Abuja — The going concern status of the Nigerian National Petroleum Corporation (NNPC) is currently at risk, according to Independent auditors and management of the corporation.
The views of the NNPC management and the independent auditors — Pricewaterhouse Coopers, SIAO Partners and Muhtari Dangana & Co.— were contained in the 2019 Audited Financial Statement of the NNPC released over the weekend.
The auditors highlighted the fact that the NNPC Group and Corporation recorded net losses of N1.8 billion and N107.8 billion respectively in 2019; compared to N803.1 billion and N254 billion in 2018, respectively, while its current liabilities exceed its current assets by N4.4 trillion and N1.1 trillion for the Group and Corporation respectively, compared to N3.3 trillion and N968.7 billion in 2018, respectively.
As a result, the auditors disclosed that material uncertainty exists that cast significant doubts on the ability of the NNPC to escape bankruptcy.
According to financials, NNPC Group and Corporation’s current assets, stood at N5.3 trillion and N4.5 trillion in 2019, while total current liabilities stood at N9.7 trillion and N5.6 trillion respectively.
This was in comparison to 2018 figures, where NNPC Group and Corporation’s total current assets stood at N5.4 trillion and N4.8 trillion respectively, while total current liabilities stood at N8.7 trillion and N5.7 trillion respectively.
In addition, in the financial statement, the management of the national oil firm, revealed that NNPC Group and Corporation had sustained recurring losses over the years, which had culminated into accumulated losses of approximately N1.5 trillion and N474 billion, compared to N1.6 trillion and N490.7 billion for the Group and Corporation in 2018, respectively.
“The Group and Corporation both continue to incur losses. These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group and Corporation’s ability to continue to as a going concern, and therefore, may be unable to realize its assets and discharge its liabilities in the normal course of business,” the management of the NNPC.
The NNPC management, however, stated that mitigation procedures are currently being executed, while the corporation is receiving support from the Federal Government to ensure that the Group and Corporation have adequate resources to continue in operational existence for the foreseeable future.
The NNPC stated that the Federal Government had commenced the elimination of cost drivers responsible for accumulation of the shortfalls in settling Domestic Crude Obligation; and the introduction of the Price Modulator mechanism in the Petroleum Products Pricing Regulatory Agency, PPPRA template, designed to eliminate the major cause of the losses and in order to make the Group and Corporation commercially viable.
It said the government was also minimizing the breaches to pipeline networks; pursuing the passage of the PIB and its implementation, which would restructure the petroleum industry, improve transparency and governance, and also give the NNPC the autonomy to operate profitably.
The management further revealed that there are plans to recapitalize the NNPC with steps to resolve all outstanding related party payables and receivable, to enable the national oil company start on a clean slate as a first step to recapitalization.