The NNPC trimmed its operating deficit in January from N17.0bn to N14.3bn (US$47m). The improvement can be traced to a stronger performance by its Nigerian Petroleum Development Company and greater efficiencies achieved by its three refining companies. The target of consistent profitability in its budgets will remain elusive as long as the industry struggles with sabotage of its infrastructure. The largest of several disruptions in December was the loss of about 330,000 b/d due to the closure of the Trans Forcados Pipeline throughout the month.
The bright spot in the corporation’s Financial and Operations Report for January is the strongest result from the refineries for more than one year. Output of finished products reached 395,000 metric tonnes, and their combined capacity utilization 36.7%New engineering software has been installed, and the NNPC has set a utilization target of 60.0% for end-2017.
Under their new business model of merchant plant, the refineries purchase the crude themselves and sell products for their own account.
The refineries are to remain state-owned although private capital may be injected. They will be joined by the 650,000 b/d Dangote project in Lagos State, which is formally scheduled for completion in 2019 and for listing.
Between January 2016 and January 2017 the NNPC’s export proceeds totaled US$2.57bn, of which US$2.50bn was transferred to the joint ventures (jvs) for cash call payments. The amount due to the jvs over the period, however, was US$8.55bn. Under an agreement with the oil majors, the corporation is to clear its arrears over five years with a first payment proposed this month.
Sources: NNPC, Financial and Operations Report, January 2017; FBNQuest Research
The report notes that power plants generated 2,047 megawatts in January from gas supplied by the industry, equivalent to 68% of total generation.
