By Mordi Chukwunonso Esther
The global Extractive Industries Transparency Initiative (EITI) has praised the Nigerian National Petroleum Corporation (NNPC) for its new-found commitment to transparency in its businesses, especially publishing its audited financial statement for the first time in 43 years. The agency has also urged the corporation to do more by disclosing the terms of oil and gas sales contracts it has running.
In a review of NNPC’s recent business disclosures titled: ‘What NNPC’s financial statement shows us- and why it matters’’ by its Nigeria Country Manager, Murjanatu Gamawa, the EITI said it was pleased with the progress made by the corporation so far. It noted that NNPC seems to have turned the corner on its reported sordid past where transparency and accountability to Nigerians was non-existent.
The EITI also explained that the embrace of transparency represents a significant milestone for NNPC.
“Since Mele Kolo Kyari became the Group Managing Director in July 2019, the corporation has undergone a number of reforms to bring about greater transparency and accountability – chief of which is the Transparency Accountability and Performance Excellence (TAPE) agenda.
“Since early 2020, NNPC has been publishing FAAC monthly reports which show how much the corporation transfers to the state from the sale of oil and gas, including royalty and tax payments. In August, NNPC became an EITI supporting company, signalling its commitment to publish the group’s financial statements,” said the EITI.
According to it, with the Integrated Data Sciences Limited (IDSL) taking in a profit of N23 billion profit in 2019, the Nigerian Petroleum Development Company (NPDC) making N478 billion profit, the National Petroleum Investment Management Service (NAPIMS) raking in N2.83 trillion, the Petroleum Products Marketing Company (PPMC) earning profit of N14.2 billion and the Nigerian Gas Marketing Company (NGMC) reporting a profit of N10 billion, the efficiency of the corporation’s subsidiaries remains key to offsetting its business losses.
It also noted that the impacts and realities of the COVID-19 pandemic on the oil market have positioned the NNPC as the main revenue generating organisation in Nigeria, to play a vital role in increasing revenue to meet the government’s budget constraints and strengthen the country’s economy.
“NNPC’s group audited financial statement presents key information on the corporation’s financial health. The statement shows that NNPC reduced its loss by 99.7 per cent – from N803 billion in 2018 to N1.7 billion in 2019 – thanks to a significant increase in profits from its subsidiaries between 2018 and 2019.
“These significant gains mean that NNPC will need to spend less of its resources offsetting losses and puts the corporation on course to generate profit from its operations, which could help to maximise revenues for the state,” it added.
It further stated that the recent publication of NNPC’s financial statements, in addition to other disclosures, indicated that, “transparency is becoming an integral and routine feature of NNPC’s governance and management systems.”
“These disclosures allow stakeholders and citizens to scrutinise NNPC’s operations, thereby providing an avenue for public debate around the management of Nigeria’s natural resources.
“NNPC’s disclosures help to address pressing governance challenges, enabling the government and public to have oversight of important revenue streams at a time when Nigeria’s economy is under strain,” it explained.
Nevertheless, the EITI stated that the corporation could go further to uphold its commitment to transparency and accountability.
It said: “For example, NNPC is encouraged to disclose its oil and gas sales contract and champion the publication of Nigeria’s upstream oil and gas contracts in line with the EITI Standard, to make public the terms of the country’s petroleum deal.