Only 2 NNPC subsidiaries were profitable in 2016 – Report

Only two of the 11 subsidiaries of the Nigerian National Petroleum Corporation, NNPC, were profitable in 2016, a review of the company’s financial and operations

report by BudgIT revealed.

In a review of the NNPC 2016 Report, BudgIT, a civic organisation, identified the NNPC Retail and the Nigerian Gas Company, NGC, as the only two subsidiaries that consistently made profits during the year.

Overall, the NNPC recorded a loss of about N197.49 billion in 2016, with the only profit of N274 million recorded in May.

While the NNPC Retail recorded a net surplus of about N7.48 billion, the NGC earned about N39.03 billion.

The review rated the National Engineering Technical Company, NETCO, above average, with profits throughout the year, except January, March and April.

Rated unremarkable were the upstream arm, the Nigerian Petroleum Development Company, NPDC, along with Integrated Data Services Limited, IDSL and Pipelines and Products Marketing Company, PPMC, for “an inconsistent financial performance throughout the year.”

Those rated “very poor” included the Corporate headquarters, CHQs, the Corporate Strategic Unit, CSU, and three refineries in Port Harcourt, Kaduna and Warri, as they barely made any profit throughout the year under review.

Throughout the year, the average capacity utilisation of the refineries stood at about 13.75 per cent, with about 22.38 million barrels of crude used to produce a total of 1.42 trillion litres of petrol and 600.55 million litres of kerosene.

On remittances to the Federation Accounts Allocation Committee, FAAC, the report described its findings as showing a “damning difference”, with a total of $72.87 million transferred by the NNPC Group into the FAAC dollar account in 2016, against $607.82 million in 2015.

BudgIT said its review showed that NNPC remitted money into the FAAC account only six times in 2015 and 2016, despite the requirement by law for monthly remittances.

“The $534.95 million difference between the 2015 and 2016 remittances could have aided in shoring up of the budget deficit, which led to the government to issue the $500 million Eurobond debt recently,” the report noted.

A total of about N729.02 billion was paid into the Naira denominated FAAC Account in 2016, against N1.09 trillion the previous year, with crude oil sale figures and domestic crude cost different from the receipt in both dollar and Naira accounts.

“The annual financial performance of NNPC over the 12-month period under review leaves s lot to be desired. Throughout the year, expenses outstripped the revenue earnings,” the report noted.

Consequently, the report said the poor performance of the subsidiaries raised critical questions about the operational activities of the NNPC Group, stressing the need to find out and address the causes of their huge losses.

Urging government to re-evaluate the performance of these subsidiaries, the report called for a cut on unnecessary operations and expenditures as well as introduction of a new robust management to turn around NNPC operations, like its peers around the world.

The report showed that a total of about $33.82 billion was realised from crude oil sales in 2016, with the highest revenue of $8.84 billion realised in the month of October.

Although about 53.38 million barrels of crude oil were sold during the month, the report observed that the monetary value did tally with previous figures in August, where about 53 million barrels were sold for only $2.51 billion.

“Where did the extra $6 billion come from,” it asked.

Despite the cancellation of allocation of crude oil for offshore processing of petroleum products following the revocation of the agreement and replacement with direct-sales direct-purchase, DSDP, arrangement, the report found that about 95,000 barrels of crude oil were still being utilised for product swap without NNPC explanation.

On gas, the report said average daily gas supply to the power plants in 2016 was about 518 million standard cubic feet, which was lower than about 696.83 mmscf per day supplied the previous year. On pipeline vandalism, report said about 2560 breaks were recorded in 2016.

The Niger Delta Avengers’ attacks on oil production facilities led to a reduction of Nigeria’s crude oil exports by about 112.1 million barrels between December 2015 and December 2016, with a cut in oil production by 14.35 per cent for the corresponding period.

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