NNPC, Nige­ria’s Oil Be­he­moth Records N547bn Losses in Three Years

Oil hits $80/bl as Shell de­clares force ma­jeure on Bonny Light ex­ports

THISDAY - - FRONT PAGE - Ejio­for Alike with agency re­ports

It’s meant to be a cash cow, but the state oil com­pany of Africa’s big­gest pro­ducer is bleed­ing money.

The Nige­rian Na­tional Petroleum Corporation, the Abuja-based be­he­moth that dom­i­nates Nige­ria’s en­ergy in­dus­try, has recorded losses for at least last three years, cul­mi­nat­ing in a to­tal loss of N546.63 bil­lion, state­ments on its web­site show.

The corporation’s unau­dited fi­nan­cial op­er­a­tions re­ports showed that NNPC re­ported losses of N267.14 bil­lion, N197.49 bil­lion and N82 bil­lion in 2015, 2016 and 2017, re­spec­tively, in con­trast to its bud­gets that showed oper­at­ing

sur­pluses of N466.94 bil­lion, N334.04 bil­lion and N601.15 bil­lion for the three years un­der review.

NNPC will prob­a­bly reg­is­ter an­other loss in 2018, ac­cord­ing to Ecobank Transna­tional Inc., as its re­finer­ies and fuel-re­tail­ing arm fail to gen­er­ate profit.

The pain for NNPC, which pro­duces oil and nat­u­ral gas in part­ner­ship with Royal Dutch Shell Plc, Exxon Mo­bil Corp. and Chevron Corp., comes even as na­tional en­ergy firms from Norway to Saudi Ara­bia thrive with crude prices re­cov­er­ing from their crash in 2014.

It also lays bare Pres­i­dent Muham­madu Buhari’s dif­fi­culty in ful­fill­ing his elec­tion campaign pledge to mod­ernise a com­pany that’s been a by­word for in­ef­fi­ciency and opac­ity since its cre­ation in the 1970s.

With oil ac­count­ing for more than half of gov­ern­ment rev­enue and 90 per cent of ex­port in­come, the com­pany is a pri­mary tar­get of those seek­ing ac­cess to state funds and is vul­ner­a­ble to po­lit­i­cal in­ter­fer­ence.

Ten­sions erupted last year be­tween Em­manuel Kachikwu, the chair­man of NNPC, and Maikanti Baru, the man­ag­ing di­rec­tor, over how more than $20 bil­lion of con­tracts were agreed.

“The very pub­lic power tus­sle shows the dif­fi­cul­ties in re­form­ing the or­gan­i­sa­tion,” Malte Liew­er­scheidt, an an­a­lyst at Te­neo In­tel­li­gence, said in an email to Bloomberg from Abuja.

Until a pend­ing but longde­layed Petroleum In­dus­try Gover­nance Bill (PIGB) de­signed to over­haul the petroleum sec­tor and split up parts of NNPC comes into ef­fect, “po­lit­i­cal con­sid­er­a­tions will con­tinue to in­ter­fere with vi­tal busi­ness needs,” he said.

Nige­ria’s state oil com­pany has lost money three years run­ning, hugely miss­ing its targets

The state oil com­pany doesn’t pub­lish full au­dited fi­nan­cial re­sults, though it re­leases lim­ited num­bers on its oper­at­ing per­for­mance. These in­clude earn­ings for core units, but ex­clude items such as taxes and div­i­dends from a 49 per cent share­hold­ing in Nige­ria LNG Ltd., one of the world’s big­gest ex­porters of liq­ue­fied nat­u­ral gas.

Those num­bers show that NNPC made an N82 bil­lion ($246 mil­lion) oper­at­ing loss in 2017. That was an im­prove­ment from 2015 and 2016, but still far from the oper­at­ing in­come it bud­geted for at N601 bil­lion.

In each of the past three years, NNPC fore­cast a profit and fin­ished in the red.

