HAVING run on losses for a long time, the turnaround in profit has shown the work being put in by the Mele Kyari-led NNPC Ltd is an indication that the national oil company is on the road to profitability.
I remember vividly when a former Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mr Gaius Obaseki, held sway, he introduced public presentation of the financial statements and vowed to continue the process until he left office.
The NNPC Ltd under Kyari’s watch instituted a multi-security control room manned by the NNPC. All assets of the company were linked in real-time to the command-and-control centre.
Obaseki would tell the world press conference back then that even if he vacates office, members of the press should always ask for it because it was their right much as the corporation was held in trust for Nigerians.
As soon as Obaseki left office, the public presentation of the financial statements stopped and not reinstated despite demands from both the press and the citizens.
The development persisted and the regime of opacity set in. The rest is now history as the corporation was labelled as corrupt, inept, inefficient and unaccountable. That was the trend until Mr Mele Kolo Kyari assumed office in 2019.
By the time Kyari came in, pipeline vandalism and crude oil theft was at its peak. It is worthy of note that these challenges are peculiar to Nigeria as opposed to other oil-producing jurisdictions.
However, Mele Kyari, after observing the tremendous damage oil theft has messed up the country’s earnings, prevailed on the Buhari administration to bring back private security strategy which eventually led to the revalidation of Tompolo’s pipeline surveillance contract earlier terminated.
The multi-million-dollar pipeline surveillance contract drastically reduced oil theft and led to increased market production, and since then, oil production has continued to stabilize and seen a steady increase.
Recall that for the first four years of the Buhari administration, oil theft was uncontrollable, just as production declined to less than 800 thousand barrels per day due to the combined effects of theft and shut-ins.
When Kyari was barely six months in office in 2020, Nigeria was able to record 2.33million barrels per day in January 2020.
However, the effect of Covid-19 fell on the world and crippled oil production globally, leading to OPEC curtailment of Nigeria’s production to less than 1.5million barrels per day.
But Nigeria still recorded a total of 646.79 million barrels in 2020, which represents a daily average of 1.7 million barrels which was above the OPEC-capped production figure. For those who are familiar with crude oil production, shut-in production to comply with the OPEC quota creates a significant distortion and consequential challenge of production ramp-up.
It was the sterling leadership quality offered by Kyari and his team which provided institutional support for the fight against the pandemic apart from making sure that production was kept stable.
It is heart-warming, when recently the energy behemoth announced the 2023 Audited Financial Statement (AFS), declaring a net profit of N3.297 trillion at the close of the financial year which ended in December 2023, an increase of over N700billion (28%) when compared to the 2022 profit of N2.548trillion.
Five years down the line which culminated in the introduction of the Petroleum Industry Act (PIA), it again presented an opportunity for Kyari and the Board to recalibrated and re-engineer the entire process to bring in the desired results.
Several disputes aside from oil theft and pipeline vandalism, paralyzed oil production when Kyari came in. But within a few months of stepping into office, he was able to resolve them.
The NNPC Ltd under Kyari’s watch instituted a multi-security control room manned by the NNPC. All assets of the company were linked in real-time to the Command-and-Control Centre.
The Centre monitors, locate, and report suspicious activities to various security agencies for intervention. The effort led to oil production recovering to 1.6 million barrels per day at the close of 2022.
Now the icing on the cake.
Recall that in 2021, NNPC declared profit in its operations for the first time.
And that was from a loss position of N803 billion in 2018, it reduced the loss further down to N1.7 billion in 2019.
However, in 2020, it posted its ‘first ever’ profit of N287 billion, then in 2021, it recorded a N674.1 billion profit and in 2022, the profit grew to N2.548, an unprecedented achievement in its financial performance.
It is heart-warming, when recently the energy behemoth announced the 2023 Audited Financial Statement (AFS), declaring a net profit of N3.297 trillion at the close of the financial year which ended in December 2023, an increase of over N700billion (28%) when compared to the 2022 profit of N2.548trillion.
The company’s Chief Financial Officer, Mr. Umar Ajiya said the release of the AFS is a testament to the Company’s commitment to transparency and accountability.
“Our fiscal performance reflects both strategic foresight and operational resilience. Despite inherent challenges of our operational and economic environment, we have improved the productivity and the financial performance of this great company,” Ajiya said.
He added that posting such impressive returns demonstrates NNPC Ltd’s commitment to sustaining profitability and supporting the attainment of national energy security as stipulated by the Petroleum Industry Act (PIA) 2021, and by extension, as expected by the Company’s shareholders.
The focus now for NNPCL is to secure Nigeria’s energy future while contributing to the nation’s overall economic progress.
He also explained that the NNPC Ltd will announce Initial Public offer (IPO) once the shareholders and Board make a decision.
The elated Chairman of the NNPC Ltd Board, Chief Pius Akinyelure said that the excellent performance came as the fruit of the PIA 2021, the commitment of the Board, Management and staff of the company.
Akinyelure added that the shareholders of the company have since approved a final dividend of N2.1trn in line with PIA 2021 provisions.
Speaking on the impressive performance, the Executive Vice President, Upstream, Mrs. Oritsemeyiwa Eyesan said with improvements witnessed as a result of the renewed vigour in the war against crude oil theft and pipeline vandalism, NNPC Ltd is targeting 2million barrels per day crude oil production by the end of the year.
It is on record that the N3.297 trillion profit declared for 2023 is the highest since the Company’s inception, 46 years ago.
The turnaround of NNPCL from deficit position to profitability represents a significant achievement for Nigeria’s petroleum industry.
However, the company and its handlers should not bask in the euphoria of the present feat but continue to build on its successes, deepen its reforms, and committed to transparency, accountability, and efficiency. The company’s ability to sustain profitability and achieve its production targets will depend on its commitment to the above principles.
The focus now for NNPCL is to secure Nigeria’s energy future while contributing to the nation’s overall economic progress.
Leveraging on these goals require continued strategic leadership and sound corporate governance.
Ewache Ajefu, a public affairs analyst, writes in from Abuja.
