In a season some of its peers reported bumper profits and took advantage of opportunities from listing on the stock market, the Nigerian National Petroleum Company Limited wrote off receivables worth N140 billion between 2019 and 2021.
Dataphyte’s findings showed the state-owned company wrote off receivables worth N34.086 billion in 2020 and another N25.309 billion in 2021.
The same development occurred in 2019 when NNPC Ltd wrote off a debt of N81.406 billion. The explanation was a post-reconciliation with customers’ accounts.
In its defense, NNPC Ltd blamed the development on “DOCT’s signed Receivables Reconciliation and the Amount actually confirmed”.
However, experts have different thoughts.
According to Investopedia, the reconciliation of accounts receivable is the process of matching the detailed amounts of unpaid customer billings to the accounts receivable total stated in the general ledger.
“Some differences may be acceptable because of the timing of payments and deposits. Unexplained or mysterious discrepancies, however, may warn of fraud or cooking the books,” Investopedia warned.
Financial experts questioned how the NNPC managed to have inaccuracies on debts in its account to the tune of N140 billion in three years.
This situation is also coming at a time when NNPC Subsidiaries owe debts up to N2.054 trillion in 2021 alone. The monies owed are NNPC’s credit to these subsidiaries and Joint Ventures to carry out their operations, cover Back charge of expenses among others.
Also, Kaduna Refinery Company, Port-Harcourt Refinery, Warri Refinery collectively owe the sum of N1.5 trillion.
Dataphyte findings showed there is no record that these companies have paid back their debt within the 2021 financial year, based on the review of the officially released audit report.
Again, NNPC Ltd Continues High Credit Sale
The NNPC Ltd in 2021 recorded a trade receivable of N1.83 trillion in 2021.
Trade receivables are credit sales and services delivered by an organisation without immediately receiving payment for such.
While Credit sales are normal occurrences in business and finance, the credit sale of NNPC Ltd is a 28percent of the total revenue made in 2021.
The Credit sales recorded is 99.5 percent of the total revenue made from crude oil sales in the year.
The NNPC Ltd sold the equivalent of 50percent of the revenue it made on Petroleum product sales, on Credit.
This same development occurred in 2020, when the NNPC Ltd sold goods worth N1.45 trillion on credit.
Experts say Nigeria’s revenue strive may suffer from losses such as that of debts written off, while the country’s revenue may be tied down with continual credit sales, this is asides from the risk of debt default associated with credit sales.
While Nigeria stuttered, Saudi Arabia’s majority-owned state-owned firm, Saudi Aramco, paid shareholders dividends of $75 billion in 2021, an amount twice the size of Nigeria’s 2021 budget, indicating how a well-run oil company can provide a lifeline to an economy.
This is even remarkable considering that the company’s profit fell by 44 percent in 2020 following the COVID-19 pandemic, but its Nigerian counterpart, the NNPC Ltd is unable to bail out the country’s troubled economy bogged down by subsidies, and an inefficient operation.