PPMC has started piling up debt stock, a year after NNPC forgave ₦423 billion debt
Debt owed and credit sales uptick in 2019, an unhealthy trend for the company’s profit.
Experts await passage of the petroleum industry bill (PIB) – an ordinance set up to revamp the oil and gas sector and make NNPC a commercially driven entity.
Pipelines and Product Marketing Company, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), continues to accumulate debt for the parent company. Details of the 2019 financial statement revealed that the company owed ₦20.74 billion for the period.
Of the amount, it owed other subsidiaries of the parent company the sum of ₦12.82 billion. First was a debit of ₦9.58 billion to the Nigerian Pipelines and Storage Company Limited- a company created out of it. Others include Kaduna, Port Harcourt and Warri refineries, Nigerian Gas Company, and Nigerian Engineering and Technical Company Limited; corresponding to ₦63.9 million, ₦60.17 million, ₦27.96 million, ₦32.7 million, and ₦5.6 million.
The transactions consist of the supply of services, the purchase of goods, and the transfer of staff and staff loans, per the financial statement.
In recent times, details of NNPC’s financials highlight instances of unprofitability, or unremitted revenue. Variations that often cost the nation, hindering socio-economic development. Last year, Dataphyte reported how the ineffective running of NNPC entities cost the country to lose trillions of naira (approximately ₦1.4 trillion). A figure which could easily construct 450 primary health centres at the cost of ₦17 million ($44,000).
What is more? The company piled up said debts in recent years, despite parent company NNPC’s interventions. Chief of which include a ₦423 billion payout premised for recapitalisation in 2017. Therein, NNPC further wrote off debts to the tune of ₦338 billion. But by 2018, the deficit rose by ₦7.26 billion. And at the end of 2019, PPMC racked up an additional ₦5.54 billion, leaving a debit of ₦12.8 billion.
The financial statements also reveal how trade and other payables increased from ₦14.11 billion to ₦20.74 billion within the same period.
As debt grows, PPMC uncollected amounted to ₦56 billion
As the company’s debt portfolio grew, it also raked up uncollected debts from partners and customers. As of the end of 2019, it had credit sales of ₦56 billion uncollected, representing a ₦20 billion increase in one year (₦36.54 bn: 2018).
Brief details of PPMC 2019 financial records
| Records | Amount (₦’bn) |
| Profit | 14.26 |
| Debt owed | 20.74 |
| Uncollected credit sales | 56.53 |
The uncollected credit sales speak to the meagre profit posted by the company for the year under review. Howbeit, it recorded a 52% increase in profits, ₦14.2 billion as against 2018’s ₦9.3 billion.
Commercially-viable oil company to the rescue – Experts
Experts have clamoured for a commercial mandate of the National Owned Companies. In 2019, Ms Tengi George-Ikoli, the Program Coordinator of the Nigeria Natural Resource Charter (NNRC), told Dataphyte that the Petroleum Industry Bill (PIB) would rescue Nigeria from its oil and gas shortcomings. She said successful National Owned Companies are often products of a robust commercial mandate.
Also, Mr Henry Adigun, a team lead at Facility for Oil Sector Transparency and Reform (FOSTER) in Nigeria, said the PIB passage would solve some fiscal transparency issues in the oil and gas sector.
However, despite rising hopes of a swift passage of the PIB, Nigeria still waits. Senate President, Ahmed Lawan, attributed non-passage of the bill to strong forces within and outside the country. With the non-passage of the bill, Nigeria has lost more investment opportunities in the oil and gas sector and cost more than $200 billion, according to Nigeria Extractive Industries Transparency Initiative (NEITI).