NNPC cuts trading deficit by N2.75 billion

…Records marginal decline in petrol importation as refining capacity increased by 29%

The Nigerian National Petroleum Corporation (NNPC) said it has cut trading deficit by N2.75billion, helped by application of its new re finery business model, where each refinery purchases crude oil at export parity price, processes and sells the corresponding products on its own account.
According to the monthly financial and operations report for January released April 11, the corporation recorded N2.75billion reduction in its trading deficit in the period under review, putting the total trading deficit at N14.26billion.
“The combined value of output by the three refineries (at import parity price) for the month of January 2017 amounted to ₦99.13 billion, while the associated crude plus freight costs was ₦88.24 billion, giving a positive margin of ₦3.36 billion after considering an overhead of ₦7.52 billion,” the NNPC said in the report.
“This represents about 16.19 per cent improvement, compared to N17.01billion recorded in December, 2016, in spite of the corporation’s challenging situation, which limits its aspiration to profitability”, the report stated.
Fuel import into Nigeria reduced by 6.3 percent to 40.9m litres in January, as the NNPC raised combined installed capacity utilisation of the country’s refineries located in Port Harcourt, Warri and Kaduna, increased by 29 percent.
After a futile attempt to collocate refineries with prospective investors in April last year, the NNPC developed a Tolling Plant Model, where the refinery does not take title to the crude, but rather charges a tolling/processing fee to the owner of the crude, which was PPMC, on behalf of the corporation but even that didn’t produce the desired results.
The NNPC now attributes its modest success to the implementation of its 12 Business Focus Areas (BUFAS) strategy introduced by Maikanti Baru, its group managing director, where the refineries act as merchant plants.
Ndu Ughamadu, NNPC spokesman, quoting the report, said of the policy, “the refineries benefitted from the introduction of a new Refineries Business Model under the 12 BUFAS strategy which has transformed them from “tolling plants to merchant plants,” thereby placing them on the path of profitability.”
Apart from PHRC and WRPC, five other subsidiaries of the corporation also posted surpluses. These include the Nigerian Petroleum Development Company (NPDC), the Nigerian Gas Pipelines and Transport Company (NGPTC), NNPC Retail, the National Engineering and Technical Company (NETCO), and the Integrated Data Services Ltd (IDSL).
According the NNPC report, Nigeria imported “642.16 million litres of white products (petrol) through the DSDP arrangements against 683,146,088.76 imported in December.
The NNPC said the capacity utilisation of the refineries rose to 36.73 per cent in January, 2017, as against 7.55 percent in the previous month of December, 2016.
The Port Harcourt Refining Company (PHRC ) and Warri Refining and Petrochemical Company (WRPC) posted surpluses of N5.1 billion and N404 million respectively.
NNPC said its performance was constrained by certain factors, including production shutdown of the Trans Niger Pipeline and Nembe Creek Trunkline, due to leakages and the shutdown of Agbami Terminal for a mini Turn-Around-Maintenance.
It also cites as a challenge, the subsisting Force Majeure declared by SPDC as a result of the vandalised 48-inch Forcados export line after its restoration in October last year.

 

ISAAC ANYAOGU