Monday, October 5, 2015

NNPC records N287.4billion loss from operations

Over N287.4bn loss is being recorded yearly by the Nigerian National Petroleum Corporation from the operations of its subsidiaries across the country despite the fact that it is meant to be a profitable business venture.

The corporation is losing about N250bn yearly as a result of the inefficiencies of the Pipelines and Product Marketing Company alone, which is one of its subsidiaries, according to figures made available by the national oil company.

The PPMC’s N250bn loss accounts for about 87 per cent of the corporation’s aggregate loss by implication.

Findings by our correspondent showed that aside the huge losses coming from the PPMC, the refineries and contractual arrangements, among other problem areas, were responsible for the remaining 13 per cent of the losses made by the corporation.

Some of the contracts were recently cancelled by the new Group Managing Director of the NNPC, Dr. Ibe Kachikwu, and according to him, an average of $150m is being saved monthly due to the cancellation.

The country is also losing about N10bn as a result of the near-comatose state of the refineries.

Kachikwu said in an interview that when 40,000 barrels of crude oil were transferred to the refineries for processing, only 15,000 barrels came out.

To this end, he said, “The truth is that the refineries are not working profitably now. This, no doubt, could be for the reason of pipeline issues, or for aging facilities in the refineries. If the refineries do 60 per cent capacity today and tomorrow zero per cent, we could possibly end up with a 20 per cent capacity when the average is done. This is, of course, a huge loss.

“We will not continue to commit crude and other resources to the refineries only to get far less. It would be better to shut the refineries for turnaround maintenance, while the crude hitherto pumped into them is sold and the proceeds used to import petroleum products.”

There are also indications that the planned unbundling of the PPMC, with the aim of creating a new subsidiary that will oversee purely pipelines issues, is part of the loss-reduction move by the leadership of the NNPC.

Kachikwu said the pipelines must be made to work because there was no model that would make economic sense in the absence of working pipelines for the petroleum business.

He said it was unsustainable to leverage alternative models other than pipelines as far as the movement of crude and refined products were concerned, stressing that alternative models would only shoot up cost for the corporation.

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