According to the recently published 2019 Audited Financial Statements, the Nigerian National Petroleum Corporation (NNPC) Group and Corporation had an accumulated loss of N1.9 trillion and N474 billion respectively. The Auditors of NNPC, made up of Pricewaterhouse Coopers, SIAO Partners, and Muhtari Dangana & Co. have raised serious doubts over the inability of NNPC to continue as a going concern following rising and humongous losses, resulting in the negative capital base.
In their report, the auditors disclosed that there is an existing material uncertainty that casts significant doubts on the ability of the NNPC to escape bankruptcy – as there are serious impairments on the company’s ability to generating sufficient revenues to meet its immediate obligations as at when due.
What you should know
- In its joint report to the stakeholders, the auditors gave an unmodified opinion and drew attention to the fact that the NNPC Group and Corporation recorded net losses of N1.8 billion and N107.8 billion respectively in 2019, compared to N803.1 billion and N254 billion in 2018 respectively. While its current liabilities exceed its current assets by N4.4 trillion and N1.1 trillion for the Group and Corporation respectively, compared to N3.3 trillion and N968.7 billion in 2018 respectively.
- NNPC Group and Corporation’s current assets, according to the financial statements, stood at N5.3 trillion and N4.5 trillion in 2019, while total current liabilities stood at N9.7 trillion and N5.6 trillion respectively.
- In 2018, NNPC Group and Corporation’s total current assets stood at N5.4 trillion and N4.8 trillion respectively, while total current liabilities stood at N8.7 trillion and N5.7 trillion respectively.
- The accumulated losses according to the financial statement are approximately N1.5 trillion and N474 billion, compared to N1.6 trillion and N490.7 billion for the Group and Corporation in 2018 respectively.
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What to expect
- The Management of the corporation is currently executing robust mitigation procedures, as it is receiving the requisite support from the Federal Government to ensure that the Group and Corporation have adequate resources to continue in operational existence for the foreseeable future.
- To make the Group and Corporation commercially viable, the Federal Government had commenced the elimination of cost drivers responsible for the accumulation of the shortfalls in settling Domestic Crude Obligation; and the introduction of the Price Modulator mechanism in the Petroleum Products Pricing Regulatory Agency (PPPRA) template, designed to eliminate the major cause of the losses.
- The Federal Government is also minimizing breaches to the country’s pipeline networks; pursuing the passage of the Petroleum Industry Bill, PIB, and its implementation, which would restructure the petroleum industry, improve transparency and governance, and also give the NNPC the autonomy to operate profitably.
- The NNPC Management further revealed the plans to recapitalize the NNPC with steps to resolving all the outstanding related party payables and receivables and enable a clean slate start prior to recapitalization.
FG to begin online registration, monitoring of petrol stations, depots
The DPR has stated that it will commence the remote monitoring, registration, and accreditation of all petroleum products depots.
The Department of Petroleum Resources (DPR) has revealed that it plans to automate and begin remote monitoring, registration, and accreditation of petroleum products depots, retail outlets, and the entire downstream oil and gas industry, with the launch of the newly established Downstream Remote Monitoring Systems (DRMS).
While disclosing a statement in Abuja, the Head, Public Affairs of the DPR, Paul Osu, pointed out that the newly established Downstream Remote Monitoring Systems is expected to take off on December 1, 2020, after the launch in Abuja.
According to a report by Vanguard, Osu explained that the DRMS is a web-based solution designed to provide intelligent regulatory and inventory management system for petroleum products supply and distribution from depot to retail outlets and also as a regulatory tool to monitor retail outlets and depot activities.
He said, “Other features of the application include retail outlets accreditation and re-registration, nationwide automated product inventory management, retail outlets coordinate recording for mapping purposes and transactions management and report generation of dealers nationwide.
“The establishment of DRMS is another strategic initiative of DPR to continue to create opportunities and enable business in the oil and gas industry in Nigeria.”
It can be recalled that the DPR had a few months ago, launched the National Production Monitoring System (NPMS), another online platform to assist the oil and gas regulator accurately monitor national crude oil production and exports, through the provision of a system for direct and independent acquisition of production data from oil and gas facilities in Nigeria
This is to ensure timely and accurate reporting of production figures and export data. This is also expected to guard against the crude oil theft that is prevalent in Nigeria’s upstream oil sector or reported cases of crude oil that is sold but unaccounted for.
