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Nigeria’s refineries record N154bn loss in one year

The Nigerian National Petroleum Corporation (NNPC) broke a 43-year-old jinx as it published the first ever audited report since its establishment in 1977.
From the report, it was revealed that Kaduna refinery recorded zero revenue in 2018.
Despite posting zero revenue, the Kaduna refinery, the 2018 Audited Financial Statements (AFS) of the corporation published on NNPC website showed, still incurred a total cost of N64 billion.

The corporation’s three refineries – Kaduna, Port Harcourt and Warri – turned out to be the black sheeps as they reported a combined loss of N154 billion revenue for the year.
A recent report by the NNPC had indicated that none of the country’s refineries, with a combined capacity of 445,000 barrels per day, produced any refined crude between 2019 and 2020.
This development has further renewed the call for the privatisation of the refineries.

However, the report revealed that the corporation had begun the process of comprehensive diagnostic assessment of the refineries that would culminate into their thorough rehabilitation, starting with Port Harcourt and Warri refineries.

It added that proposals to change the refineries’ business models to that similar to Nigeria Liquefied Natural Gas Limited’s (NLNG), which had been a success story over the years, was also afoot.
The National Petroleum Investment Management Services (NAPIMS) is the group’s most profitable division, according to the statements, signed by Group Managing Director, Mele Kyari.
It reported revenue of N5.04 trillion ($13 billion) in 2018 and a profit of N1.01 trillion. That compares with a loss of N1.65 trillion in 2017.

The report shows total assets managed by NAPIMS at N18.6 trillion, with the oil and gas components valued at N14.2 trillion.
Its oil production subsidiary, the Nigerian Petroleum Development Company (NPDC), reported a post-tax profit of N179 billion in 2018.
“The AFS of the NPDC indicated that a profit after tax of over N179.1 billion came as significant improvement from the 2017 profit after tax of over N157.4 billion.
“During the period, NPDC posted revenue of over N1.3 trillion compared to the 2017 revenue of over N882.3 billion,” it said.
It added that the National Engineering and Technical Company (NETCO), another upstream subsidiary of the corporation, indicated a profit after tax of over N4.5 billion for 2018, a remarkable improvement from the previous year record of over N2.4 billion.
It noted that the Nigeria Gas Company (NGC), a subsidiary in charge of gas resources, recorded a profit after tax of over N13.2 billion with a comprehensive annual income of about N19.9 billion.
It valued the NGC total assets in 2018 at over N251.7 billion compared to N196 billion in 2017.
In the Downstream Sector, the Petroleum Products Marketing Company (PPMC) for the first time, recorded gross profit of N24.3 billion in the year under review.
According to the report, NNPC Retail Limited posts profit after tax of over N2.2 billion compared to the N1.8 billion recorded in the preceding year.
The Integrated Data Services Limited (IDSL), another subsidiary of NNPC, recorded significant revenue increase by about N1.3 billion (or 7.76 per cent) in 2018 from 2017.
Profit for the year 2017 included about N2.9 billion foreign exchange rate gain but exchange rate loss of N1 million in 2018.
Profit for the year also included about N1.7 billion actuarial valuation of employee benefit expense in 2018 but no actuarial valuation in 2017 due to the company starting to comply with IAS 19 on employee benefit in 2018.
“The Integrated Data Services Limited (IDSL), an NNPC Subsidiary in charge of acquisition and interpretation of seismic data, posted a total comprehensive income of about N3.2 billion with profit of about N154 million within the period,” the report stated.
The NNPC Retail, another key subsidiary of the corporation, which was audited by Aminu Ibrahim and Co, made N236.635 billion revenue in the year under review with results from operating activities totalling N936.853 million.
The company posted N1.095 billion profit before income tax while its profit after tax stood at N2.276 billion.
“NNPC and its partners are considering modalities to cap crude oil cost per litre at $10 by 2021, in order to ensure that Nigeria benefits more from the nation’s hydrocarbon resources.
“In all, the audited financial statements of the 19 subsidiaries and the corporate service unit (NAPIMS), were laid bare in a novel move to enshrine high level transparency and accountability in the National Oil Company,” the report added.
The AFS named the key achievements recorded in the year under review to include, Recapitalization of PPMC through transfer of the negative revenue reserve to CHQ.
It said that NNPC achieved a second straight year without incurring additional cash call arrears and repayment of over $2.7 billion of total cash call arrears due to industry operators.
Stating that it published its audited financial statements online in a bid to improve transparency around its operations, the corporation also published online the audited accounts of its 20 subsidiaries and business divisions for the first time.
These entities, it said, included, NAPIMS, IDSL, NPDC, NETCO, Port Harcourt Refining Company (PHRC), Warri Refining and Petrochemicals Limited (WRPC), and Kaduna Refining and Petrochemicals Company (KRPC).
Others were, Duke Oil Services (UK) Limited, Duke Oil Incorporated, Duke Global Energy Investment Limited, The Wheel Insurance, Petroleum Products Marketing Company (PPMC) Nigerian Pipelines and Storage Company (NPSC) NNPC Retail Limited and NIDAS UK Agency.
Also among the entities are, NIDAS Shipping Services, NIDAS Marine FS, Nigerian Gas Marketing Company (NGMC), Nigerian Gas Company (NGC), and N-Gas.
The 2018 AFS covered the corporation’s 19 Strategic Business Units (SBUs), and a Corporate Services Unit (CSU).
It also revealed that the release of the AFS was in compliance with the directive of President Muhammadu Buhari and his administration’s commitment to accountability and transparency by way of full disclosures of government agencies’ transactions.
“It is also in accordance with International Financial Reporting Standards, apart from being a requirement for the Companies and Allied Matters Act (CAMA).
“The 2018 reports which posted positives in many of the National Oil Company’s Upstream going concerns, however, recorded low figures in the Midstream.
“This was unsurprisingly because of the long downtime of the nation’s four refineries in Port Harcourt, Warri and Kaduna,” it said.
It added that the 2019 Audited account report was already being prepared and expected to be ready in a couple of months.

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