By Adewole Kehinde
“Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall” – Stephen Covey.
I recently came across a glaring headline titled “Audit of NNPC’s account shows corporation could go bankrupt” from a major online medium.
“Nigeria’s state-owned oil company, Nigerian National Petroleum Corporation (NNPC), could be teetering on the brink of bankruptcy as the group’s current liabilities outweigh its current assets by as much as N4.6 trillion, the auditors’ report of its 2020 financials issued on Wednesday showed” the online media reported.
Even though the NNPC management under Mallam Mele Kolo Kyari has kept the account of the Corporation open since 2019 with three Audited Financial Statements from 2018 to 2020, I will dissect the fear the major online medium has raised.
Sometimes companies find themselves on the wrong track. Whether due to flawed strategy, incompetent management or even a handful of small glitches that slow down the entire enterprise; some businesses just need someone to come in and make big decisions to change course.
This must have prompted President Buhari on Monday, July 8, 2019 when he announced the appointment of Mele Kolo Kyari as the 19th Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC).
Prior to his appointment, Kyari, a Maiduguri-born Petroleum Engineering graduate from Bornu State was the Group General Manager in charge of the Crude Oil Marketing Department (COMD). He has worked with the NNPC and the Nigerian Oil and Gas industry for over 33 years.
Recently, the Corporation announced the Profit After Tax of N287 billion for the year 2020 and that has generated lots of comments in favour and against the feat.
Since the publication of the 2020 Audited Financial Statements, many individuals and the media have picked holes in the Liabilities and assets of the Corporation.
So many people criticizing the Audited Report make the mistake of looking at the software, looking at the hardware, looking at their reports, looking at all of the assets and not the most important asset initially, which is human capital – the human asset. All of those systems, procedures and protocols are only as good as the people driving them and that is infinitely more important.
When you are planning a turnaround mission you have to be realistic about the timeline you give yourself to figure out if your plans are working and the business is indeed turning around. If you are not realistic about the problems facing the company, your timeline will be off and your new strategy will be flawed.
Unlike previous Group Managing Director of the Corporation, Mallam Mele Kolo Yusuf has been able to calm the nerves of those foreseen the bankruptcy of the NNPC.
I would like to bring the attention of those saying the NNPC is heading to bankruptcy to major multinational companies that were reorganized and emerged from bankruptcy.
It’s hard to believe that one of the world’s largest companies by market capitalization Apple was once in dire straits. Another is General Motors. Following the financial crisis of 2008, General Motors (GM), once the largest automobile manufacturer in the world, filed for bankruptcy and was ultimately bailed out by the federal government.
Also, GMAC now Ally Financial (ALLY) the auto-financing arm of General Motors, extending credit to purchasers of its cars. The bank was bailed out alongside its parent to the tune of $17.2 billion by the U.S. Treasury Department.
General Motors wasn’t the only carmaker to go bust during the Great Recession. American car manufacturer Chrysler filed for bankruptcy in April 2009, about one month before GM. Chrysler took $12.5 billion in government assistance, of which it repaid the U.S. Treasury $11.2 billion.
With blockbuster movies such as Spiderman, The Avengers, and Guardians of the Galaxy, it is surprising to note that Marvel Entertainment filed for bankruptcy in 1996. This was before the company got into the movie-making business when it focused primarily on comic books.
Theme park operator and amusement company Six Flags (SIX) has 26 theme and water parks throughout North America, home to some of the world’s biggest and fastest roller coasters. In 2009, however, the company declared bankruptcy after racking up more than $2.7 billion in debt which it could not pay back. Six Flags reorganized and emerged from bankruptcy in 2010.
Texaco, now part of Chevron (CVX) once dominated the oil industry. In 1984, Texaco agreed to buy Getty Oil, setting off a three-year legal drama that would end with Texaco owing billions to rival Pennzoil.
Sbarro operates and franchises more than 600 fast-food style pizza and Italian-food restaurants worldwide. Sbarro went bankrupt twice: first through Chapter 11 bankruptcy reorganization in 2011 and then again in 2014. The company has re-emerged with the help of a collaboration of private equity firms to transform the company’s image to a more fast-casual style, rather than its previous kiosk or food counter concept.
The online medium raised an issue of the auditors’ concerns over material uncertainties in the book that cast considerable doubt on the ability of the group and corporation to continue to operate as a going concern but with the Petroleum Industry Bill, the NNPC is bound to make profits as a Trillion Naira Company.
The 20 percent equity share in Dangote Refinery combined with the Petroleum Industry Act will surely create a sound legal, fiscal, and regulatory framework to govern the business activities of the NNPC in the years to come.
Among the moves taken to mitigate the big threat to the continuity of its operations revealed by the audit scrutiny is NNPC’s proposed recapitalisation, which Group Managing Director Mele Kyari said on Tuesday would come in the form of an initial public offering in three years’ time.
In all, Kyari’s noticeable efforts to deepen transparency in NNPC as evidenced by the publication of its 2018, 2019 and 2020 audited financial statements as well as declaration N287 billion by the Corporation in 2020 is no doubt has resolved to drive the Corporation along the line of Transparency, Accountability & Performance Excellence (TAPE) agenda.
With Mallam Mele Kolo Kyari as the Managing Director of NNPC Limited, the fear of bankruptcy will be a thing of the past as he has the capacity to run the Company more efficiently, accountable, profitable and run it according to the international best practices.
Adewole Kehinde is the Publisher of Swift Reporters and can be reached via 08166240846 and 08123608662. Kennyadewole@gmail.com