Umar Ajiya, Chief Financial Officer of the Nigerian National Petroleum Corporation (NNPC) Limited, said the company is not opposed to selling assets to boost margins and achieve higher profits in the near future.
Ajiya made the remarks in an interview while discussing the oil major’s audited financial statements for 2023.
He said the company is not only looking to make the most of some assets but is also looking to sell assets that cannot be optimized for better returns.
“You have a company that is literally just one year old. We started first of July, 2022. 2023 marks our second year of operation.
“We are going to sweat the assets by bringing in partners to sweat them in. We will also sell those assets that we think we cannot sweat ourselves.
“That way, we will rebalance the balance sheet in such a way that the assets are maxed out. We expect the rate of returns to be achieved,” said Umar Ajia.
NNPC reported a 28% increase in profits to 3.2 trillion naira and that it has assets worth about 246.8 trillion naira, more than Nigeria’s entire Gross Domestic Product (GDP).
Ajiya also said the oil company is ready to make a public offer depending on shareholders’ willingness to invest. He noted that the Petroleum Industry Act (PIA) recommends a two- to three-year financial history to reassure investors that the country’s energy giant is on a profitable trajectory.
He stressed that NNPC has already demonstrated this profitability in its first two years, adding that shareholders expect the company to perform well after it enters the market and becomes a listed company.
“To go to the public is basically a shareholder’s decision. We are almost there in the sense that we have at least two or three years of financial history to demonstrate to the investors that the company is on a profitable trajectory. We’ve demonstrated that for the first two years.
“Hopefully, the shareholders will decide how much to sell down and unwind. It’s really the shareholders’ call.
“The shareholders are now averse to selling down. They are eager to see us deliver with some strong performance and they can ask us to enter the market at the appropriate time,” the CFO added.
NNPC’s recently audited financial report has raised concerns about the company’s profitability and equity capital within its capital structure.
While the national oil company reported a 28% increase in profits over 2022 to NGN3.2 trillion, many analysts believe NNPC has not fully optimized its assets and equity capital, which exceeds Nigeria’s GDP.
In response, NNPC said the two-year-old limited liability company’s profitability reflects its strong commitment to corporate governance and has already attracted significant interest from potential investors and shareholders as it prepares for an initial public offering.
