The Nigerian National Petroleum Company Limited (NNPCL) has reported a notable 37.2% increase in its revenue, showcasing a robust financial performance in its latest Audited Financial Statement (AFS) for the year 2022.

This marks a crucial milestone for the state-owned oil corporation, whose financial reports have been under the shadows for years.

The released AFS for 2022 reveals a substantial surge in revenue, climbing from N6.42 trillion in 2021 to an impressive N8.81 trillion. This considerable growth underscores a shift in the management of the NNPC.

Profit After Tax (PAT) has also seen an extraordinary surge, recording N2.52 trillion in 2022. This represents a remarkable 274% increase compared to the N674 billion reported in the previous year. Such substantial profit growth underlines the NNPC’s ability to navigate challenges effectively and capitalize on market opportunities.

Examining the financial metrics in detail, the AFS discloses a robust asset base for the NNPC. Total non-current assets stand at N37 trillion, complemented by current assets of N21.59 trillion, culminating in a total asset valuation of N58.65 trillion. This represents an outstanding increase of 260.47% compared to the figures reported in 2021.

However, accompanying this growth are non-current liabilities of N19.98 trillion and current liabilities of N29.3 trillion, resulting in a total liability of N49.35 trillion. This demonstrates a substantial increase of approximately 266.6%.

One significant aspect of the NNPC’s financial health is the positive trend in profits over the past few years. Reflecting on historical data, the corporation recorded a loss of N803 billion in 2018. However, subsequent years witnessed a commendable turnaround. The NNPC reported a profit of N287 billion in 2020 and N674.1 billion in 2021, laying the foundation for the impressive financial performance witnessed in 2022.

The auditors, in their notes to the 2022 AFS, expressed confidence in the NNPC’s financial stability, stating, “The financial statements have been prepared in accordance with the going concern principle under the historical cost convention. Nothing has come to the attention of the directors to indicate that NNPC will not remain a going concern for at least 12 months from the date of these financial statements.”

The governance reforms in the oil and gas sector, particularly the enactment of the Petroleum Industry Act (PIA) in 2021, played a pivotal role in reshaping the NNPC’s structure and operations. Under the PIA, the NNPC officially transitioned from a state-run oil corporation to a commercial venture in July 2022. Despite this transformation, the federal government still maintains a considerable level of control over the NNPC.

The NNPC’s remarkable financial trajectory is further highlighted by its cost of sales, which escalated to N6.7 trillion in 2022, indicating a 25.47% increase from N5.34 trillion in the previous year. This increase reflects the corporation’s commitment to operational excellence and efficiency.

In addition to its financial performance, the NNPC’s AFS provides insights into its investment strategy. Notably, the report outlines the repayment plan for the NNPC’s 20% stake in the Dangote refinery.

“In September 2021, the NNPC acquired a 20 percent interest in Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE) worth $2.76 billion. This investment is held by NNPC Greenfield (a special-purpose vehicle that is 100 percent owned by NNPC) in trust for NNPC.

“This acquisition was financed by a $1.036 billion funding of which $1 billion was paid to Dangote Refinery and $36 million accounting for transaction costs.

“The balance of the cost of equity investments made in DPRP FZE, which is $1.76 billion will be paid upon completion of the refinery project starting April 1, 2023 or any other date agreed between the parties, that is the NNPC and Dangote Oil Refining Company Limited,” the report said.

According to the report, once the refinery comes into operation, the NNPC will initiate a discounting mechanism, offering a $2.5 discount for every barrel from the supply of 300,000 barrels per day. This discount will be utilized to offset the remaining equity participation.

Furthermore, the NNPC has entered into a forward sale agreement with Lekki Refinery Funding Limited to supply 35,000 barrels of crude oil per day. This arrangement aims to facilitate the repayment of the $1.036 billion funding already received for the investment in the Dangote refinery.

The NNPC’s financial success is also evident in its forward-looking initiatives, such as the 90,000 bpd oil-for-debt financing deal of $3.3 billion with Afreximbank. These strategic engagements are said to contribute to the company’s overall financial resilience, strengthening its position in the energy sector.

