‘NNPC can be profitable like Saudi Aramco’ if ..- PwC, Taiwo Oyedele

Oredola Adeola

The Nigerian National Petroleum Company Limited, if correctly molded in the fashion of Aramco, its Saudi Arabian counterpart, is well positioned to become a profitable enterprise with the prospect of achieving a net income revenue of USD 50 billion in the coming financial year.

Mr. Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PriceWaterHouseCoopers (PwC) said this while examining the future prospects of the NNPC Limited as a profitable business entity and in the context of the current global market outlook.

In the case of Aramco, the PwC partner pointed out that the company in the financial results for last year (2021), with an average daily crude oil production of 9.2m bpd, generated revenue of $400b and net income of $110b after paying $95b in taxes.

He said, “Additionally, dividends of $75b were paid, mostly to the government. Given higher oil prices, profits should have soared in 2022, with the company’s market capitalization now estimated at about $2.5 trillion.

If we assume , Oyedele said, “that the Nigerian government’s share of daily crude oil production is just below 1m bpd, NNPC could proportionately have generated about $50b in revenue, net income of $11b, paid taxes of $9.5b, and dividends of $7.5b with a market capitalisation of $250b in view.”

” This means that, even if only 20% of the shares were to be listed, the government would raise about $50 billion to pay off our public debt if we wished to.”

“While it is often said that the government has no business doing business, I think the real issue is that if the government must do business, it must be devoid of politics and inefficiencies, including the current wasteful petrol subsidy,” Oyedele noted.

On NNPC’s obligation of remittances to FAAC, He further said, ” I think the company will continue to do so more stringently in view of section 53(7) of the Petroleum Industry Act, viz., which says that ‘NNPC Limited and any of its subsidiaries shall conduct their affairs on a commercial basis in a profitable and efficient manner without recourse to government funds.

“Their memorandum and articles of association shall state the restrictions, and NNPC Limited shall operate as a Companies and Allied Matters Act entity, declare dividends to its shareholders and retain 20% of profits as retained earnings to grow its business.”

“Section 57 added that, ‘NNPC Limited shall pay its share of all fees, royalties, profit oil shares, taxes and other required payments to the government as any company in Nigeria.

“Section 64 then further provides that, ‘NNPC Limited shall promptly remit the proceeds of the sales of the profit oil and profit gas to the Federation less its 30% for licence fee and Frontier Exploration Fund as specified in section 9 (4) of this Act.’

Mr. Taiwo Oyedele’s optimistic view is, however, underlined by the more critical factors of Good Governance Culture as a major prerequisite that will guide the NNPC Limited’s emergence as a successful enterprise founded by the Nigerian government.

EnergyDay however gathered that the next calendar year and perhaps halfway through, the Nigerian National Petroleum Company Limited is expected to provide its first annual report or half-year report. This according to Mr. Oyedele will give a clearer indication of its future.