PwC, other auditors express fears over NNPC sustainability despite N287bn profit

Despite a well-publicized declaration of Profit After Tax (PAT) of N287 billion, the Nigerian National Petroleum Corporation (NNPC) is still mired in financial difficulties.

The NNPC released its audited financial report for 2020 on Wednesday evening, with auditors expressing fears about the corporation’s financial sustainability.

The auditors’ concern stemmed from the fact that, despite declaring a profit, NNPC’s liabilities exceeded its assets by N4.6 trillion.

In accounting, if a company’s liabilities exceed its assets, it shows an asset deficiency – meaning that the company is heading for bankruptcy.

The financial health of such companies is at risk.

PricewaterhouseCoopers, SIAO Partners, and Muhtari Dangana & Co., which audited the NNPC financial report, raised concerns about the corporation’s financial health and sustainability in their note.

The note read: “We draw attention to note 42 of the consolidated and separate financial statements, which indicates that the group recorded a net profit of N287.2 billion (Corporation: N235-3 billion) during the year ended 31 December 2020 and, as at that date, the group’s current liabilities exceeded its current assets by N4.6 trillion (Corporation: N729.1 billion).

READ ALSO: NNPC declares first net profit in 44 years, as Buhari praises management

“As stated in Note 42, these events or conditions, along with other matters as set forth in Note 42, indicate that a material uncertainty exists that may cast significant doubt on the group and corporation’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”

.Part of Note 42 referred to NNPC sustained losses over the years leading to accumulated losses of approximately N1.5 trillion, and N395 billion respectively.

“These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group and Corporation’s ability to continue as a going concern, and therefore may be unable to realise its assets and discharge its liabilities in the normal course of business,” the auditors added.

Other highlights of NNPC 2020 Audited Financials include the increase in total current assets by 18.7 percent compared to that of 2019 while total current liabilities increased by 11.4 percent during the period.

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