A further decline in the NNPC deficit

In May the NNPC reduced its operating deficit from N5.3bn the previous month to N3.5bn (US$12m), its best performance since the token profit in May 2016. Profits were generated by production (N10.6bn) and refineries (N2.7bn) before deductions for central costs and ventures. The corporation’s Financial and Operations Report for May notes a pick-up in crude output in April to 1.79 mbpd from 1.60 mbpd the previous month. Its commentary adds that production was then still being lost due to shut-ins at the Yoho, Qua Iboe, Bonny, Bonga and Usan terminals.

The combined capacity utilization of the three refinery companies in May reached 23.1%, led by Port Harcourt which achieved 34.3%. The Warri was closed for the month due to power failures.

The FGN and NNPC are adamant that, while they will accept private-sector financing for the four ailing refineries, they will not consider their sale or concession agreements. The corporation will continue to run the operations although Vice-president Osinbajo has warned official labour that they would soon become obsolete without wholesale reform.

It is also pursuing greenfield investors. The local Agip company has a 150,000 b/d refinery in OPL 245 on the drawing board and near the MoU stage. With the Dangote project in Lagos State in mind, the NNPC has a target of end-2019 for self-sufficiency in premium motor spirit (petrol/gasoline).

The corporation’s operating deficit has declined to N175bn in the 12 months to May from N239bn in the year-earlier period. Without a legal framework for the industry and radical change at the refineries, further upside is limited.

The report notes that power plants generated 3,095 megawatts in May from gas supplied by the corporation, equivalent to 82% of total generation.

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