Four downstream oil and gas firms in Nigeria saw their total revenue surge to the highest in at least seven years, a BusinessDay analysis shows.
Data from the latest unaudited financial statements of TotalEnergies Marketing Nigeria Plc, Conoil Plc, Eterna Plc, and MRS Oil Nigeria Plc shows that their combined revenue rose to N1.20 trillion last year from N831.15 billion in 2022.
“The significant increase in revenue for the downstream sector is a result of the increase in the cost of Premium Motor Spirit (PMS), also known as petrol. The price, which used to be N165 per litre, is now N601 per litre as a result of subsidy removal,” Jide Pratt, chief operating officer of Aiona and country manager of Trade Grid, said.
Revenue is the money generated from normal business operations, calculated as the average sales price times the number of units sold. It is the top-line (or gross income) figure.
The downstream sector comprises activities such as refining, storage, transportation, and marketing of petroleum products. These activities are crucial for ensuring a steady supply of fuel and other petroleum products to consumers and businesses.
Nigeria discontinued its costly petrol subsidy practice on May 29, 2023, when President Bola Tinubu eliminated the subsidy in his inaugural address to the nation of more than 200 million people.
Since then, petrol prices in Africa’s biggest economy have more than doubled. According to the latest data from the National Bureau of Statistics, the average petrol price across Nigeria was N671.86 in December 2023, a 225.8 percent increase from N206.19 in the same period of 2022.
Petrol, widely used by households and small businesses for powering generators, has also seen its price surge due to foreign exchange shortages and disruptions in the local distribution network.
The government’s efforts to stabilise the FX market, including collapsing the I&E window, have contributed to significant volatility and difficulties in sourcing dollars, a currency essential for purchasing crude oil in the global market, resulting in a rise in pump prices.
However, Nigeria continues to grapple with foreign currency shortages and an ongoing foreign exchange crisis, exacerbating challenges in the local distribution network and driving up the cost of petrol, industry experts say.
Further analysis of the oil companies’ financials showed that TotalEnergies, MRS Oil and Conoil recorded a combined increase in their after-tax profit to N27.45 billion in 2023 from N22.39 billion in 2022.
Eterna reported an after-tax loss of N9.33 billion compared to an after-tax profit of N1.01 billion.
Speaking on the sustainability of the high revenue, Pratt said higher prices result in increased revenue for fuel distributors, and profit margins have dwindled from around 10 percent to as low as six percent, posing cash flow challenges for industry players.
He added that while the higher prices generate more revenue for fuel distributors, the return on investment has decreased.
“Previously, profit margins were around 10 percent, but now they have shrunk to six percent or even lower. This unsustainable situation may cause cash flow problems for companies in the industry,” Pratt said.
In recent weeks, the controversy over whether the petrol subsidy is gone has reemerged as marketers continue to stay on the sidelines after some brought in cargo following the implementation of reforms by the current administration.
Recent reports by BusinessDay suggest that Nigeria’s petrol subsidy has resurfaced and now exceeds the amount paid before the cessation of the practice by Tinubu.
BusinessDay’s analysis has revealed that the country is paying about N907.5 billion subsidy on petrol monthly as the country’s foreign exchange crisis pushed the actual cost of litre of fuel to N1,203.
Analysis of data from individual firms
Total Energies Marketing Nigeria
TotalEnergies recorded the highest revenue of N635.95 billion in 2023 from N482.47 billion in 2022.
Petroleum products accounted for the most of N509.3 billion, while Lubricants and others totalled N126.64 billion.
After-tax profit for the period was N12.93 billion from N16.12 billion.
The French multinational integrated energy and petroleum company was founded in 1924 and is one of the seven supermajor oil companies.
It is a broad energy company that produces and markets oil & biofuels, natural gas & green gasses, renewables & electricity
Conoil
Conoil’s revenue recorded the second highest revenue of N210.39 billion from N131.42 billion. After-tax profit for the period was N9.63 billion, up from N4.95 billion.
The firm is involved in the sale of regulated gasoline and kerosene, diesel, aviation fuel, and low-pour fuel. Other business activities include the production and marketing of lubricants under the brand name Quatr0
Eterna
Eterna reported N183.38 billion as revenue, up from N116.47 billion. It recorded no trading revenue, fuel revenue was up to N164.56 billion, lubricants amounted to N18.59 billion, while other revenue stood at N223.49 million.
However, the firm reported an after-tax loss of N9.33 billion compared to a profit of N1.02 billion.
It manufactures and sells a range of lubricants and petroleum products as well as supplies imported fuels for the retail, industrial, agricultural, automotive, marine and energy sectors in Nigeria.
The trading division bulk imports and sells premium motor fuels and automotive gas oil, dual-purpose kerosene, base oils, bitumen, low-pour fuel oil and crude oil.
MRS Oil Nigeria
MRS revenue totalled N182.31 billion, up from N100.78 billion.
Revenue from Premium Motor Spirit totalled N161.74 billion, automotive gas oil totalled N9.37 billion, aviation turbine kerosene totalled N6.44 billion, Lubricants and Greases totalled N4.49 billion and liquefied petroleum gas totalled N258.04 million.
After-tax profit was N4.89 billion, up from N1.32 billion.
The company markets and distributes a range of refined petroleum products and lubricants in Nigeria for the automotive, industrial and aviation sectors.
Fuel products include petroleum motor spirit, automotive gas oil, dual-purpose kerosene, aviation kerosene, and low-pour fuel oil.
