Despite its transition into a fully commercial entity, the Nigerian National Petroleum Company Limited is facing mounting financial strain as debts owed by its own subsidiaries and related entities ballooned to an alarming N30.30 trillion.
Fresh details from NNPC’s 2024 audited financial statements show that inter company receivables surged by 70.4 per cent, rising from N17.78 trillion in 2023 to N30.30 trillion as of December 31, 2024. The sharp spike is raising serious questions about liquidity management, operational efficiency and the long term sustainability of Africa’s largest national oil company.
An in depth review of the accounts reveals that several of NNPC’s core subsidiaries including refineries, trading arms and gas infrastructure units are responsible for the bulk of the debt build up. Of the company’s 32 subsidiaries, only eight are debt free, leaving the rest deeply indebted to the parent company.
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The development comes at a delicate time for NNPC, which is still navigating the aftermath of its transition under the Petroleum Industry Act and ongoing concerns over legacy debts, asset efficiency and capital structure.
Just last week, it emerged that President Bola Tinubu approved the cancellation of a large portion of debts owed by NNPC to the Federation Account, wiping off about $1.42 billion and N5.57 trillion following a reconciliation exercise. The company has also intensified efforts to divest non core assets in a bid to shore up liquidity.
Yet, beneath headline profit figures, cracks are widening.
NNPC reported a Profit After Tax of N5.4 trillion in 2024, supported by N45.1 trillion in revenue, representing year on year increases of 64 per cent and 88 per cent respectively. However, analysts say the explosion in inter company debt threatens to undermine those gains if not urgently addressed.
At the top of the debtors list is the Port Harcourt Refining Company Limited, which owed NNPC N4.22 trillion in 2024, up from N2.00 trillion the previous year. The figure reflects years of rehabilitation spending and prolonged operational downtime.
The Kaduna Refining and Petrochemical Company Limited followed closely with debts of N2.39 trillion, up from N1.36 trillion, while the Warri Refining and Petrochemical Company Limited owed N2.06 trillion, rising from N1.17 trillion in 2023.
Despite repeated turnaround maintenance efforts, the three state owned refineries are yet to operate sustainably at commercially viable levels, leaving them dependent on continuous financial support from the parent company.
Trading operations also emerged as a major pressure point. NNPC Trading SA alone owed the parent company a staggering N19.15 trillion, more than double the N8.57 trillion recorded a year earlier.
Other notable receivables included NNPC Gas Infrastructure Company Limited (N847.98bn), Nigerian Pipelines and Storage Company Limited (N466.74bn), Gwagwalada Power Limited (N326.58bn) and the Maiduguri Emergency Power Plant (N179.33bn), alongside dozens of smaller subsidiaries and joint ventures.
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In total, related party debts rose sharply from N17.78 trillion to N30.30 trillion within a year, underscoring deepening liquidity pressures across the NNPC group.
Ironically, NNPC’s own liabilities to subsidiaries also expanded. Amounts owed by the parent company climbed to N20.51 trillion in 2024, from N14.17 trillion in 2023. The largest exposure was to NNPC Trading Limited, which was owed N16.36 trillion, up from N6.70 trillion a year earlier.
Industry observers say the swelling balances highlight unresolved structural challenges stemming from NNPC’s transition from a state corporation to a limited liability company.
With plans underway to divest refineries, pipelines, power plants and other infrastructure assets, the rising inter company debt pile may complicate efforts to attract investors and unlock value.
For a company seeking to reposition itself as a globally competitive, profit driven national oil company, the message from the balance sheet is clear: profitability alone is not enough if the debts are all within the family.
