BUSINESS DAY
Thirty-two subsidiaries of the Nigerian National Petroleum Company Ltd (NNPC) are grappling with N22 trillion debt incurred over a 12-month period, raising questions over their viability.
Data gleaned from the latest financials of NNPC showed 32 subsidiaries of the state-owned oil company grew their debts by 155 percent from N8.6 trillion in 2022 to N22 trillion in 2023.
The subsidiaries and joint venture partners owe NNPC Limited for activities such as funding of operations, back charge of expense, operating lease and processing fees charged for the year ended December 2023.
NNPC said the transactions with related parties are made at “terms equivalent to those that prevail in arm’s length transactions.”
“Outstanding balances at the year-end are unsecured and interest-free,” NNPC said in its 2023 financial statement.
Debts in Refineries
Among the most striking changes, Port-Harcourt Refining Company Limited saw its debts to NNPC escalate by 144 percent, reaching N1.97 trillion in 2023 compared to N806 billion the previous year.
NNPC explained that the nature of the transactions for the Port Harcourt Refinery was for “funding of operations, operating lease and processing fees charged for the period.”
The debt increases in Port Harcourt mirror similar challenges at other major refining units.
The Kaduna Refining and Petrochemical Company Limited (KRPC) saw its debt swell by 127.8 percent, reaching N1.36 trillion in 2023 from N597.2 billion in 2022. Similarly, the Warri Refining and Petrochemical Company Limited (WRPC) reported a 140 percent rise in debt, climbing to N1.17 trillion from N487.3 billion.
Most analysts wonder why NNPC continues to pile up losses, wasting resources on idle refining machinery and personnel amid perennial losses, and the obvious lack of capacity to manage them.
Despite producing zero fuel and recording a loss of N50.5 billion, the Port Harcourt refinery raised the payment made as salary and benefits for staff to N22.2 billion in 2019, from N21.76 billion the previous year.
Six directors collected N59.65 million in fees, compared to N58.7 million received in 2018, meaning that each received an average payment of N9.94 million a month in 2019 from a company that recorded no revenue.
A 2023 parliamentary report showed Nigeria had spent more than N11.35 trillion ($25 billion) on fixing the country’s three moribund refineries in the past 10 years.
The NNPC is pumping nearly $3 billion into the revamp of Port Harcourt, Warri and Kaduna refineries.
BusinessDay findings showed the six major refineries in the United Kingdom belong to the likes of Shell, Chevron, INEOS, and ExxonMobil.
Saudi Aramco owns the 600,000 barrels per day (bpd) Port Arthur Refinery in Texas, America’s largest. Aramco is constructing a 300,000 bpd $10 billion refinery in China. In Canada, the private sector operates the 18 refineries there.
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