Nigeria: Audited Reports – Pipeline Vandalisation, Theft, Refineries Impact NNPC Negatively

The Nigerian National Petroleum Corporation (NNPC), yesterday, blamed pipeline vandalism, crude oil and petroleum products theft for the not-too-impressive performance of some of its subsidiaries and division as recorded in its recently-released audited financial statements.

In a note to the audited financial statements obtained from the NNPC, the corporation, however, noted that the significant increase in crude oil price in 2018, impacted positively on the financial performance of majority of its subsidiaries n the period under review.

The release of the 2018 Audited Financial Statements (AFS) of its 19 Strategic Business Units (SBUs) and a Corporate Services Unit (CSU), made it the first time in its history that the NNPC is making public its audited financial statement.

The NNPC further disclosed that its 2019 audited account report was already being prepared and expected to be ready in a couple of months.

The release of the AFS, the NNPC said, was in compliance with the directive of President Muhammadu Buhari and his Administration’s commitment to accountability and transparency by way of full disclosures of government agencies’ transactions.

The NNPC added that It was also in accordance with International Financial Reporting Standards, apart from being a requirement for the Companies and Allied Matters Act (CAMA).

In an analysis of the financials of the subsidiaries, it was revealed that the that NNPC Group had four main sources of revenue — petroleum product sales, accounting for 62 per cent; crude oil sales, 24 per cent of its total revenue; gas sales, accounting for 11 per cent of total revenue, and services, which accounted for two percent of its total revenue.

In addition, the NNPC recorded 49 per cent increase in petroleum product sales from N1.98 trillion in 2017 to N2.96 trillion in 2018; and 31 per cent increase in crude sales from N0.881 trillion in 2017 to N1.151trillion in 2018.

The NNPC noted that the 31 per cent increase in crude oil sales was as a result of the rise in crude oil prices, from an average of $56 per barrel in 2017 to $73 per barrel in 2018.

However, the NNPC said: “The continuous vandalism of NNPC pipelines resulted in an increased cost of pipelines maintenance alongside loss of crude oil and petroleum products.”

In the 2018 reports, the NNPC recorded positive performances in majority of its upstream subsidiaries, but recorded not-too-impressive performances in its midstream subsidiaries, mainly because of the long downtime of the nation’s four refineries in Port Harcourt, Warri and Kaduna.

However, the NNPC disclosed that it has commenced the process of a comprehensive diagnostic assessment of the refineries that would culminate into their thorough rehabilitation, starting with Port Harcourt and Warri Refineries.

In addition, the NNPC disclosed that proposals to change the refineries’ business models to that similar to the Nigerian Liquefied Natural Gas Limited’s (NLNG) had begun.

Particularly, analysis of the AFS for the year ended December 31, 2018 of the National Engineering and Technical Company (NETCO), an upstream subsidiary of the NNPC, indicated a profit after tax of over N4.5 billion, a remarkable improvement from the previous year record of over N2.4 billion; while the financials of the Nigerian Petroleum Development Company (NPDC) indicated a profit after tax of over N179.1 billion, a significant improvement from the 2017 profit of over N157.4 billion.

According to the NNPC, during the period, the NPDC posted revenue of over N1.3 trillion, compared to the 2017 revenue of over N882.3 billion.

The AFS also indicated that the NNPC flagship subsidiary has a total asset of over N5.3 trillion within the period, compared to the N4.007 trillion assets recorded in 2017.

On its part, the Nigeria Gas Company (NGC) recorded a profit after tax of over N13.2 billion with a comprehensive annual income of about N19.9 billion.

The AFS also valued the NGC total assets in 2018 at over N251.7 billion compared to N196billion in 2017.

In the Downstream Sector, the Petroleum Products Marketing Company (PPMC), for the first time, recorded gross profit of N24.3 billion in the year under review, while NNPC Retail Limited posted profit after tax of over N2.2 billion compared to the N1.8 billion recorded in the preceding year.

National Petroleum Investment Management Services (NAPIMS) also posted revenue of N5.04 trillion in 2018 and profit of N1.01 trillion, with total assets under the portfolio of the service unit valued at N18.6 trillion.

The Integrated Data Services Limited (IDSL), the NNPC subsidiary in charge of acquisition and interpretation of seismic data, posted a total comprehensive income of about N3.2 billion with profit of about N154 million within the period.

The NNPC listed key achievements recorded in the year under review to include recapitalization of the PPMC through transfer of the negative revenue reserve to corporate headquarter.

IN addition; the NNPC said it achieved a second straight year without incurring additional cash call arrears and it repaid over $2.7 billion of total cash call arrears due to Industry operators.

Source: Vanguard

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