17 February 2017

Nigeria: NNPC Reports N197 Billion Trading Loss for 2016

Abuja — The Nigerian National Petroleum Corporation (NNPC) ended the 2016 fiscal year with a trading loss of N197 billion, its monthly operations and financial report for the month of December 2016 has disclosed.

According to the report, which was released by the corporation yesterday in Abuja, the NNPC ended all but one of its monthly trading activities in deficits.

The only month it made a profit in the year was May when it posted a profit of N273.74 million.

The report indicated that the NNPC operated in a very challenging environment and that most of the losses it recorded in 2016 were from its subsidiaries which include the Nigerian Petroleum Development Company (NPDC), Integrated Data Services Limited (IDSL), the Kaduna, Port Harcourt and Warri Refineries as well as from its corporate headquarters, other strategic business units (SBU) and the Pipeline and Products Marketing Company (PPMC).

While the December 2016 loss figure in the report was N17.01 billion, a review of the last 11 months indicated that in January, the NNPC had a N3.55 billion trading deficit, it recorded N24.23 billion in February as deficit, N18.89 billion in March, N26.51 billion in June, N24.18 billion in July, N11.22 billion in August, N17.18 billion in September, N16.85 billion in October and N18.72 billion in November. It made N273.74 million in May as profit though.

NNPC indicated that repeated pipeline breaks and vandalism of oil assets across the country were responsible for most of its losses, and that these limited its desire to return profit on its operations.

As regards its December operations, it said: "NNPC has been operating in a challenging environment which limits its aspiration to profitability. Overall, a trading deficit of N17.01 billion was recorded for the month under review as against the reported November, 2016 trading deficit of N18.72 billion.

"This represents a decrease of N1.71 billion in trading deficit as against November, 2016. The marginal decrease is due to improved PPMC coastal sales following completion of reconciliation with other marketers. Other factors that affected the overall NNPC's performance include force majeure declared by Shell Petroleum Development Company (SPDC) as a result of the vandalised 48 inch Forcados export line after the restoration on October 17, 2016, among others."

It stated that on the back of the federal government's peace overtures to militants in the Niger Delta, crude oil production in the country rose to 1.92 million barrels a day (mbd) in December, but that the major drag to its performance was the subsisting force majeure at Forcados and Brass terminals.

According to it, shutdown of two Nembe Creek Trunk Lines (NCTL) flow stations following pipeline leakages and outcomes from areas much affected by the militant activities at the onshore and shallow water assets, where government's take was high, also impacted its operations.

"Products theft and vandalism have continued to destroy value and put NNPC at disadvantaged competitive position. A total of 2,560 vandalised points have been recorded between January 2016 and December 2016," the report added.

On statutory remittances within the period, it said: "NNPC transferred the sum of N34.93 billion into Federation Account during the month under review from the net domestic crude oil receipt and N5.11 billion from gas receipts.

"Also, the 29th instalment of the refund to federal government (federal government) of N6.33 billion was transferred. In 2016, Federation, JV (Joint Venture), and FG received the sum N653.06 billion, N355.17 billion and N75.96 billion respectively."

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