Higher oil prices have boosted ex­plo­ration and pro­duc­tion, the most prof­itable part of NNPC and which earned al­most N183 bil­lion ($600 mil­lion) in 2017.

But its ill-main­tained re­finer­ies, which op­er­ate at a frac­tion of their com­bined ca­pac­ity of 445,000 bar­rels a day, lost about N30.5 bil­lion ($100 mil­lion).

Even big­ger short­falls came in the fuel-re­tail­ing busi­ness, which has to con­tend with the gov­ern­ment’s cap on petrol prices, and the cor­po­rate head­quar­ters unit, which lost al­most N122 bil­lion ($400 mil­lion), more than any other part of the com­pany.

While NNPC’s ex­plo­ration and pro­duc­tion busi­ness will prob­a­bly im­prove this year, the re­finer­ies and re­tail­ing sub­sidiaries will con­tinue to be a drag, es­pe­cially if the gov­ern­ment main­tains the ceil­ing of N145 a litre for petrol, ac­cord­ing to Ecobank.

The bank pre­dicts that NNPC will make an oper­at­ing loss of as much as N80 bil­lion in 2018.

Ndu Ughamadu, spokesman for NNPC, said that while the re­finer­ies are strug­gling to make money, the com­pany’s over­all per­for­mance will prob­a­bly be bet­ter this year. He de­clined to say if NNPC was fore­cast­ing a re­turn to profit.

It made a loss of N1.6 bil­lion in Jan­uary, the lat­est month for which re­sults have been re­leased.

The prob­lems at NNPC off­set the ben­e­fits to Nige­ria’s strug­gling econ­omy of Brent crude’s more than 50 per cent rise in the past year to al­most $80 a barrel.

Still, there have been im­prove­ments within the com­pany and the coun­try’s over­all oil sec­tor, ac­cord­ing to Moody’s In­vestors Ser­vice.

NNPC’s reduction of debts owed to joint-ven­ture part­ners may help in­crease Nige­rian oil pro­duc­tion to around 2.5 mil­lion bar­rels a day by 2020 from 2 mil­lion to­day, said Aure­lien Mali, an an­a­lyst at Moody’s.

“The clearing of ar­rears is a huge step for­ward that will un­leash ex­tra in­vest­ment from in­ter­na­tional oil com­pa­nies,” Mali said in an in­ter­view in La­gos. “NNPC is key for the gov­ern­ment. It’s go­ing in the right direc­tion.”

It has some catch­ing up to do. Its fi­nan­cial po­si­tion con­trasts with those of state oil firms in other ma­jor pro­duc­ers. Saudi Aramco is gush­ing cash, mak­ing a net in­come of $34 bil­lion in the first half of 2017 alone, ac­cord­ing to num­bers seen by Bloomberg.

Brazil’s Petro­bras, Mex­ico’s Pe­mex and Norway’s Sta­toil all im­proved their re­sults in 2017 and made oper­at­ing prof­its. So did An­gola’s So­nan­gol in 2016, when it last pub­lished data.

Mean­while, crude oil prices climbed above $80 per barrel yes­ter­day for the first time since Novem­ber 2014, on con­cerns that Ira­nian ex­ports could fall be­cause of re­newed United States sanc­tions, which will re­duce sup­ply in an al­ready tight­en­ing mar­ket.

This is com­ing as Shell Petroleum De­vel­op­ment Com­pany (SPDC) yes­ter­day sus­pended ship­ments of Nige­rian Bonny Light crude to the in­ter­na­tional mar­ket af­ter it de­clared force ma­jeure.

The crude oil mar­ket has con­tin­ued to push higher as geopo­lit­i­cal con­cerns drove trad­ing, with the global bench­mark, Brent crude fu­tures reach­ing an in­tra­day high of $80.33 per barrel yes­ter­day be­fore re­ced­ing to $80.16 per barrel.

West Texas In­ter­me­di­ate (WTI) crude fu­tures also hit their high­est since Novem­ber 2014, at $72.30 per barrel.

