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NNPC Operating Deficit Halved from N11.9bn to N5.7bn in August

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Friday, November 10, 2017 / 8:53AM / FBNQuest Research

In August the NNPC’s operating deficit halved from N11.9bn the previous month to N5.7bn (US$19m). Before central costs and ventures, a profit from production (N28.0bn) covered the losses from refineries (N4.6bn) and retail/marketing (N13.4bn). 

The corporation’s Financial and Operations Report for August notes a welcome pick-up in crude output (including condensates) in July to 2.01 mbpd from 1.95 mbpd. It attributes this latest increase to what it quaintly terms the “semblance of normalcy” in the delta and the resumption of activity at the Forcados terminal.

The refineries reported another loss in August because of recurring production shutdowns. Warri processed 179,000 metric tonnes of crude in August while for Port Harcourt and Kaduna, the figure was zero. 

The corporation again ensured availability of products across the country. In August 980 million litres of PMS (petrol/gasoline) and DPK (kerosene) were imported, 80 million litres refined domestically, and 870 million litres distributed and sold by the Pipelines and Products Marketing Company. 

The deficit has declined to N66bn in January-August 2017 from N128bn in the year-earlier period. Without a legal framework for the industry and root-and-branch change at the refineries, further upside is limited. In the period sizeable operating surpluses were reported by the Nigerian Petroleum Development Company (N64bn) and the Nigerian Gas Processing and Transportation Company (N41bn).  

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The report notes that power plants generated 2,307 megawatts in August from gas supplied by the corporation, equivalent to 71% of total generation. 

We have to conclude by noting the re-emergence of turf wars between the corporation and the FGN.   

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