed significantly to the naira appreciation.
The company said the currency conversion rate for fixed assets was 907.1 naira per dollar compared to 448.4 naira per dollar in 2022.
For its sales revenues, the company used an average rate of 644.2 naira per dollar, compared to 431.3 naira per dollar last year.
Analysis – A quick look at the results reveals that the company’s revenue stands at 23.9 trillion naira, the highest ever recorded.
Crude Oil Sales – The company derives revenue from the sale of crude oil, petroleum products, natural gas, electricity, and services.
Revenue from crude oil sales reached 14 trillion naira, a significant increase from the 3.5 trillion naira reported last year.
Interestingly, from a geographic market perspective, Nigeria’s sales revenue was 12 trillion naira, followed by Panama in second place with 2 trillion naira.
Crude oil sales revenue for 2022 was also higher for Panama, reaching about 2.9 trillion naira compared to Nigeria’s 545.3 billion naira.
Petroleum Products Sales – The company reported revenue from the sale of petroleum products of 7.1 trillion naira, up from 4.5 trillion naira last year.
Petroleum product sales include the sale of fuel, kerosene, diesel, naphtha, and other related products.
Nigeria again led the way in terms of geographic markets, generating 6.9 trillion naira against 4.3 trillion naira last year. This represents about 97% of total petroleum product sales, with sales to the Bahamas at only 151.7 billion naira (down from 129.5 billion naira last year).
NNPC has been the sole importer of petroleum products in Nigeria for many years, relying on imports through the controversial Direct Sales Direct Purchase (DSDP) structure.
NNPC Ltd profits were expected to increase after the fuel subsidy was removed on May 29, 2023. This sector’s revenues are expected to increase as product sales reflect higher prices for most of the year.
Natural Gas Revenues – This category represents the invoice value of natural gas sold to third parties, and generated about 2.3 trillion naira in the current fiscal year compared to 683 billion naira in the previous fiscal year.
Nigeria was again the main source of revenue, contributing 1.9 trillion naira (up from 638.7 billion naira in 2022), which constituted 82.6% of total revenues.
The Cayman Islands also contributed to gas revenues, generating 402.7 billion naira compared to 3.9 billion naira, 24 billion naira and 16.3 billion naira for the UK, Panama and Cayman Islands in the previous fiscal year.
Services revenue – This includes revenue from seismic contracts, time-based contracts, gas transportation charges, shipping, marine and engineering services. The company’s annual revenue totaled NOK 464 billion, up from NOK 100.5 billion last year.
Nigeria contributed NOK 379.2 billion to service revenue, compared to zero in 2022. Another significant contributor was Cyprus, which generated NOK 80.49 billion.
Interestingly, NOK 100.5 billion of total revenue in 2022 came from the Cayman Islands. However, in 2023, the Cayman Islands did not contribute anything to revenue.
Cash Disbursements – NNPC Limited reported a significant increase in its cash and cash equivalents by N5,232 billion during the year, to now have a cash balance of N7,700 billion.
To the government:
Income tax paid was N497.2 billion in 2023 compared to N102.5 billion in 2022.
Royalties paid in cash amounted to N669 billion compared to N76.5 billion in 2022.
Dividends paid to the federal government, the sole shareholder, were N546.6 billion compared to zero last year.
Investments:
The company made N230.9 billion from the sale of property, plant, and equipment.
However, it paid N2.5 trillion for the purchase of property, plant, and equipment. Another 370.2 billion naira was spent on the purchase of exploration and evaluation assets.
Another 1.2 trillion naira was paid for the purchase of oil and gas assets.
Interest payments:
NNPC Limited said it did not obtain external financing and therefore interest payments were likely earmarked for legacy loans.
During the year, the company paid interest payments of 441.45 billion naira.
