How NNPC avoided a loss in 2025 amid revenue decline

NNPC, the country’s national oil company, has released its 2025 annual report for the year ended December 2025, reporting an 18.3% increase in pre-tax profit to N11.31 trillion, compared with N9.56 trillion in 2024.

Profit after tax also grew 32.7% to N7.18 trillion, from N5.41 trillion in the previous year.

The growth in the bottom line, however, came amid a strong decline in revenue. NNPC’s revenue fell 23.4% to N34.52 trillion from N45.08 trillion, meaning the company generated about N10.56 trillion less in sales than it did a year earlier.

The weakness also filtered through to gross profit, which fell 20% to N9.37 trillion from N11.71 trillion.

Ordinarily, a company reporting lower revenue and lower gross profit would be expected to record weaker earnings. But NNPC’s profit moved in the opposite direction.

What really happened

First, it helps to see why revenue dropped. NNPC’s revenue fell because two of its biggest money-making businesses brought in much less than they did in 2024.

The biggest hit was from petroleum products. NNPC made N2.17 trillion from that business in 2025, down from N9.68 trillion a year earlier. That is a loss of about N7.5 trillion in revenue from just one part of the business. The accounts do not clearly state whether the decline came mainly from lower sales volumes, lower prices, or reduced trading activity.

Also, crude oil brought in less money. Revenue from crude fell to N25.39 trillion from N29.21 trillion, a drop of about N3.8 trillion.

How did the company avoid loss then

Despite the sharp fall in revenue, NNPC did not see profit collapse with it. Instead, the company benefited from several gains further down the accounts that helped cushion the weakness in its core business.

• The biggest support came from other income, which rose to N8.42 trillion from N3.39 trillion.
• Most of that increase came from sundry income, which jumped to N7.10 trillion from N2.53 trillion.
• NNPC says this included income from pipeline operations, crude processing fees, miscellaneous receipts from joint-venture operators, and a writeback linked to the Amenam-Kpono stock overlift claim.
• The company also recorded higher gains from crude-stock valuation and management fees.

Aside from the gains from other income, NNPC also spent less on running the business. General and administrative expenses fell to N2.88 trillion from N3.58 trillion, saving the company close to N700 billion.

• The biggest saving came from professional and consultancy fees, which dropped by more than N600 billion.
• Security costs, fines and penalties, and repairs and maintenance also fell sharply.
• These reductions helped offset increases in staff costs and depreciation, allowing administrative expenses to decline overall.

There was also a major boost from money NNPC had previously assumed it might not fully recover.

• In 2024, NNPC set aside about N753.6 billion because it expected that some amounts owed to it might not be collected. That reduced profit for that year.
• By 2025, that outlook had improved. Instead of setting aside more money, NNPC was able to reverse about N325.4 billion of those earlier provisions.

So, NNPC had previously prepared for a possible loss on money owed to it, but ended up recovering part of it in 2025. That change alone improved the year-on-year profit position by more than N1 trillion.

Put together, those three movements; higher other income, lower administrative costs, and the impairment reversal more than helped cushion the pressure from lower revenue and weaker gross profit.

But profit did not mean more cash

Yes, NNPC’s profit grew amid revenue fall, but we also must understand that the company did not end the year with more money in the bank.

• NNPC generated N12.81 trillion in cash from its operations in 2025, higher than the N11 trillion it generated a year earlier. But by the end of the year, its cash balance had fallen to about N6.35 trillion from N10.31 trillion.
• This is because a lot of the cash generated during the year was used up. NNPC paid about N11.56 trillion in royalties, spent roughly N9.46 trillion on oil, gas and other fixed assets, and paid around N4 trillion in dividends.
• The royalty payment was especially large. It rose from N2.83 trillion in 2024 to N11.56 trillion in 2025. But this was not because the royalty charge suddenly increased fourfold. The accounts show that NNPC was also clearing royalty obligations that had been built up from previous years.
• That is why the amount still owed in royalties fell sharply to N1.27 trillion from N9.21 trillion.

So, while NNPC ended the year with less cash on hand, much of the cash it generated was used rather than simply depleted. The company used it to settle accumulated royalty obligations, invest in oil and gas assets, and pay dividends.

In that sense, the lower year-end cash balance partly reflects the fact that NNPC was clearing liabilities and funding future operations, rather than leaving those obligations outstanding.