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Rising inter-company liabilities raise fresh concerns over liquidity, sustainability and balance-sheet management
Despite its transition into a fully commercial entity, the Nigerian National Petroleum Company Limited (NNPC) is facing mounting financial pressure as debts owed by its subsidiaries and related entities surged by more than 70 per cent to ₦30.30 trillion in 2024.
An analysis of NNPC’s audited 2024 financial statements shows that inter-company receivables rose sharply from ₦17.78tn in 2023 to ₦30.30tn as of December 31, 2024—an increase of ₦12.52tn or 70.4 per cent. The development has heightened concerns over liquidity management and the long-term financial sustainability of the national oil company.
Majority of subsidiaries indebted
The audited accounts reveal that while NNPC operates 32 subsidiaries, only eight are free of debt to the parent company. The remaining entities—particularly refineries, trading arms and gas infrastructure units—account for the bulk of the ballooning inter-company obligations.
This comes amid lingering concerns over the write-off of substantial debts owed by NNPC to the Federation Account and the company’s ongoing plans to divest non-core assets as part of its transformation into a profitable, commercially driven enterprise.
Last week, The PUNCH exclusively reported that President Bola Tinubu approved the cancellation of a significant portion of NNPC’s liabilities to the Federation Account, wiping off about $1.42bn and ₦5.57tn following a reconciliation exercise.
Strong profits, growing debt exposure
Announcing the company’s 2024 financial performance, Group Chief Executive Officer, Bashir Bayo Ojulari, disclosed that NNPC recorded a Profit After Tax of ₦5.4tn on the back of ₦45.1tn in revenue, representing increases of 64 per cent and 88 per cent respectively over 2023 figures.
However, analysts note that the surge in inter-company debts underscores the need for a rethink of liquidity strategy and balance-sheet management if the company is to sustain profitability and successfully execute its restructuring and divestment plans.
Refineries top the debt list
Leading the list of indebted subsidiaries is the Port Harcourt Refining Company Limited, which owed ₦4.22tn in 2024, up from ₦2.00tn a year earlier. The spike reflects years of rehabilitation spending and prolonged operational downtime.
It is followed by:
- Kaduna Refining and Petrochemical Company Limited – ₦2.39tn (up from ₦1.36tn)
- Warri Refining and Petrochemical Company Limited – ₦2.06tn (up from ₦1.17tn)
Despite multiple rounds of turnaround maintenance aimed at boosting domestic refining capacity, the Port Harcourt, Warri and Kaduna refineries have yet to operate sustainably at commercially viable levels. As a result, they remain heavily dependent on financial support from the parent company.
Trading arm, gas units deepen exposure
NNPC’s trading operations also featured prominently, with NNPC Trading SA owing the parent company ₦19.15tn, more than double the ₦8.57tn recorded in 2023.
Other notable receivables include:
- NNPC Gas Infrastructure Company Ltd – ₦847.98bn
- Nigerian Pipelines and Storage Company Ltd – ₦466.74bn
- Gwagwalada Power Ltd – ₦326.58bn
- Maiduguri Emergency Power Plant – ₦179.33bn
Smaller balances were recorded across several entities, including Petroleum Products Marketing Company Limited, NNPC Shipping and Logistics Limited, NNPC Medical Services Limited, NNPC Gas Marketing Company Limited, NNPC Engineering and Technical Company Limited, and NNPC New Energy Limited, among others.
NNPC’s liabilities to subsidiaries also rise
Conversely, NNPC’s obligations to its subsidiaries and related entities also increased significantly, rising to ₦20.51tn in 2024 from ₦14.17tn in 2023, a 44.7 per cent year-on-year increase.
The largest exposure relates to NNPC Trading Limited, which was owed ₦16.36tn, up from ₦6.70tn a year earlier.
Other obligations include:
- NNPC Exploration and Production Limited – ₦4.02tn
- NNPC Gas Infrastructure Company Ltd – ₦106.97bn
- NNPC Retail Limited – ₦10.95bn
Transition pains and divestment push
Industry watchers say the sharp rise in inter-company balances reflects lingering financial complexities from NNPC’s transition from a state corporation to a limited liability company under the Petroleum Industry Act.
The swelling debts come as the company intensifies efforts to divest non-core assets, improve liquidity and attract external capital. NNPC has signalled plans to sell stakes in refineries, pipelines, power plants and other infrastructure assets to strengthen its balance sheet.
Recently, the company confirmed it is reviewing its asset portfolio to unlock value, reduce debt exposure and reposition itself as a commercially viable national oil company capable of competing on a global scale.
