NNPC’s 2025 results present a striking corporate puzzle Profit rose by about 33 per cent even as revenue fell by more than 23 per cent and gross profit declined. The company attributes its stronger earnings to improved efficiency and cost discipline. Yet the accounts also show a sharp rise in other income, including ₦7.1 trillion in sundry income. That may be entirely proper. But before we applaud the headline, we should understand how much of the profit came from the company’s recurring oil and gas business and how much from items that may not recur next year.
The questions deepen when we look beyond profit NNPC reports substantial sums due from the Federation, while future crude production has been committed under forward sale financing arrangements. Its accounts tell us not only what the company earned last year, but also what government owes it and how much of tomorrow’s oil is already spoken for. That is why the ₦7.2 trillion result calls for more than congratulations. It calls for an examination of NNPC’s business model, balance sheet and relationship with government.
The Petroleum Industry Act provides the test Under section 53(7), NNPC Limited is to operate commercially, profitably and efficiently, without recourse to government funds. It must declare dividends and retain 20 per cent of its profits to grow the business. But section 64 gives NNPC duties beyond those of an ordinary commercial company. It may manage production sharing contracts on behalf of the Federation, carry out certain tasks for regulators for a fee, support energy security and act as supplier of last resort, with the associated costs charged to the Federation.
This is the central tension, and it is written into the law NNPC is expected to behave like a commercial company while also undertaking public functions for its owner. Those roles need not be incompatible. But they must be clearly distinguished. When NNPC acts for the Federation, the task should be authorised, its cost established, the fee or reimbursement specified, and the settlement reported. Otherwise, it becomes difficult to tell whether the company is earning a commercial return or carrying a public obligation through its own accounts.
The PIA’s model is also more nuanced than a simple government versus company divide NNPC is wholly owned on behalf of the Federation, yet it is to operate under company law and on commercial terms. The Act separates petroleum regulation into dedicated institutions, while giving NNPC operational and agency roles. The question is not whether NNPC should serve national interests; it must. The question is whether those interests are pursued under clear rules that protect the company’s commercial discipline and the public’s right to know what it is paying for.
Consider first the quality of the 2025 profit Revenue fell from ₦45.1 trillion to ₦34.5 trillion. Gross profit was also reported to have declined, even as profit after tax rose to ₦7.2 trillion from ₦5.4 trillion. Analysis of the accounts points to a substantial increase in other income and sundry income. These figures do not invalidate the result, but they make its composition essential. The company should show which earnings arose from its ordinary operations, which came from other income, and which are one off or exposed to market movements. A profit that can be repeated is different from one that depends heavily on exceptional items.
The same discipline should apply to the dividend NNPC declared ₦5.8 trillion, close to four fifths of its reported profit and broadly consistent with the PIA’s design to retain 20 per cent for business growth. That is a substantial return to the shareholder. It should also be tested against the company’s capital needs, financing commitments and ability to fund worthwhile projects. A national oil company should pay its owner, but it should not weaken its future merely to make this year’s distribution look generous.
The balance sheet demands equal attention Reported assets fell from ₦162.67 trillion in 2024 to ₦145.06 trillion in 2025, while liabilities fell from ₦52.77 trillion to ₦33.19 trillion. A decline in liabilities may be welcome, but the public needs a clear bridge between the two years. What was repaid, what was reconciled against government balances, and what was reclassified? Without that explanation, even a large improvement can remain difficult to interpret.
One particularly important balance is the ₦112 trillion reported as other receivables from the Federation, including advances and oil and gas security related costs. This should not be mistaken for ₦11.2 trillion of new security spending in 2025. Reporting on the audited accounts says no new energy security expense was recognised that year, and that earlier balances were reconciled against royalties, taxes and dividends due from NNPC. The closing balance still needs a full explanation. What it comprises, how much has been verified, when it is expected to be settled and what safeguards prevent such balances from accumulating without timely resolution.
The forward sale arrangements raise another question about the company’s room to manoeuvre NNPC’s 2025 accounts reportedly show about ₦8.25 trillion in forward crude sale obligations, with more than 186,000 barrels per day committed under crude backed financing arrangements. Such deals can bring money forward, but they also commit future production and carry financing costs. The right benchmark is not simply whether NNPC obtained cash. It is whether the funds were put to productive or properly authorised use, whether the financing terms were competitive, and what future revenue remains after the committed crude is delivered.
This is why NNPC should be judged against more than its profit figure or production target Its commercial performance should be measured through recurring operating profit, cash generation, returns on invested capital, unit production costs, asset reliability and delivery of approved projects. These measures should be compared with relevant oil and gas companies, allowing for differences in size and business mix. A raw comparison of total profit or revenue with a much larger international company would tell us little; a carefully chosen comparison of costs, returns, reliability and capital discipline could tell us a great deal.
The public functions require their own scorecard Whenever NNPC performs a task for the Federation, Nigerians should be able to see who authorised it, what it cost, whether NNPC earned an agreed fee, how much government owes and when settlement is due. The PIA itself makes this distinction especially clear for certain tasks. NNPC may act for the regulators for a fee, while costs associated with its supplier of last resort role are for the Federation’s account. These are not accounting details for specialists alone. They determine whether a public obligation is being funded transparently or quietly obscuring the company’s commercial performance.
There is also a political governance test The President appoints NNPC’s board under the PIA, and in April 2025 the Presidency announced a full reconstitution of the board, including the removal of the then chairman, group chief executive and other members. The appointment power is part of the legal framework; a board change, by itself, does not prove political interference. But frequent or wholesale changes can weaken continuity and raise a reasonable question about whether directors have the security to exercise independent judgement.
The benchmark should be a government that acts as an informed shareholder without managing the company from the outside Board appointments should follow transparent, merit based criteria. Terms should be stable, and removals should have stated reasons. Government’s broad expectations should be communicated formally through the ownership structure and the board, while operational decisions remain with the board and management. The OECD’s guidelines for state owned companies make the same distinction. The state sets clear expectations, but the board needs the authority and objectivity to oversee strategy and management without undue political interference.
None of these tests presumes that NNPC’s results are improper or that its public functions are misplaced They ask whether the company’s earnings are sustainable, its obligations transparent and its governance strong enough to protect both commercial judgement and the public interest. NNPC’s ₦7.2 trillion profit is welcome. But the PIA asks a larger question than whether the company made money. It asks whether NNPC can earn a commercial return, carry out its public duties openly and preserve the value of the resources entrusted to it.
The profit is the headline The real measure is whether NNPC can explain, clearly and consistently, how it earned the money, what it owes, what it has promised against future production and how it keeps the owner’s legitimate influence from becoming day to day political direction. That is the test the 2025 results place before the company and before the Federation as its shareholder.
“Suleyman A Ndanusa, PhD, OON, is an economist, lawyer, strategic studies scholar, and public policy thinker and practitioner with extensive experience in financial markets, regulation, governance, national Security and development.”