NNPC directors’ expenses jump 214% to N2.6bn – Report

Executive and non-executive directors at the Nigerian National Petroleum Company Limited received N2.59bn as fees and expenses in the 2023 financial year, The PUNCH reports.

This figure indicates an increase of 214 per cent from N824m paid to the directors in 2022.

This new information was disclosed in the company’s latest financial statements for 2023.

Although the statement did not reveal the number of directors sitting on the board of the oil company, a statement by the presidency on November 27, 2023, revealed that nine people including the Chief Executive Officer currently sit on the board of the company.

NNPC is a major revenue-generating agency in Nigeria, operating as the national oil company in charge of the management, sales, etc, of the country’s crude oil and gas, among other key functions. It’s also a major source of forex.

Other administrative expenses showed that the group spent a total sum of N8.7bn on bank charges, N583.79bn on employees benefit expenses and N170.7bn on security expenses.

The report also stated that the NNPC spent a total sum of N45.88bn on safeguarding its pipeline and maintenance costs nationwide.

 This cost was an increase of 64.47 per cent from N16.29bn while the insurance and security expenses on its assets also gulped N58.23bn.

The oil firm said, “Expenditure on major maintenance refits or repairs comprises the cost of replacement of assets or parts of assets, inspection costs and overhaul costs. Where an asset or part of an asset that was separately depreciated is replaced and future economic benefits associated with the item will probably flow to the Group, the expenditure is capitalised and the carrying amount of the replaced asset is unrecognised.

“The costs of major turn-around of refineries and large petrochemical units are capitalized as incurred and depreciated over the time between two consecutive major turnarounds. Where part of the asset was not separately considered as a component, the replacement value is used to estimate the carrying amount of the replaced assets which is immediately written off. All other maintenance costs are expensed as incurred.”

Meanwhile, NNPC contributed N431.06bn of its accrued revenue to the federation account in the first seven months of 2024.

The amount distributed monthly is shared by the Federal Account Allocation Committee to the three tiers of government.

This was disclosed in a document analysing income remitted to the federation account by revenue-generating agencies between January and June 2024.

This analysis implemented by the Federation Account Department reveals the total inflows received monthly from sales of crude oil, makes necessary deductions, and the rest is shared with the three tiers of government.

NNPC is a major revenue-generating agency in Nigeria. It is also a major source of forex.

This revenue is different from taxes paid to the Federal Inland Revenue Services or royalties.

In recent years, the NNPC remitted literally zero funds to the Federation Account due to the payment of subsidy on Premium Motor Spirit.

It said fuel subsidy stopped the revenue-generating firm from remitting taxes and royalties to the Federation Account, as well as halted the company from making a profit.

The Chief Financial Officer of NNPCL, Umar Ajiya, said this in a 5.24-minute video released by the oil company early this year, noting that it didn’t remit a single naira in 2022.

Ajiya said, “That action of saying subsidy has gone, literally saved this nation N400bn on average every month. And what that meant was that the totality of the entitlements of tax, royalties and profits were all going into subsidy.

“And that was why we reached a position in 2022 where we remitted zero to the Federation Account. It was unpalatable, but we can’t give what we don’t have.

“We were taking NNPC’s cash flows from other operations to augment for products and it could not be sustained beyond June 2023.”

After the removal, our correspondent observed that the company restarted monthly.

A breakdown of the figures revealed that the largest remittance, amounting to N115.65bn, was deposited into the account in January 2024.

In the following month, the payment dropped by N23.17bn or 20 per cent to N92.48bn in February.

In March, the amount was N111.26bn before it dropped to N89.39bn in April.

However, the oil company’s remittance to the federation account dropped significantly by 93 per cent to N5.52bn and  N8.28bn in June and N8.480bn in July indicating a total sum of N422.58bn in six months.

It also recorded a variance of N105.41bn.

When compared with other revenue-generating agencies, NNPC performed poorly as the Nigerian Upstream Petroleum Regulatory Commission remitted a total of N2.87tn in six months while the Nigerian Customs Service paid N1.57tn within the same period.

On Sunday, NNPC’s Chief Corporate Communications Officer, Olufemi Soneye, said the oil company remained the largest contributor to the federation account.

The spokesperson said this in response to claims that the company is indebted to international oil traders to the tune of $6.8bn and that it has not remitted revenues to the Federation Account since January.

“NNPC Ltd remains the largest contributor to the tax revenue shared every month at Federation Account Allocation Committee,” he stated.