The Nigerian National Petroleum Corporation (NNPC) posted a profit after tax of N287.23 billion in 2020, representing a significant growth compared to a loss of N1.76 billion recorded in the previous year.

This is contained in the recently released audited financial statements for the group, published on its website.

According to the result, NNPC recorded profit growth despite a 20% decline in its revenue for the year. Specifically, its revenue declined from N4.63 trillion recorded in 2019 to N3.72 trillion in 2020. This could be attributed to the downturn caused by the covid-19 pandemic, which affected global crude oil prices.

Notably, revenue from sales of crude oil and petroleum products declined from N2.58 trillion recorded in the previous year to N2.13 trillion in 2020. This represents a 17% year-on-year decline in crude revenue. Recall that the cost of crude oil in the global market slumped to a record low in the year 2020, during the heat of the pandemic.

Key Highlights

Cost of sales reduced from N3.92 trillion in 2019 to N3.65 trillion in the review year (2020).
Due to the significant decline in revenue, and a by far less decline in cost of sales, the gross profit recorded a 91% decrease to stand at N64.77 billion as opposed to N714.04 billion recorded in 2019.
The bottom line of the group was lifted by a 154% increase in other income from N266.1 billion in 2019 to N675.7 billion in 2020.
A total of N431.9 billion was declared as tax expenses during the period, compared to a tax credit of N91.34 billion received in the previous year.
Total assets rose to N15.84 trillion as of December 2020, representing a 19% growth compared to N13.29 trillion recorded as of the end of 2019.
Shareholders equity during the period increased by 166% to stand at N1.15 trillion as of the end of the year.
The group paid a sum of N345.4 billion as royalties to the federal government of Nigeria in 2020, compared to N200.76 billion in the previous year.

A breakdown of the revenue from customers shows that a total of N2.28 trillion was made from the sales of petroleum products, accounting for 61.2% of the recorded revenue. NNPC generated N828.13 billion from the sales of crude oil, representing 22.3% of the total revenue.

Other items on the breakdown of the revenue include, sales from natural gas at N524.4 billion and revenue from services at N89.96 billion.

Other income drove profit growth in 2020

The NNPC was able to post positive bottom line despite the decline in revenue due to the significant increase recorded in other income for the period compared to the previous year. Notably, Other income at N675.66 billion rose by 154% in the review period from N266.1 billion in 2019.

A cursory look at the breakdown of the other income earned by the petroleum group showed that it received a sum of N20.79 billion in management fees, which represents 2% charges in respect of capital expenditure budget of NAPIMS.

Also, a significant increase in sundry income drove the bottom line up. A total of N157.1 billion was recovered from the Federation relating to strategic alliance balances compared to N76.3 billion recorded in the previous year.

Other items on the list, which contributed to the profit growth include, refunds from the federation (N110.63 billion), variation in crude stock (N250.17 billion), demurrage (N14.24 billion), Freight income (N44.32 billion), amongst others.

It is worth noting that refund from federation relates to the amount received from the federation for expenses incurred on their behalf which had been previously written off.

Meanwhile, recall that the Group Managing Director of NNPC, Mele Kyari revealed that it will be issuing an IPO by 2024. The recent profit declaration is a step in the right direction as this will help boost investors confidence in the firm.