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NNPC: Audited Financial Statement shows that Directors now collecting N214m as allowances

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NNPC: Audited Financial Statement shows that Directors now collecting N214m as allowances

The Nigerian National Petroleum Corporation (NNPC) slashed the various fees collected by directors of the national oil company from N606 million in 2019 to N214 million in 2020, an analysis of the just-released Audited Financial Statement (AFS) for 2020 has shown.

This represents a 60.2 per cent reduction in directors’ fees.

Typically, directors’ fees entail compensation for services as a member of the board of directors of the company, excluding reimbursement of expenses or other non-regular forms of compensation.

In all, the audited statement showed that in certain areas, the corporation did remarkably well in its avowed cost-cutting efforts during the year under review, while other administrative cost centres, gulped a substantial portion of the NNPC’s finances.

Following the economic downturn occasioned by the COVID-19 pandemic last year, which led to the fall in oil prices, the NNPC said it was embarking on the internal restructuring of its operations, including shaving off unnecessary spending as well as automation of its processes.

“The corporation saved a lot of cost through contract renegotiation by up to 30 per cent on the heels of the COVID-19 pandemic, introduction of technology that drastically cut travel cost through reduction in in-person meetings and the general automation of processes that enhanced efficiency across the group’s businesses,” Group Managing Director of the NNPC, Mallam Mele Kyari, said last week.

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He was speaking on how the NNPC made its first gain in 44 years, amounting to N287 billion in 2020.

Under general administrative expenses, although the NNPC paid N6.2 billion for rent and rates as opposed to N5 billion in 2019, it however reduced repairs and maintenance costs from N38 billion to N26.6 billion.

Security expenses were reduced from N12.6 billion in 2019 to N12.3 billion, in 2020, while directors’ fees were reduced from N606 million to N214 million, a slump of about 60 per cent.

The NNPC board is led by the Minister of State, Petroleum Resources, Chief Timipre Sylva, who doubles as the alternate chairman, assisted by Senator Magnus Abe, Dr. Tajudeen Umaru, Dr. Steven Dike, Mrs. Lami Ahmed, Chief Pius Akinyelure, Mallam Mohammed Lawal and Secretary of the Board, Mrs. Hadiza Coomassie, as well as the Permanent Secretary, Ministry of Finance.

For general and administrative charges, the NNPC’s bank charges increased from N370 million in 2019 to N845 million in 2020, exchange loss was N72 million, advertisement and publicity gulped N5.3 billion, up from N1.2 billion in 2019.

In addition, employee benefits expenses cost increased from N357 billion to N397 billion, donations rose from N279 million to N3.63 billion, audit fees rose from N1.040 to N1.07 billion, while entertainment expenses were slashed from N8.3 billion to N1.6 billion in the 2020 financial year.

Between 2019 and 2020, legal and professional fees paid by the corporation reduced from N30 billion to N24 billion while printing and stationery came down from N1.6 billion to N976 million.

Staff training and recruitment cost slumped from N12.8 billion to N7.5 billion in the year under review and what the corporation termed management and facilitation fees increased from N1.3 billion to N5.6 billion.

However, the document revealed that transport and travelling gulped N13.5 billion in 2019 and N14.2 billion in 2020, a year marked by travel restrictions as countries embarked on lockdown due to the pandemic, even as postages and telephone expenses which consumed N8.5 billion in 2019, dropped to N5.6 billion in 2020.

Office running cost jumped from N11 million to N83 million, while under the subheading other expenses, which included Nigerian content expenses, business development expenses, decoration and beautification expenses, the amount spent was reduced from N53.2 billion to N26.6 billion.

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Similarly, NNPC paid N94 billion as pensions in 2020, up from N90 billion in 2019 and gratuity costs decreased from N51 billion to N46 billion in 2020. Cumulatively, the NNPC spent N678.171 on general and administrative expenses, a reduction from N695.949 in 2019.

The AFS stated that the share of loss of NNPC in Nikorma Transport and West Africa LPG, the corporation’s shipping and transportation company engaged in transportation of energy products, was not recognised since the accumulated share of loss was higher than the initial investment.

In terms of monies from contracts, revenue from crude oil sales was N828 billion in 2020 as opposed to N1.0 trillion in 2019; revenue from petroleum product sales was N2.2 trillion in 2020, from a high of N2.9 trillion in 2019, sales of natural gas increased from N489 billion in 2019 to N524 billion in 2020 while monies from services rendered decreased from N144 billion to N89 billion in 2019 and 2020 respectively.

In all, group revenues from the above items for the group, decreased from N4.6 trillion in 2019 to N3.7 trillion in 2020, according to the document.

On a sectorial basis, Nigerian Gas Company (NGC), one of the NNPC’s subsidiaries established in 1988, spent N31.88bn on salaries, welfare and other personnel expenses in 2020 and generated N109.1 billion in 2020, representing a 21 per cent increase from N90.2 billion in 2019.

The company’s profit before tax also increased by 19 per cent from N54.7 billion in 2019 to N65.1 billion in 2020, while profit after tax also rose by 20 per cent to N52.7 billion from N43.7 billion in the preceding year.

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