Despite its transition into a commercial entity, the Nigerian National Petroleum Company Limited (NNPC) is grappling with mounting financial pressure as unviable and underperforming subsidiaries deepen inter-company indebtedness, pushing outstanding obligations owed to the company to ₦30.30 trillion.
Latest findings from NNPC’s 2024 audited financial statements showed that debts owed by subsidiaries, joint ventures, and other related entities rose by 70.4 per cent, or ₦12.52 trillion, from ₦17.78 trillion in 2023 to ₦30.30 trillion as of December 31, 2024. The sharp increase has raised fresh concerns about the company’s liquidity management and long-term financial sustainability.
An analysis of the audited accounts, recently released by the oil firm, conducted on Sunday, revealed that several of the national oil company’s core operating subsidiaries—particularly its refineries, trading arms, and gas infrastructure units—accounted for the bulk of the ballooning intercompany receivables.
The report showed that while the national oil company operates 32 subsidiaries, only eight are not indebted to the parent company, leaving the majority burdened with varying levels of inter-company debt.
This development comes as NNPC continues to navigate concerns surrounding the write-off of substantial debts owed to the Federation and advances plans to divest non-core assets as part of its ongoing transformation into a profitable, commercially oriented national oil company.
Last week, President Bola Tinubu approved the cancellation of a significant portion of the debts owed by NNPC to the Federation Account, wiping off about $1.42 billion and ₦5.57 trillion after a reconciliation of records between both parties.
The company has also begun moves to sell stakes in some of its oil and gas assets.
Announcing the company’s 2024 financial results, Group Chief Executive Officer, Bashir Bayo Ojulari, said NNPC recorded a Profit After Tax of ₦5.4 trillion on the back of ₦45.1 trillion in revenue for the year, representing increases of 64 per cent and 88 per cent respectively over the 2023 figures.
Despite these strong headline numbers, the surge in inter-company debts to ₦30.30 trillion underscores the need for a rethink of liquidity strategy and balance-sheet management if the company is to sustain profitability and successfully execute its planned divestments and restructuring.
Topping the list of subsidiaries owing NNPC is the Port Harcourt Refining Company Limited, which posted inter-company debts of ₦4.22 trillion in 2024, up sharply from ₦2.00 trillion in 2023. This reflects the financial strain associated with years of rehabilitation spending and prolonged operational downtime.
Next was the Kaduna Refining and Petrochemical Company Limited, whose obligations rose to ₦2.39 trillion from ₦1.36 trillion a year earlier, while the Warri Refining and Petrochemical Company Limited owed ₦2.06 trillion, up from ₦1.17 trillion in 2023.
Although the Port Harcourt, Warri, and Kaduna refineries have undergone several rounds of turnaround maintenance aimed at boosting domestic refined petroleum output, they have yet to operate sustainably at commercially viable levels.
As a result, they remain largely dependent on continued financial support from the parent company, contributing significantly to rising inter-company debts reflected in NNPC’s 2024 accounts.
NNPC’s trading operations also featured prominently, with NNPC Trading SA owing the parent company ₦19.15 trillion, more than double the ₦8.57 trillion recorded in the previous year.
Smaller but notable receivables were recorded from NNPC Gas Infrastructure Company Limited (₦847.98 billion), Nigerian Pipelines and Storage Company Limited (₦466.74 billion), Maiduguri Emergency Power Plant (₦179.33 billion), NNPC Eighteen Operating Limited (₦681 million), NNPC Trading Services (UK) Limited (₦1.97 billion), Nidas Shipping Service Agency Limited (₦1.26 billion), Kaduna IPP Limited (₦1.83 billion), Kano IPP Limited (₦1.47bn) and Hyson Nigeria Limited (Joint Venture) (₦102 million).
Other subsidiaries with outstanding balances include Petroleum Products Marketing Company Limited (₦264.75 billion), NNPC Medical Services Limited (₦106.75 billion), NNPC Shipping and Logistics Limited (₦99.99 billion), NNPC Gas Marketing Company Limited (₦54.71 billion), NNPC Engineering and Technical Company Limited (₦50.86 billion), Gwagwalada Power Limited (₦326.58 billion), National Petroleum Telecommunication Limited (₦26.37 billion), NNPC LNG Limited (₦28.22 billion), NNPC Properties Limited (₦18.94 billion), and NNPC New Energy Limited (₦5.51 billion).
In total, amounts owed by related parties climbed from ₦17.78 trillion in 2023 to ₦30.30 trillion in 2024, underscoring deepening liquidity pressures within the NNPC group structure.
Conversely, the report showed that NNPC’s obligations to its subsidiaries and related entities also increased, rising to ₦20.51 trillion in 2024 from ₦14.17 trillion in 2023, representing a 44.7 per cent year-on-year increase.
The bulk of this exposure relates to NNPC Trading Limited, to which the national oil company owed ₦16.36 trillion as of December 2024, up sharply from ₦6.70 trillion a year earlier.
Similarly, NNPC Exploration and Production Limited was owed ₦4.02 trillion, down from ₦4.85 trillion in 2023, while smaller balances were recorded for NNPC Retail Limited (₦10.95 billion), NNPC HMO (₦3.47 billion), Antan Producing Limited (₦7.20 billion) and NNPC Gas Infrastructure Company Limited (₦106.97 billion).
The sharp rise in inter-company balances reflects lingering financial complexities arising from NNPCL’s transition from a state corporation to a limited liability company under the Petroleum Industry Act.
The swelling debts come amid the company’s renewed push to divest non-core assets, improve liquidity and attract external capital. NNPCL has repeatedly signalled plans to sell stakes in refineries, pipelines, power plants and other infrastructure assets to strengthen its balance sheet.
Recently, the company confirmed it was reviewing its asset portfolio to unlock value, reduce debt exposure and reposition itself as a commercially viable national oil company capable of competing globally.
The PUNCH