Thirty-two subsidiaries of the Nigerian National Petroleum Company Ltd (NNPC) accumulated N22 trillion in debt within a 12-month period, raising concerns about their financial sustainability. The subsidiaries’ debt grew by 155%, rising from N8.6 trillion in 2022 to N22 trillion in 2023, according to the latest NNPC financials. The debts arose from funding operations, back charges, operating leases, and processing fees.
Refinery Debts
The Port-Harcourt Refining Company Limited’s debt surged by 144% to N1.97 trillion in 2023, up from N806 billion in 2022. Similarly, Kaduna Refining and Petrochemical Company Limited (KRPC) saw its debt increase by 127.8%, reaching N1.36 trillion, while Warri Refining and Petrochemical Company Limited (WRPC) reported a 140% increase to N1.17 trillion. Despite producing no fuel, the Port-Harcourt refinery’s salary expenses increased to N22.2 billion in 2019, highlighting operational inefficiencies.
Nigeria has spent over N11.35 trillion in the last decade attempting to fix its refineries, with NNPC investing nearly $3 billion to revamp the Port Harcourt, Warri, and Kaduna refineries. However, experts criticize NNPC’s capacity to manage these projects, citing lost organizational knowledge and ingrained inefficiencies.
Northern Oil Exploration
NNPC Energy Services Limited’s debt grew by 118.9%, reaching N154.2 billion. A significant portion, N53.33 billion, was for projects like the Keana drilling campaign and Chad Basin re-entry. Interest has already been paid on the loan, but principal repayments are yet to begin.
Other Rising Debts
Several other NNPC subsidiaries reported significant debt increases. NNPC Gas Infrastructure Company Ltd incurred N1.86 trillion in debt, while Nigerian Pipelines and Storage Company Limited (NPSC) saw its debt rise 52-fold to N236.1 billion. NNPC LNG Limited’s debt surged by 2201% to N13.9 billion, and NNPC Medical Services Limited reported a 200.5% increase, reaching N56.5 billion.
The report noted that ‘other related parties’ debt grew by 175.5% to N14.3 trillion from N5.19 trillion in the previous year.
Debt Decreases
Despite the growing debt, some subsidiaries managed to reduce their liabilities. NNPC Retail Limited reduced its debt by 21.8% to N38.7 billion, and NNPC Gas Marketing Company Limited saw a 23% decrease, bringing its debt down to N20.9 billion.
New and Foreign Debts
NNPC Shipping and Logistics Limited, which had no debt in 2022, now owes N28.6 billion. The Maiduguri Emergency Power Plant also reported a new debt of N71.08 billion. Meanwhile, NNPC Trading SA’s debt increased to N503.1 billion, and NNPC Trading Services (UK) Limited’s debt rose to N730 million from N37 million.
Experts’ Views
Experts attribute NNPC’s financial woes to mismanagement and political interference. Energy analyst Charles Akinbobola noted that NNPC, unlike its counterparts like Petronas, Equinor, and Petrobras, has failed to play a pivotal role in Nigeria’s economic development, instead becoming a source of distress for the country. Many believe that NNPC’s operations have been hampered by political control and a lack of business-focused management.
