FACT CHECK: Did NNPC make first profit in its 44-year history as claimed by Buhari?

On August 26, 2021, President Muhammadu Buhari announced what was regarded as unprecedented: that the Nigerian National Petroleum Corporation (NNPC) made a net profit in 2020 for the “first time in its 44-year history”.

Femi Adesina, presidential spokesman, in a statement, quoted Buhari, who is also the country’s petroleum minister, as making the claim.

The president boasted that the declaration of profit is consistent with his administration’s commitments to natural resources for maximum value.

“The NNPC losses were reduced from N803 Billion in year 2018 to N1.7 Billion in year 2019 and the eventual declaration of Net Profit in Year 2020 for the first time in its 44-year history,” he said.

“This development is consistent with this administration’s commitment to ensuring prudent management of resources and maximization of value for the Nigerian people from their natural resources.

“I have further directed the Nigerian National Petroleum Corporation to timely publish the Audited Financial statements in line with the requirements of the law and as follow up to our commitment to ensuring transparency and accountability by public institutions.

“I congratulate the Board, Management and Staff of the Corporation and look forward to greater value creation for the Nigerian people.”

NNPC’S 44-YEAR FINANCIAL BOOKS

In the last 44 years, the state-owned oil company opened its financial books for the first time last year. It released details of its audited financial accounts for 2018 and 2019.

In 2019, Mele Kyari had pledged to open the financial statement of NNPC to the public in line with financial regulation and his management’s commitment to openness, transparency, and accountability in line with the global EITI principles.

Last year, Kyari-led NNPC also partnered with the Extractive Industries Transparency Initiative (EITI) to promote transparency and accountability in the Nigerian oil industry – in three broad areas.

The areas include revenues and payments to the government, contracts governing petroleum exploration, and production and consolidated group-level financial statements.

KYARI: COST-CUTTING, IMPROVED EFFICIENCY YIELDED RESULTS

Mele Kyari, NNPC’s group managing director, attributed the profit to cost-cutting, improved efficiency and lower borrowing rates.

NNPC operates joint production ventures with oil majors and also engages in refining and marketing petroleum products – which has largely been incurring losses.

N287BN PROFIT IS NOT THE FIRST IN NNPC’S HISTORY

The corporation’s 2019 financial statement provided a glimpse into previous trading profit and loss accounts since 2015.

According to the financial report, the group posted a loss of N770.18 billion in 2015 and N119.03 billion in 2016.

In 2017, it, however, made a profit of N111.59 billion. It is uncertain if NNPC had declared previous profits in its years of operations, but the financial books are not in the public domain.

It returned to loss-making, posting N803.14 billion and N1.7 billion losses at the end of 2018 and 2019 financial operations, respectively. Though its financial report for 2021 has not been published, the petroleum minister and NNPC said the company made a profit of N287 billion.

The financial summary above showed that the 2017 figure is a “restated” entry. A restated entry means the previous statement contains “material inaccuracy”.

The inadequacy made NNPC readjusted its books and declared a profit, amounting to N111.59 billion in the year.

Garba Deen Muhammad, spokesperson of the NNPC, has been contacted for clarification.

VERDICT: From the corporation’s financial reports, it is evident that the claim by Buhari is inaccurate.

Editor’s note: This story has been edited to explain “restatement” in financial reporting.