The Chief Executive Officer of Cowry Assets Management Limited and financial analyst, Johnson Chukwu, has said that the dividend and taxes paid by the Nigerian National Petroleum Company Limited, NNPCL, will reduce the financial burden of the federal government.
Chukwu said this in response to the record performance of the state-owned company after it released its financial accounts for 2023.
NNPCL on Monday announced an N3.3 trillion profit in 2023 while declaring its financial statement for the period under review.
The profit represents 28 per cent higher when compared to the N2.54tn recorded in 2022.
The financial statements showed that NNPCL recorded a historic profit before tax of N5.98 trillion while paying taxes of N2.6 trillion to the Federal Inland Revenue Service.
NNPC also recorded a dividend of N2.6 trillion payable to the Nigerian government. The company had declared a loss of N803 billion in 2018, and it was reduced to N1.7 billion in 2019.
But the company, led by the Group Chief Executive Officer, Mele Kyari, returned to profitability in 2020 with N287 billion profit and N674.1 billion profit in 2021. It went further to post N2.55 billion profit in 2022.
Reacting to the development, Chukwu said in a recent interview on Arise TV that the dividend and taxes declared by the company will reduce the financial stress of the federal government.
He said: “The federal government has made a supplementary budget of about N6 trillion. And then NNPC’s N2.1 trillion final dividend is more than 35 per cent of the supplementary budget.
“That will show you the impact this is going to have when that money comes to the foundation account.
“Bear in mind that whatever dividend they pay goes to two organs of government. One, Federal Ministry of Finance, Incorporated, and Ministry of Petroleum, Incorporated and they own NNPC Limited 50-50 percent.
“So, it all goes back to the entire national treasury. And that simply means it will go into the federation account, which will be shared through the three tiers of government. And that will cushion the kind of financial stress that the governments at different levels are going through.”
According to him, in the past, the concern of Nigerians has always been the issue of accountability on the part of the former Nigerian National Petroleum Corporation, now NNPCL.
Chukwu added that NNPC Ltd is likened to Saudi Aramco, which is the biggest listed oil firm with a $1.8 trillion market capitalisation.
He said: “I was quite impressed. Do you know why? Everything we’ve heard in the recent past, are all negative about the general industry, what is going on and that. And then today we’re looking at how NNPC has turned the corner.
“They would have instilled some level of performance in different arms of an NNPC. They have also escalated their level of reporting, and now do you have a detailed financial statement from an NNPC? For years, we did not have a detailed financial statement from an NNPC.
“So, I think NNPC is an incorporated company, like what we have in NNPC Limited, unlike what you have in Nigerian National Petroleum Corporation when it was a corporation, and then there was no level of accountability.
“What has been brought to bear are the standards that apply to private sector enterprises in terms of performance-based, board oversight functions, budgeting, and then appraisals that measure performance against targets.
“And I think those things have been institutionalised, which is why we are seeing consistency in terms of their profitability and we’re seeing a steady growth in their profitability over these past few years since they turned the corner.
“And I believe those are the factors that were brought to bear that made the company turn the corner.”
NNPCL N2.1trn dividend, N2.6trn tax will ease govt’s financial burden – Analyst
