NNPC Report: PPMC Recorded N102 Billion Loss in 2017

Chineme Okafor in Abuja

An analysis of the December 2017 edition of the monthly operations and financial reports of the Nigerian National Petroleum Corporation (NNPC) has revealed that Products and Pipelines Marketing Company (PPMC) exceeded the projected loss in its year-to-date (YTD) operations by about 240.1 per cent.

THISDAY analysis of the latest NNPC report showed that while PPMC, the downstream petroleum subsidiary of the corporation, only expected to make a loss of N30.144 billion in 2017, it eventually made a loss of N102.527 billion, thus translating to about 240.1 per cent increase between the budgeted and actual loss expectations of the downstream company.

According to a section of the report, which showed the group financial performances of all NNPC subsidiaries, even the Nigerian Petroleum Development Company (NPDC), the upstream subsidiaries of the corporation, and Nigerian Gas Company (NGC) could not keep to their budgeted expenditure marks, as they both spent more money than they planned to in their YTD operations.

For instance, the report noted that the NPDC, which appeared to have increased its revenue as a result of the restoration of production after the Forcados pipeline outages in 2016 and first half of 2017, could not keep its YTD cost under control as it budgeted to spend N291.060 billion, but ended up spending N556.598 billion. The company, however, netted a revenue of N668.475 billion, and an operational surplus of N111.877 billion.

For the NGC, the report showed that it had budgeted to spend N187.324 billion on its operations, but eventually spent N201.688 billion, and subsequently earned N275.502 billion as against the N298.224 billion that it budgeted.

On the midstream, which includes the refineries, the report showed that Kaduna spent N141.295 billion, which is about N29.605 billion more than the N111.690 billion it planned to spend, and earned N109.524 billion as against N107.082 billion, but still recorded a YTD deficit of N31.771 billion. Port Harcourt refinery, it said, budgeted to spend N368.220 billion, eventually spent N351.728 billion and earned a trading surplus of N20.671 billion, even though it earned just N372.399 billion as against the N453.965 billion it planned for.

For Warri Refinery, its planned YTD expenditure was N265.180 billion, it eventually spent N111.104 billion but only earned N89.361 billion out of the N314.940 billion it budgeted to earn for the year, and then posted a deficit of N21.743 billion from its operations.

The NNPC, in the report, stated reasons why the YTD expenses of the PPMC increased by that percentage. “The value gained from NPDC was, however, eroded by an increased PPMC operation’s cost in an effort to ensure steady petroleum products supply across the nation being the major supplier of the products.”

It equally noted that theft of its products and vandalism of downstream assets had continued to destroy its value addition, pointing out that a total of 1120 vandalised points were recorded on its pipeline between January and December 2017.

Perhaps referring to its subsidy of petrol consumption in the country, the corporation added that it had doubled the daily supply of petrol from 850 trucks per day to 1500 trucks per day and that this translated to 52 million litres of daily consumption in the country.

An industry analyst, who didn’t want his name in print, however, told THISDAY that the disruptions at the Forcados in 2016 and parts of 2017 perhaps affected the NPDC and made it miss its revenue projection. He, however, noted that the NPDC would need to do a lot of work to bring its cost under control, adding that continued subsidisation of petrol consumption by the PPMC was denying the federal government and states a lot of revenue.

Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) has begun its conduct of data management training for its member countries to ensure that crude oil production data they submit to it are accurate and in line with the current market dynamics.

OPEC said the training would help officials, who are in charge of data collection and collation in its member countries to adapt to the new data processing methodology it now uses to compute trends in the market, adding that this was in line with the operational changes it has introduced to stay abreast with changes in the global oil market.

Nigeria’s Governor to OPEC, Dr. Omar Farouk, recently explained this to THISDAY at the Nigerian lap of the training which was hosted by the Petroleum Technology Development Fund (PTDF) in Abuja.

Farouk, said the training would equip Nigeria’s officials with knowledge of the new methodology adopted by OPEC in its data gathering and collation.

He stated that the training would cover data processing methods for crude oil production, oil consumptions, refineries runs of Nigeria and its Gross Domestic Product (GDP).

He said Nigeria had previously done badly with its data collection and submission to the OPEC, but has improved in the last three years and was now amongst the top three OPEC countries that are timely and accurate with their data collection and submission.

“In the last two years, particularly from last year, OPEC in recognition of the changing dynamics of the oil market, has introduced some areas that had not been part of what it is doing in the last 30 or 40 years, and the objective of this workshop is to go round member countries, gather those who actually collect and collate these data and send to OPEC, to give them training on the new methodology of data collection and assessment or evaluation before it is eventually sent to OPEC,” said Farouk.

He further stated: “It is essentially on every aspect of data from crude oil production to Nigeria’s GDP, to oil consumption, gas, refinery run, and virtually everything about oil and the economy.