The 2021 financial performance of Nigeria’s downstream firms despite the absence of deregulation can be likened to cat pulling a chestnuts out of the fire.
The billions of naira Africa’s largest oil-producing country squanders due to the absence of full deregulation in Nigeria’s downstream sector is no longer news, but what is new is how firms braced the odds in 2021 to post significant upticks in both top-line and bottom-line figures.
Analysis by BusinessDay showed the financial performance of five major companies operating in the downstream sector namely Ardova, Conoil, Eterna, MRS, and TotalEnergies in full-year 2021. The firm’s combined profits increased by 371 percent to N17.41 billion in the full year 2021 compared to N3.69 billion in their full year 2020.
TotalEnergies
TotalEnergies, currently the only International Oil Company (IOC) in Nigeria’s downstream sector with diverse innovations including lubricants, insecticides, and solar energy, outpaced its peers with an outstanding profit.
The firm’s profit soared by 711 percent to N16.72 billion compared to N2.06 billion in the previous year, the highest in its five-year financials.
Revenue surged 66.6 percent to N341 billion in 2021 compared to N204.7 billion in the corresponding period last year. Total Energy cost of sales increased to N286.17 billion from N174 billion in the comparable periods.
Selling & distribution cost rose to N3.23 billion from N2.96 billion in the comparable periods. Administrative expenses stood at N29.8 billion, a 19 percent increase compared to N25.06 billion in the period under review.
Finance income dropped to N831 million from N2.26 billion in the comparable periods. Assets grew 44.3 percent to N207.2 billion in the full year 2021 compared to N143.6 in the corresponding period last year.
Net cash generated from operating activities jumped to N60.6 billion from N44.6 billion in the comparable period. Net cash used in investing activities recorded a year-on-year loss of N9.37 billion compared to N8.28 billion in the year-ago period.
Net cash generated from financing activities recorded a loss of N18 billion in December 2021 compared to N9 billion gained in 2020.
Conoil Plc
Conoil Plc profit jumped by a massive 111 percent to N3.04 billion in December 2021 compared to N1.44 billion in December 2020.
Revenue increased to N126.7 billion compared to N117.47 billion in the comparable year-ago period. The cost of sales rose to N115.2 billion in 2021, a 7.06 percent modest increase from N107.6 billion in December 2020.
Distribution expenses jumped to N2.08 billion compared to N2.07 billion in the comparable periods. Administration expenses dropped to N5.14 billion from N5.18 billion in the period under review.
Assets rose to N53.7 billion from N48.8 billion in the comparable periods. Net cash used in investing activities recorded N51.8 million from N110.28 million loss year on year.
Net cash used in financing activities recorded a loss of N1.8 billion compared to N2.1 billion loss year on year.
MRS
MRS recorded a profit of N135.4 million compared to a N2.26 billion loss in the previous year.
Revenue surged 71.4 percent to N72 billion in the full year 2021 from N42 billion in the comparable periods. The cost of sales jumped to N66.8 billion compared to N38.5 billion in the period under review.
Selling and distribution expenses increased to N1.5 billion from N1.02 billion in the previous year. Administrative expenses dropped to N4.4 billion compared to N5 billion in the period under review.
Finance income rose to N428.2 billion in 2021 compared to N8.87 billion in 2020. Assets dropped to N33 billion in December 2021 compared to N36.6 billion in the previous year.
Cash generated from operating activities recorded a loss of N549.1 million in the full year 2021 compared to N4.36 in the full year 2020. Net cash used for investing activities recorded a year-on-year loss of N947 million from N338.2 million.
Cash flows from financing activities recorded a year-on-year loss of N59.45 million from N104 million in the comparable periods.
Few odds
Ardova
Ardova recorded a loss of N1.64 billion in December 2021 from a profit of N1.85 billion in December 2020.
Revenue stood at N200.6 billion, a 10.2 percent modest increase to N182 billion in the comparable periods. The cost of sales jumped to N187.4 billion in the full year 2021 compared to N169.8 billion in the full year 2020.
Distribution expenses rose to N3 billion from N2.23 billion in the year-ago period. Administrative expenses grew to N9.3 billion in December 2021 compared to N7.2 billion in December 2020.
Finance income dipped to N159.2 million compared to N271 million in the year-ago period. Assets stood at N121 billion in December 2021,86.72 percent increase from N64.8 billion in December 2020.
Cash generated from operations recorded N4.56 billion loss from N5 billion in the comparable periods. Cash flows from investing activities recorded a year-on-year loss of N13.5 billion compared to N5 billion.
Read also: Oil theft, pipeline vandalism fuelling IOCs divestment in Nigeria downstream sector — NEITI
Eterna
Eterna in its latest financial books recorded a loss of N85 million in the full year 2021 as against N60 million profit in the full year 2020.
Revenue surged to N82.57 billion in December 2021 compared to N59.3 billion in December 2020. The cost of sales increased to N78.07 billion in the full year 2020 compared to N53.9 billion in the year-ago period.
Selling and distribution expenses increased to N228.2 million compared to N127 million in the comparable periods. General and administrative expenses rose to N4 billion from N3.4 billion in the previous year.
Finance income dipped 81.8 percent to N4.6 million in December 2021 from N25.3 million in December 2020. Assets dipped to N34.8 billion as against N35.7 billion in the comparable period.
Net cash flow from operating activities recorded a loss of N7 billion compared to N3.2 billion in the year-ago period. Cash flows from investing activities recorded a year-on-year loss of N13.5 billion compared to N5 billion.
Cash flows from financing activities recorded N34.6 billion compared to the loss of N932.35 in the period under review.
Overview
To improve the viability of firms, Analysts have called several times for full deregulation of the downstream petroleum sector because subsidies on fuel are no longer sustainable.
Unfortunately, the government has yet to muster the political will to effect this change even when oil prices are near $10 a barrel in 2020.
The federal government is currently in protracted talks with labour unions who have threatened to shut down the country if the government deregulates without fixing the refineries.
However, the petrol subsidy regime and the accompanying endless corruption, smuggling and dearth of investments in the downstream sector are indicative of an urgent need to end subsidies and implement deregulation fully.
Financial experts have raised concern about the opaque system that is bleeding Nigeria’s economy considering the high level of life-threatening hunger in a country with over 95.9 million people living in extreme poverty, overtaking India according to a 2018 Brookings Institution report, despite having only a fifth of India’s population.
According to a Department of Petroleum Resources (DPR) report on 30 September 2020, Nigeria had spent N10.7 trillion on fuel subsidies in the last 10 years.
The NNPC could have saved on these costs and passed on such savings as extra income on to the three tiers of government if customers paid market prices for gasoline, supporters of deregulation have argued.
