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BusinessDay

These Seven NNPC Subsidiaries made a cumulative operating deficit of N275 bn in 9m 2019

Why NNPC requires paying attention to Shell’s exploration, development of renewables

Africa’s biggest oil producer is bleeding money as seven state subsidiaries attached to Nigerian National Petroleum Corporation (NNPC) made a cumulative loss of N275 billion in the first nine months of 2019.

Nigeria is dependent on oil for about two-thirds of state revenues and is among the countries worst affected by the plunge in international crude prices to below $30 a barrel in January — a level was last seen in 2003.

A cursory review of September’s 2019 NNPC’s financial reveals seven subsidiaries such as Corporate Head Quarters (CHQ), Port Harcourt Refining Company (PHRC), Warri Refining Petrochemical Company (WRPC), Kaduna Refining Petrochemical Company (KRPC), Shipping and Nigeria Pipeline Storage Company Limited (NPSC) made a cumulative loss of N275 billion.

The lion share of the loss was incurred by the Corporate Headquarters (CHQ) and ventures with an N137billion loss while Nigerian Petroleum Development Company Ltd (NPDC) emerged as a shining star in 2018 financial year with N217.8billion profits followed by Nigerian Gas Company with N60.9billion and Nigeria Gas Marketing Company (NGMC) with N24.3 billion profits.

“These are basically the medium which lots of funds are stolen as they are basically used by the government to do political patronage,” Adeoluwa Eweje, an International Energy Solution Consultant told BusinessDay.

NNPC has struggled to keep the poorly-maintained state-owned oil refineries operating profitably with very little luck; in the first nine months of 2019 year these refineries in Kaduna, Port Harcourt and Warri incurred a cumulative loss of N111.5billion in nine month 2019.

“In September 2019, the three refineries processed no crude but produced 967 MT of finished products; primarily from WRPC and PHRC. Similar to last month, combined yield efficiency is 0.00percent owing largely to on-going rehabilitation works in the Refineries,” NNPC admitted in its latest monthly report.

Further, drilling reveals the biggest expenditure uptick amongst NNPC’s subsidiaries in 2018 occurred with Nigeria Gas Marketing Company whose expenditure increased by 824.02 percent from N20.1 billion to N186.3 billion.

Industry analysts said the federal government could have sorted itself out financially rather than resort to borrowing if it had mustered the political will to first and foremost address concerns of unbundling Nigeria’s oil sector.

“What we need is a lean organization that simply regulates the oil industry. In terms of production and exploration, they are not cut out for it. “Austin Onuoha, a research analyst, and the Executive director of African center for corporate Responsibility told BusinessDay.

“Let me give you another instance, why is it that the Nigeria National Petroleum Corporation (NNPC) is not quoted in Nigeria’s Stock Market (NSE), why?‎If anybody is expecting NNPC to be profitable, that is wishful thinking. This is why you see subsidy payments growing by the year, because of inefficiency that characterized the sector” he states further.

Ademola Henry Adigun an oil sector governance expert told BusinessDay that,”‎To address concerns of the sector, the NNPC must be made to run as a corporate entity. It must run like a corporation independent of undue interference. There must be full disclosure on the activities of the corporation in terms of crude importation, which was imported, among others, to enable Nigerians who are the rightful owners of the corporation to track investments in the sector.

Henry insists that there must be a proper legal framework for the sector, adding that “The government should write its own version of the Petroleum Industry Governance Bill if the present one keeps getting less attention from the lawmakers.”

Apart from the recorded losses in the refineries, due largely to lack of fiscal governance framework for the sector, several investments shift base to other neighbouring African countries that are mainly leapfrogging the Nigerian state with regard to oil production but has better fiscal governance for the sector.

Buhari had in 2015 promised to stop NNPC from falling back into bad habits by transforming Nigeria’s national oil company into a cost-effective, profit-driven and transparent institution; however, data from NNPC reveals the perennial challenges confronting the organization still remain the same.

 

DIPO OLADEHINDE