Umar Ajiya, Chief Financial Officer of the Nigerian National Petroleum Company (NNPC) Limited, revealed that the company is open to asset sales as part of its strategy to enhance profit margins and achieve higher returns in the near future.
In an interview discussing NNPC’s 2023 audited financial statement, Ajiya noted that the company is not only focused on maximizing the utilization of certain assets but is also considering selling those that cannot be optimized for better returns.
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“You have a company that is literally just one year old. We started on the first of July, 2022. 2023 marks our second year of operation. We are going to maximize the assets by bringing in partners to help. We will also sell those assets that we believe we cannot maximize ourselves. That way, we will rebalance the balance sheet to ensure that the assets are fully utilized, and we expect to achieve a higher rate of return,” Ajiya explained.
NNPC, which reported a 28% increase in profit, reaching N3.2 trillion, holds total assets valued at approximately N246.8 trillion, exceeding Nigeria’s entire Gross Domestic Product (GDP).
NNPC Ready for Public Offers
Ajiya also mentioned that NNPC is prepared for public offers, depending on the willingness of shareholders to invest. He noted that the Petroleum Industry Act (PIA) recommends a two to three-year financial history to assure investors that the national energy giant is on a profitable path.
He emphasized that NNPC has already demonstrated profitability in its first two years, adding that shareholders are eager to see the company deliver strong performance once it enters the market and becomes a publicly traded entity.
“Going to the public is ultimately a shareholder’s decision. We are almost ready in the sense that we have at least two or three years of financial history to demonstrate to investors that the company is on a profitable trajectory. We’ve shown this for the first two years. Hopefully, the shareholders will decide how much to sell down and unwind. It’s really the shareholders’ call. The shareholders are now cautious about selling down. They are eager to see us deliver strong performance and may ask us to enter the market at the appropriate time,” the CFO added.
What You Should Know
NNPC’s recent audited financial report has raised concerns about the company’s profit margins and the equity within its capital structure. While the national oil company reported a 28% increase in profit, reaching N3.2 trillion compared to 2022, many analysts believe that NNPC has not fully optimized its assets and equity, which surpassed Nigeria’s GDP.
In response, NNPC stated that, as a limited company for just two years, its profitability reflects a strong commitment to corporate governance. This commitment has already generated significant interest from potential investors and shareholders as the company prepares to go public.