Like its counterpart Saudi Aramco, the NNPCL is expected to drive economic growth and revenue stability in the country through financial prowess.

Experts believe that the positive trajectory in revenue and profits, coupled with strategic investment initiatives, will change the unpleasant financial story of the NNPC if sustained.

In a move aimed at enhancing the ease of doing business in Lagos State, Governor Babajide Sanwo-Olu officially inaugurated the electronic registration of lands with the launch of the land administration portal named e-GIS.

This initiative marks a pivotal step towards digitizing and streamlining the land registration process, eliminating manual procedures, and providing residents with the convenience of online land registration.

The e-GIS portal is designed to reduce the physical presence of applicants at Lands Bureau offices, allowing residents to register their lands from the comfort of their homes. Through the portal, individuals can make online payments for all necessary fees, obtain their title documents, and apply for a Certificate of Occupancy (C of O), among other registration processes.

During the launch event held at the Land Office in Alausa, Ikeja, Governor Sanwo-Olu noted the importance of using technology in improving land administration.

“Land administration is one of those areas where technology customizes and streamlines business workflows, aiming for higher productivity, enhanced revenue generation, securing our documents, and improving customer service,” he stated.

The Governor said that the automated process would transition land transactions into a digital format, integrating them into the registry. This transformation is expected to significantly reduce transaction costs and eliminate issues related to missing or hidden files.

Sanwo-Olu expressed confidence that the introduction of this digital system would foster collaboration among various agencies, leading to more effective information management in government offices.

“Everything will be digitally available. Moreover, the introduction of this process will foster collaboration among agencies. I think that’s also an important, deliverable.

The e-GIS portal offers users a secure and convenient experience, providing self-service options, easy online record and data search capabilities, and the ability to analyze site traffic. Users can also track application progress, provide comments, and receive immediate feedback on complaints.

Sanwo-Olu spoke of the government’s commitment to creating an innovative environment, eliminating bottlenecks associated with manual processes, and aligning with the smart city vision.

“New technology-driven system which aligns with our smart city vision, promotes accountability, gender transparency and will improve quality of service delivery to our citizens.

“We want to therefore implore everyone to key into this new system and to experience a seamless, secure and efficient process in land administration from anywhere in the world,” he said.

Adding his voice to the development, the Special Adviser to the Governor on e-GIS and Urban Development, Olajide Babatunde, highlighted the global significance of land administration, which comprises four key components: land tenure, land value, land use, and land development.

He noted that the land administration portal, aligned with the THEMES+ agenda of the Governor, complies with global technology-driven land administration processes.

Babatunde explained that the portal incorporates a robust internal business process workflow system, the Automation Land Administration solution, ensuring security and meeting the needs of the projected large volume of applicants.

“This is because we are committed to the security and needs of the projected large volume of applicants who will be using this portal for individual or corporate purposes.

The launch of the Land Administration portal is expected to drive investment into Lagos State, positively impacting the World Bank’s ease of doing business index.

In a country where land fraud, attributed to ineffectual property laws, is prevalent, Lagos State’s initiative to embrace electronic land registration marks a significant leap towards modernizing administrative processes, fostering transparency, and creating a conducive environment for residents and investors.

The successful implementation of this technology-driven system is poised to inspire other states in the country to digitize their land administration processes, attracting investment and facilitating sustainable growth.

In a bid to propel the Federal Government’s Internally Generated Revenue (IGR), and reduce dependence on costly debts, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has announced an ambitious plan to increase the Federal Government’s Internally Generated Revenue (IGR) by a staggering 77%.

This announcement was made during the 2024 Strategic Management Retreat of the Federal Inland Revenue Service (FIRS) held in Abuja on Wednesday.

The Minister emphasized the government’s strategic shift from relying on expensive debts, highlighting the pivotal role of tax revenue in funding essential infrastructure and robust social safety nets for ordinary Nigerians.

