The Nigerian National Petroleum Company Limited (NNPCL) is facing renewed pressure over its financial health after debts owed to the company by its subsidiaries and related entities surged by more than 70 per cent to N30.30tn in 2024, raising questions about liquidity management and the effectiveness of ongoing reforms.
According to NNPCL’s audited financial statements for 2024, inter-company receivables rose sharply from N17.78tn in 2023 to N30.30tn as of December 31, 2024 - an increase of N12.52tn or 70.4 per cent within one year. Analysts say the scale and speed of the increase underscore deep-seated structural challenges within the group, despite its transition into a limited liability company under the Petroleum Industry Act (PIA).
An analysis of the accounts shows that the bulk of the debts is concentrated among NNPCL’s operating subsidiaries, particularly its refineries, trading arms and gas infrastructure companies. Of the company’s 32 subsidiaries, only eight were not indebted to the parent company at the end of 2024, leaving the majority reliant on inter-company funding to sustain operations.
The rising debt burden comes against the backdrop of strong headline financial performance. Announcing the company’s 2024 results, Group Chief Executive Officer, Bashir Bayo Ojulari, said NNPCL recorded a profit after tax of N5.4tn on revenue of N45.1tn, representing increases of 64 per cent and 88 per cent respectively over the 2023 figures. However, analysts warn that the ballooning inter-company debts may weaken the quality of earnings and pose risks to long-term sustainability.
Topping the list of indebted subsidiaries is the Port Harcourt Refining Company Limited, which owed NNPCL N4.22tn in 2024, up from N2.00tn a year earlier. The increase reflects years of heavy rehabilitation spending and prolonged operational downtime. The Kaduna Refining and Petrochemical Company Limited followed with N2.39tn, rising from N1.36tn in 2023, while the Warri Refining and Petrochemical Company Limited owed N2.06tn, up from N1.17tn.
Despite multiple rounds of turnaround maintenance aimed at reviving domestic refining capacity, the three state-owned refineries have yet to operate sustainably at commercially viable levels. As a result, they remain heavily dependent on financial support from the parent company, making them significant contributors to the swelling inter-company debt profile.
NNPCL’s trading operations also featured prominently. NNPC Trading SA owed the parent company N19.15tn in 2024, more than double the N8.57tn recorded in the previous year. Other notable receivables were recorded from NNPC Gas Infrastructure Company Limited (N847.98bn), Nigerian Pipelines and Storage Company Limited (N466.74bn), Gwagwalada Power Limited (N326.58bn), Petroleum Products Marketing Company Limited (N264.75bn) and the Maiduguri Emergency Power Plant (N179.33bn), alongside several smaller subsidiaries and joint ventures.
In total, amounts owed by related parties climbed to N30.30tn in 2024, underscoring the extent of liquidity pressures within the NNPCL group structure.
On the other side of the balance sheet, NNPCL’s obligations to its subsidiaries and related entities also rose significantly, increasing by 44.7 per cent from N14.17tn in 2023 to N20.51tn in 2024. The bulk of this exposure relates to NNPC Trading Limited, which was owed N16.36tn as of December 2024, up sharply from N6.70tn a year earlier. NNPC Exploration and Production Limited was owed N4.02tn, slightly lower than the N4.85tn recorded in 2023.
The swelling inter-company balances reflect lingering financial complexities associated with NNPCL’s transition from a state-owned corporation to a commercially oriented limited liability company under the PIA. They also come amid efforts by the Federal Government to ease the company’s financial burden. President Bola Tinubu had approved the cancellation of about $1.42bn and N5.57tn in legacy debts owed by NNPCL to the Federation Account after a reconciliation of records.
At the same time, the company has intensified plans to divest non-core assets, including stakes in refineries, pipelines, power plants and other infrastructure, as part of a broader strategy to unlock value, improve liquidity and attract external capital.
Commenting on the development, petroleum economist Prof Wumi Iledare told Punch Newspaper that the N30.3tn inter-company debt figure points to governance and structural weaknesses rather than outright insolvency. He warned that allowing subsidiaries to accumulate unpaid obligations erodes accountability and ties down cash that should be deployed for maintenance, investment and growth.
“The fact that only eight out of 32 subsidiaries are debt-free shows this is not an isolated issue but a systemic problem,” Iledare said, adding that NNPCL must enforce strict settlement timelines, restructure or merge non-viable entities and hold subsidiary management accountable for cash flow and profitability.
Similarly, the Chief Executive Officer of Petroleumprice.ng, Jeremiah Olatide, described the surge as alarming, warning that the cycle of internal debt could undermine future operations if left unaddressed. He said stronger debt-management frameworks, regular audits and transparent reporting were essential to restoring discipline within the group.
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