Despite N287bn profit, NNPC’s liabilities exceeded assets by N4.6trn in 2020

The Nigerian National Petroleum Corporation (NNPC) has published its audited financial statements (AFS) for 2020, declaring N287 billion profit — even as current liabilities exceeded assets by N4.6 trillion.

According to Investopedia, if a company’s current liabilities exceed its current assets, it is a sign that the company may have problems meeting its short-term obligations.

Also in 2019, auditors raised concerns over material uncertainties in the book that cast considerable doubt on the ability of the group and corporation to continue to operate as a going concern

In its 44-year history, this is the third consecutive year that the NNPC is opening its financial books.

Garba Deen Muhammad, NNPC’s spokesperson, in a statement on Wednesday, said the release followed President Muhammadu Buhari’s directive for the corporation to meet its statutory requirements.

According to the statement, the group’s working capital in 2020 was N4.56 trillion, down from N4.44 trillion in 2019.

“In compliance with the President’s directive, the NNPC has fulfilled this very important statutory requirement by publishing its Audited Financial Statements today,” the statement reads.

“Among the highlights of the 2020 AFS is the Corporation’s group profit which rose from a loss position of N1.7 billion in 2019 to a profit of N287bn in 2020, for the first time in 44 years.

“The Group Managing Director of the NNPC Mal. Mele Kyari had at various times since the President’s declaration of profit, attributed the turnaround to aggressive cost-cutting, automation of the system and renegotiation of contracts downwards by about 30 per cent, among other tough measures.”

The statement added that while the corporation’s group financial position increased in total current assets by 18.7 percent compared to 2019, its total current liabilities increased by 11.4% within the same period.

“The group’s working capital remained below the line at N4.56 trillion in 2020 as against N4.44 trillion in 2019, the AFS further revealed,” the statement added.

“Similarly, the Corporation’s group revenue for the 2020 financial year stood at N3.718 trillion as against N4.634trillion in 2019, a decrease that could be attributed to the decline in the production and price of crude oil due to the global impact of the Covid-19 pandemic.”

However, checks by TheCable showed that while the group declared profit of N287 billion, it has current liabilities exceeding current assets by N4.6 trillion, up by N200 billion from the figure in 2019 when it declared a loss of N1.7 billion.

Additionally, the group suffered recurring losses throughout the year, resulting in accumulated losses of N1.5 trillion.