“We are projecting a 77% increase in IGR. Our revenue as a percentage of Gross Domestic Product (GDP) is low at below 10%. It should be much higher. Government needs so much to spend on infrastructure and social services. The idea is to shift from expensive debts to domestic revenue mobilization,” he said.

Notably, Edun had previously mentioned that since the removal of the fuel subsidy, the Federal Government has been generating over N1 trillion monthly, putting more money into the purse of governments. A 77% increase suggests an ambitious target of approximately N1.77 trillion monthly.

At the end of the preceding year, the three tiers of government shared about N1.13 trillion in revenue made in December 2013, setting the stage for the government’s optimistic revenue projections for the current year.

The FIRS, responsible for generating up to 70% of government revenues, is banking on voluntary tax compliance and a revamped organizational structure unveiled during the retreat to achieve the ambitious N19.4 trillion collection target for 2024.

“We want to use the new structure to drive voluntary compliance because the focus cannot be on litigation and investigation. The real strategy is to drive voluntary compliance, and there will always be consequences for non-compliance, and that is where this structure is going,” Zacch Adedeji, FIRS Executive Chairman, said while discussing the new structure and revenue performance at the retreat.

The new organizational structure, set to commence in February 2024, aims to revolutionize tax administration in a modernized and digitized manner.

Adedeji highlighted a technology-based, customer-centric approach designed to streamline processes, enhance efficiency, and meet the evolving needs of taxpayers. He said there is going to be a comprehensive approach to taxpayer services, tailoring services to specific taxpayer segments to simplify the taxpayer experience.

“The structure advocates for a comprehensive approach to taxpayer services, consolidating our core functions and support under one umbrella. By tailoring our services to specific taxpayer segments, we aim to simplify the taxpayer experience. No more complexities, no more overlaps — just a seamless and user-friendly interaction for every taxpayer.

“In a groundbreaking move, we are shifting away from traditional tax categorization. Instead of maintaining different departments for distinct tax categories, the new structure formulates taxpayer segments based on thresholds. This tailored approach ensures that taxpayers are guided and serviced according to their specific needs, eliminating confusion and redundancy in tax administration,” he said.

He said that a meticulous approach would be taken in the reformation, underpinning the FIRS’ dedication to creating a taxpayer-friendly environment in line with global best practices, thereby positioning Nigeria as a pioneer in modern tax administration.

Adedeji clarified that there would be no increase in taxes. Instead, the emphasis would be on “collecting better,” a goal that the new structure also aims to accomplish.

Mr. Edun commended the FIRS’ improved revenue collections, urging a transparent process that earns public trust and citizens’ confidence in voluntarily abiding by tax rules. He reiterated the government’s commitment to growing the economy without resorting to borrowing, focusing on internally generated revenue, domestic resource mobilization, and equity instead.

Expressing dissatisfaction with the country’s current tax-to-GDP ratio, which stands at less than 10 percent, Mr. Edun urged the FIRS to elevate it in accordance with the existing tax policy, aiming for an increase to up to 18 percent within the next few years.

Despite this challenge, he expressed optimism that the FIRS would surpass the target. This confidence stems from ongoing reforms and anticipated new collection strategies expected to emerge from the upcoming retreat.

Making the Nigerian Customs Service a revenue agency

In its bid to boost IGR, the Federal Government is pressuring revenue-generating agencies, including the Nigerian Customs Service (NCS) to increase revenue collection to 100%.

The Comptroller-General of Customs, Mr. Bashir Adeniyi, revealed that the NCS generated an unprecedented N3.2 trillion in revenue in 2023, representing a 21.4% increase from the previous year. However, it fell short of the N3.68 trillion target by N478 billion.

For the year 2024, the NCS set a revenue target of N5 trillion, which was subsequently increased to N6 trillion by the House of Representatives. This move has sparked concerns that the corruption within the agency is going to deepen.

“The Nigeria Customs Service has no business collecting revenues on behalf of the government, whether the minister instructed they remit 100% of IGR or not,” financial analyst, Kelvin Emmanuel said. “Customs should be focused on trade facilitation and should be under the ministry of trade and investment, not finance.”