NNPC subsidiaries’ debt surges 70% to N30.3trn

The Nigerian National Petroleum Company Limited is facing mounting financial pressure as debts owed by its subsidiaries and related entities climbed sharply to N30.30tn in 2024, representing a 70 per cent increase from N17.78tn in 2023.

The rise in inter-company receivables was revealed in the company’s audited financial statements for the year ended December 31, 2024.

The figures have raised concerns about liquidity management and the long-term financial sustainability of the restructured national oil firm.

An analysis of the audited accounts showed that several key operating subsidiaries — particularly refineries, trading arms and gas infrastructure units — were responsible for the largest share of the accumulated debts.

Of the 32 subsidiaries operating under the group, only eight were reported to be free of outstanding obligations to the parent company.

The significant rise in internal debts comes as NNPC continues its transformation from a state corporation to a commercially-oriented oil company under the Petroleum Industry Act.

As part of this process, the company has been reviewing plans to divest non-core assets and improve revenue generation.

Last week, the Federal Government approved the cancellation of a large portion of NNPC’s legacy debts to the Federation Account after records reconciliation.

In announcing the 2024 financial results, NNPC’s Group Chief Executive Officer, Bashir Bayo Ojulari, said the company recorded a Profit After Tax of N5.4tn and revenue of N45.1tn, representing significant increases over the prior year.

Yet, the surge in inter-company debts — now at N30.30tn — underscores the need for tighter financial controls as the company implements its commercial objectives.

Among subsidiaries with the largest balances owed to the parent company, the Port Harcourt Refining Company recorded the highest figure, reporting inter-company debts of N4.22tn, up from N2.00tn in 2023.

The Kaduna Refining and Petrochemical Company’s obligations rose to N2.39tn from N1.36tn, while the Warri Refining and Petrochemical Company’s debt increased to N2.06tn from N1.17tn in the previous year.

Although the three refineries have undergone multiple rounds of rehabilitation aimed at boosting domestic fuel output, they are yet to operate at commercially sustainable levels, remaining dependent on financial support from the parent firm.

NNPC Trading SA also featured prominently, with debts owed to the parent company more than doubling to N19.15tn from N8.57tn in the preceding year.

Other subsidiaries, including those operating in gas infrastructure, pipelines and emergency power plants, were reported to owe sizeable amounts, adding to the overall internal debt burden.

In addition to inter-company receivables, NNPC’s audited financial statements showed that the company’s own obligations to subsidiaries and related entities increased to N20.51tn from N14.17tn in 2023.

The largest portion of this exposure related to NNPC Trading Limited, to which the group owed N16.36tn as of December 31, 2024.

Other entities owed by the company included exploration and production units, retail operations and service companies.

Experts say the swelling inter-company balances reflect lingering structural and governance challenges arising from the transition to a commercially-oriented business model.

Resolving these obligations will be critical for NNPC to successfully implement planned divestments, attract external investment and reassure stakeholders about its financial discipline.

Petroleum economist Professor Wumi Iledare described the rapid build-up of internal debts as a warning sign that inefficiencies are outpacing reforms.

He said the recorded figures, while not indicative of insolvency, point to weak commercial practices that must be addressed through stricter settlement timelines, restructuring of non-viable units and enhanced accountability.

Similarly, the Chief Executive Officer of Petroleumprice.ng, Jeremiah Olatide, described the 70 per cent year-on-year increase as “financial recklessness” and emphasised the need for a robust debt-management framework to boost sustainability and transparency within the group.

Meanwhile, NNPC’s borrowings more than doubled in 2024, rising from N55.7bn to N122.8bn.

The increase, driven largely by new loan arrangements and accrued interest, reflects efforts to fund strategic projects such as the Gwagwalada Independent Power Project.

The audited report indicated that these borrowings were company-level obligations and did not include debts at the subsidiary or joint-venture level.

Analysts say addressing the growing internal debt burden will be a defining challenge for NNPC as it seeks to transform into a competitive and financially disciplined national oil company.

If unchecked, the debt could constrain cash flow, limit investment capacity and undermine confidence in the company’s strategic direction.