Nigeria’s state oil firm records ₦1.6bn operating loss as retailing, refining arm fail to generate profit
Bukola Odufade is Businessamlive Reporter.
You can contact her on bukola.odufade@businessamlive.com with stories and commentary.
Nigeria’s state oil company, Nigerian National Petroleum Corporation (NNPC), made an operating loss of N1.6 billion in January 2018, while it had budgeted N600 billion as its operating income.
According to data from the NNPC’s monthly financial report for the year 2017, the company operated at a deficit of N82 billion for the period under review, however, an improvement from December 2017, where it recorded an operating loss of N6.81 billion.
Exploration and production continue to generate the largest share of revenue, as crude oil prices edge higher, earning almost $600 million in 2017. But its ill-maintained refineries and retailing business are still the key problems of the company, as the utilization capacity of the four refineries remains under 20 percent, refining unless than 445,000 barrels a day, losing about $100 million.
Subsidy payments reached almost $400 million in the year under review, as landing cost of petrol is higher than the pump price. Ndu Ughamadu, the 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.
It will probably register another in 2018, Ecobank Transnational Inc. said, as its refineries and fuel-retailing arm fail to generate profit.
In a similar report, Ibe Kachikwu, Nigeria’s minister of state for petroleum resources said Tuesday that the country’s new gas, oil policy, bold steps to restructure the country’s industry, would play a critical role in the industrialisation initiative, particularly stimulating competitive environment that will be attractive to foreign and local investors.
The minister who made the disclosure at Light up Nigeria conference organized by Brandzone Consulting said that government the approval by the Federal Executive Council (FEC), of the county’s gas policy was a clear indication of government’s readiness to fully tap the opportunities available in the midstream sector of the industry.