NNPC’s many reforms fail to grow profits
…. records N197bn loss in 2016
A year-long series of reforms initiated by the administration of President Muhammadu Buhari has failed to improve the balance sheet of the Nigerian National Petroleum Corporation as the organisation recorded a cumulative loss of N197bn in 2016.
President Muhammadu Buhari in January 2016, announced that an inter-ministerial committee will be established to speed up the re-organization and reformation of the NNPC when he met with the Chief Executive Officer of the International Finance Corporation (IFC), Jin-Yong Cai at the presidential villa, Abuja.
President Buhari said the reformation of the NNPC had become inevitable in view of the corruption and abuse of its present structure in the recent past.
Following this, in March 2016 Ibe Kachikwu then minister of state for Petroleum Resources and Group Managing Director of the corporation, announced the unbundling of NNPC, splitting the corporation into seven divisions, comprising 20 subsidiaries.
The wave of reforms led to Kachikwu stepping down as group managing director of NNPC in July 2016 and handed over to Maikanti Baru.
Baru, barely before learning where all the switches are located in his new office, soon rolled out a 12-point programme for the NNPC, which included addressing and defraying the cash calls arrears owed International Oil Companies by the NNPC, security and increasing production through exploring new fields.
This came at a time the organisation has barely read through Ibe Kachikwu’s ‘20 fixes’ plan for the ministry.
Yet results appear too scanty for so much effort invested in reforms. NNPC’s December operations report released showed that apart from a N274 million operating profit recorded in May, due to the increase in pump price of petrol in the month, it was loss galore for the national oil company.
A breakdown of the report showed that the Corporation launched 2016 with a trading deficit of N3.55bn in January 2016, N24.23bn in February, N18.89bn in March and N19.43bn in April.
After posting N270m profit in May it returned to loss making in June with N26.50bn. Losses recorded in subsequent months included: July N24.18bn, August N11.22bn, September 17.18bn and October N16.85bn.
After rising to N18.72bn in November its losses lowered by N1.71bn to N17.01bn in December, states the report.
Meanwhile, in November 2016, the corporation said crude oil production inched up to 1.92 million barrels per day, which represented 7.77 per cent increase relative to October’s production, but the figures dropped by 12.04 per cent, when placed against the November 2015’s performance.
“The month’s performance is attributed to the Federal Government’s overtures to Niger Delta militants towards providing a lasting peace to the crisis,” the report said.
“However, some of the major drag to our performance includes the subsisting force majeure at Forcados terminal and Brass Terminal, and shutdown of two NCTL flow stations following pipeline leakages,” the report states.
It adds, “Areas much affected by the militant activities are the onshore and shallow water assets, where government take is high. Hence, securing Onshore & Shallow water locations remain a priority to restore production.
Most of the operating losses reported by NNPC were attributed to militancy in the Niger Delta which led to destruction of crude oil pipelines.