U.S. Pres­i­dent, Don­ald Trump’s de­ci­sion this month to with­draw from an in­ter­na­tional nu­clear deal with Iran and re­vive sanc­tions that could limit crude ex­ports from OPEC’s third-largest pro­ducer has boosted oil prices.

France’s To­tal had warned on Wed­nes­day that it might

Omololu Ogun­made in Abuja, John Shik­lam in Kaduna, Michael Olug­bode in Maiduguri and Ge­orge Okoh in Makurdi

The death toll con­tin­ued to mount with­out let in parts of the coun­try on Tues­day when 10 per­sons were bru­tally mur­dered in Birnin Gwari Lo­cal Gov­ern­ment Area of Kaduna State, fol­low­ing an at­tack on five vil­lages in the area.

The at­tack on Birnin Gwari pre­ceded yet an­other in­va­sion on vil­lages in Logo Lo­cal Gov­ern­ment Area of Benue State by sus­pected herds­men on Wed­nes­day morn­ing, lead­ing to the deaths of three per­sons.

The herds­men at­tack on the Benue com­mu­ni­ties took place when Vice-Pres­i­dent Yemi Os­in­bajo was on a two-day visit to the state to as­sess the dam­age caused by the farm­ers-herds­men cri­sis.

In the case of Birnin Gwari, the at­tack oc­curred on the same day the Chief of Army State, Lt.-Gen. Tukur Bu­ratai vis­ited the area, which has recorded dozens of at­tacks in re­cent months.

Dur­ing his visit, Bu­ratai had or­dered troops to be de­ployed in Birnin Gwari and had given them an ul­ti­ma­tum to flush out the ban­dits within three weeks.

The ban­dits were said to have in­vaded the com­mu­ni­ties again in Birnin Gwari on Tues­day at about 5:00 p.m.

A vig­i­lante group in the area, Birnin Gwari Van­guard for Se­cu­rity, said in a state­ment that the at­tack lasted for over three hours.

“The armed ban­dits at­tacked the vil­lages around 5:00 p.m. on Tues­day and it lasted for three and half hours.

“The vil­lages are Mashigi, Dak­waro, Sabon Gida and an­other vil­lage ad­ja­cent to Dak­waro,” the state­ment said.

The state­ment quoted a mem­ber of the vig­i­lante group, Mal­lam Umar, as say­ing 10 dead bod­ies were re­cov­ered, while many were un­ac­counted for.

The ban­dits were said to have burnt houses and food­stuff of the af­fected vil­lages.

Ac­cord­ing to the vig­i­lante group, vol­un­teers from the south­ern axis of Birnin-Gwari and se­cu­rity per­son­nel were mo­bilised to as­cer­tain the num­ber of ca­su­al­ties.

The group added that the af­fected vil­lages were in need of aid af­ter the raid.

The group, while com­mend­ing the fed­eral gov­ern­ment and se­cu­rity per­son­nel for the steps taken to ad­dress the se­cu­rity chal­lenges in the area, called for ad­di­tional de­ploy­ment of troops and spe­cial forces from the po­lice to con­tain the at­tacks.

Efforts to reach the spokesman of the Kaduna State po­lice com­mand Aliyu Mukhtar were un­suc­cess­ful as he did not re­spond to phone calls and a text mes­sage sent to him.

Fol­low­ing the lat­est at­tack, Bu­ratai said yes­ter­day in Abuja that the Nige­rian Army was pre­pared to part­ner other se­cu­rity agen­cies in the coun­try to flush out ban­dits oper­at­ing in the Birnin Gwari axis along the Kaduna ex­press­way.

An­swer­ing ques­tions from jour­nal­ists af­ter a meet­ing with Pres­i­dent Muham­madu Buhari in the State House, Bu­ratai said an army bat­tal­ion had been de­ployed in the area to ad­dress se­cu­rity con­cerns.

