The Nigerian National Petroleum Company, NNPC will be declaring its first profit for the first time since it was created in 1977.
In a handover speech by Ibe Kachikwu, the outgoing group managing director of the NNPC, the NNPC has finally gotten out of its web of losses and financial wreck. For the month of May, the NNPC recorded a net profit of NGN274 million. This is a positive as the corporation has never made profit for the last 15 years.
In a detailed analysis of the report acquired by ThisDay, the NNPC “made a N273.74 million operating profit in May 2016 as against its operating loss of N19.43 billion in April was attributed to improved cost efficiency at the corporate headquarters of NNPC and performance by the Petroleum Products Marketing Company, PPMC.”
“PPMC recorded a net gain of N17.69 billion as against the net loss of N6.91 billion in April, 2016 following complete stoppage of commercially unfavourable swaps and offshore processing agreements (OPAs).
“Direct-Sale and Direct-Purchase has now replaced the previous regime. Notwithstanding these improvements, renewed and vigorous vandalism of pipelines in Niger Delta means that productions were shut-in and cargoes deferred, which denied revenues streams accruing to NPDC and the federation.”
However, the deficit was reverted “in the month of May 2016 due to significant increase in revenue generation which could be attributed to the rise in petroleum product sales by 51.13%”.
59.56 million barrels of crude oil and condensate was produced in the month of April 2016, representing average daily production of 1.99 million barrels and a decrease of 1.72% compared to March 2016 performance.
“Of the April 2016 production, Joint Ventures (JVs) and Production Sharing Contracts (PSC) contributed about 33.82% and 46.77% respectively. While AF (Alternative Funding or Financing), NPDC and independent oil firms accounted for 13.81%, 1.73% and 3.87% respectively,” the report stated.
On NNPC’s exploration and production subsidiary, NPDC, the report showed that NPDC’s PTD (period-to-date – May 2015 to April 2016) cumulative production from all fields amounted to 33,028,954 barrels of crude oil which translated to an average daily production of 90,243 barrels.
“Comparing NPDC’s performance to national production, the company’s production share amounted to 4.31%. NPDC production is expected to hit production levels of 250,000bp/d after the completion of the on-going NPDC re-kitting project and repairs of vandalised facilities.
“Production from NPDC wholly operated assets amounted to 10,216,198 barrels (or 30.93% of the total production) with Okono Okpoho (OML 119) alone producing more than 82.66% of the NPDC wholly owned operated assets or 25.57% of the total NPDC total production.
“Also on the NPDC operated JV assets, in which NPDC owns 55% controlling interest, crude oil production amounted to 13,296,309 (or 40.26% of the NPDC total production). On the JV assets not operated by NPDC, production level stood at 9,516,447 barrels or 28.81% of the company’s production,” the report revealed.”
The NNPC has been described as a cesspit of corruption, an archetype of the culture of financial reckless that pervaded Nigeria’s political class for many decades. The present government instituted an anti-corruption war that probed the books of the corporation.
During his handover to Maikanti Kacalla Baru, the new GMD of the corporation, Kachikwu advised him to continue with reforms to further reposition the NNPC for profitability and effectiveness. Part of which includes transparency, publishing of financial statements and effective management.