NNPC Cuts Operating Deficit to N5.3b

By Dipo Olowookere

State-owned oil firm, the Nigerian National Petroleum Corporation (NNPC), has reduced its operating deficit to N5.3 billion from N5.6 billion.

In its latest oil and gas report, it was revealed that the deficit, which stood at N33.99 billion in March 2017, increased by N5.3 billion in April to close at N39.3 billion, showing that it was cut from N5.6 billion in March to N5.3 billion a month later.

The company’s financial reports showed that the Nigerian Pipelines Marketing Company (NPMC), a subsidiary of NNPC, and its corporate headquarters recorded the heaviest losses since the beginning of the year, losing N50.99 billion and N47.16 billion respectively.

Analysts at FBNQuest Research said profits were generated by production (N2.0 billion), refineries (N1.6 billion) and retail activities (N1.6 billion) before deductions for central costs and ventures.

The corporation’s Financial and Operations Report for April notes a sharp fall in crude output in March to 1.60 mbpd from 1.82 mbpd the previous month due to leakages, force majeure and maintenance. Most of these obstacles have since been removed.

 The combined capacity utilization of the three refinery companies in April reached 24.6%, led by Kaduna which achieved 31.3%.

Earlier this week a speech made on behalf of the Acting President, Mr Yemi Osinbajo, pledged that the corporation would continue to manage the four refineries, whatever agreements were reached on equity injections and concession deals.

However, it also warned the audience of labour union officials that the FGN favoured greenfield investment by the private sector and that the NNPC plants would soon become obsolete without wholesale reform.

Between April 2016 and April 2017 the NNPC’s export proceeds totalled $2.50 billion, of which $2.29 billion was transferred to the joint ventures (JVs) for cash call payments. This was well short of what was due to the JVs (more than $8 billion).

Under an agreement with the oil majors, a haircut has been applied to the corporation’s arrears, a first repayment has been made, and the ventures are to become incorporated and self-financing.

The report notes that power plants generated 2,787 megawatts in April from gas supplied by the corporation, equivalent to 77% of total generation.