“We will con­tinue to co­op­er­ate along with other se­cu­rity agen­cies that are charged with the re­spon­si­bil­ity of se­cur­ing our coun­try and the de­ploy­ment of a unit there is quite strategic. It is in line with the Nige­rian Army or­der of bat­tle that was ap­proved in 2016.

“We have to implement all of them to achieve the strategic ob­jec­tive of the gov­ern­ment. This is essen­tially why we have to put the bat­tal­ion there and to work with other se­cu­rity agen­cies,” Bu­ratai said.

On the counter-ter­ror­ism op­er­a­tion in the North-east, the Army chief said the on­go­ing “Op­er­a­tion Last Hold” by troops would strengthen mil­i­tary op­er­a­tions in the area and equally pave the way for the re­turn of in­ter­nally dis­placed per­sons to their var­i­ous com­mu­ni­ties.

“It has gone very suc­cess­fully. It’s pro­gress­ing very well and be rest as­sured that Op­er­a­tion Last Hold will fur­ther con­sol­i­date on our achieve­ments so far but we hope the in­ter­nally dis­placed per­sons will go back to their com­mu­ni­ties and pick up their lives again.

“I think that is the aim of this our Op­er­a­tion Last Hold. It is a consolidation of the over­all suc­cesses that we have achieved in the North-east,” Bu­ratai said.

In Benue, ram­pag­ing herds­men on Wed­nes­day morn­ing at­tacked and killed three per­sons while sev­eral oth­ers were said to be miss­ing in Logo Lo­cal Gov­ern­ment Area.

The at­tack took place when the vice-pres­i­dent was at the in­ter­nally dis­placed per­sons (IDP) camp in Anyiin to sym­pa­thise with the peo­ple over the in­va­sion of herds­men in the area.

A res­i­dent said the herds­men stormed the af­fected com­mu­ni­ties which in­cluded Tse-Mue, Torkaa, Mg­bakpa, Tor­jem and Ifer vil­lages be­tween 6:30 and 9:00 a.m., killing three per­sons whose names he gave as Bem Tor­jem, Apedzan Chia and Akpuku Koya,

He said the herds­men launched the deadly at­tack when the peo­ple were head­ing to their farms, adding that there was pal­pa­ble fear as many peo­ple had fled the area.

He said the death toll from the at­tack could be higher but this could only be as­cer­tained when those who ran away had re­turned.

Benue State gov­er­nor, Sa­muel Or­tom, con­firmed the lat­est killing dur­ing a cour­tesy visit made by Min­is­ter of State for Power, Works and Hous­ing, Mr. Suleiman Has­san Zarma.

Or­tom said the herds­men at­tacked and killed some peo­ple in Logo.

All at­tempts to get con­fir­ma­tion from the po­lice com­mand in Benue were un­suc­cess­ful, as the po­lice spokesman could not be reached. Sui­cide Bombing Kills Four in Borno Mean­while, res­i­dents of Borno State were wo­ken up to an­other ter­ror­ist at­tack by Boko Haram yes­ter­day when a sui­cide bomber det­o­nated his bomb at Dikwa dur­ing early morn­ing Mus­lim prayers.

The at­tack tar­geted at Mus­lims on the first day of Ra­madan, the Holy month set aside for fast­ing and prayer to God (Al­lah), led to the deaths of four per­sons while eight oth­ers sus­tained in­juries.

A post on the Face­book page of the Na­tional Emer­gency Man­age­ment Agency (NEMA), North East of­fice by the agency’s in­for­ma­tion of­fi­cer, Ab­dulKa­dir Ibrahim, said: “In­ci­dent of sui­cide bomb blast oc­curred at Dikwa town, Dikwa Lo­cal Gov­ern­ment Area of Borno State dur­ing early morn­ing prayers.

“Four per­sons were re­ported dead while eight oth­ers were in­jured.

“Se­cu­rity has been beefed up. The area is now calm with ex­tra vig­i­lance en­joined by res­i­dents.”


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