The NPMS is an initiative that is developed as a replacement for the current paper-based report and ensures ready production reporting to the Federal Inland Revenue Service (FIRS) and the Nigeria Extractive Industries Transparency Initiative (NEITI) and other agencies.
DPR approves new Liquefied Petroleum Gas guidelines for investors, operators
DPR has announced the introduction of new guidelines to accommodate more LPG investors and operators across the country.
The Department of Petroleum Resources (DPR) has announced the introduction of new guidelines to accommodate more Liquefied Petroleum Gas (LPG) investors and operators across the country as part of its policy on gas.
This initiative by the oil and gas regulator is part of the measures aimed at enhancing the availability of LPG, also known as cooking gas in Nigeria, in addition to meeting the current administration’s target of 5 million metric tonnes of domestic, commercial and industrial LPG utilization in the next 10 years.
According to a report by ThisDay, the disclosure was made by the Zonal Operations Controller of DPR, Ayorinde Cardoso, while speaking with journalists during a public sensitization exercise on safe usage of LPG.
Cardoso stated that the federal government through the National Gas Expansion Programme was committed to making gas accessible and affordable for Nigerians.
He said, “We have a lot of people coming into the sector to invest and DPR is on ground to ensure that they follow the regulatory requirements. We have brought out new guidelines to encourage investors and anybody that wants to operate in the sector to follow the guidelines.
“DPR is also collaborating with the Lagos state government and other stakeholders to improve safety in gas storage, sales and distribution.”
What you should know
Nairametrics had earlier reported that as part of its new policy on gas, DPR had moved against illegal operators of gas facilities with the shutdown of 85 LPG plants in Lagos in the last 10 months. It stated that the plants were shut down for not complying with international safety standards and operating without approval or license from the DPR.
The Federal Government had encouraged stakeholders and investors to invest in the LPG sector to accelerate the development of the domestic gas market.
It can be recalled that the FG through the Central Bank of Nigeria had set up a N250 billion intervention facility for the national gas expansion programme, with the specific target at making Compressed Natural Gas (CNG) the fuel of choice for transportation as against petrol and LPG for domestic cooking, captive power, and small industrial complexes.
Nigeria’s 5,000 BPD refinery will produce 271 million liters of petrol every year
The operator of the newly commissioned refinery has disclosed that the facility will produce 271 million liters of petroleum products annually.
Mr. Chikezie Nwosu, Chief Executive Officer of WalterSmith Petroman Oil Limited, the operator of the new refinery, has disclosed that the newly commissioned 5,000 BPD Refinery will produce 271 million liters of petroleum product annually.
This information was disclosed by Nwosu in his address during the commissioning ceremony of the 5,000 BPD Modular Refinery, in the Ibigwe Field, Imo State.
Mr. Nwosu disclosed that the refinery will refine 5,000 barrels per day of crude oil, and produce 271 million liters of petroleum product annually.
He added that since it commenced the evacuation of products in November 2020, it has already delivered 5 million liters of product into the Nigerian market.
While speaking at the ceremony, the Executive Secretary of the Nigerian Content Development and Monitoring Board, Engr. Simbi Wabote explained that the next phase of the project will be a 45,000 BPD Refinery, with a completion timeline of 24-30months. When completed, the Refinery will utilize 16 million barrels of crude oil annually.
He stressed that this is an impressive and avid step towards the board’s mandates of developing in-country capacities/capabilities to add value to Nigeria’s hydrocarbon resources.
The ES of NCDMB disclosed that the Federal Government’s target is that at least 10% of Nigeria’s crude and condensate production should be refined through modular refineries.
What you should know
The refinery is one of the government’s investments in the oil industry, as FG’s investments in ongoing modular refinery projects so far amount to 80,000 BPD of combined modular refining capacity.
WalterSmith Petroman Oil Limited owns 70% of the Refinery being commissioned today, while the Nigerian Content Development and Monitoring Board on behalf of the Federal Government of Nigeria hold 30% equity of the refinery.
However, it is important to note that the Federal Government of Nigeria signed a Memorandum of Understanding (MoU) with the Niger Republic on the transportation and storage of petroleum products.
Why this matters
The refinery is a giant step towards the development of capacities and capabilities in the oil industry, especially in terms of local production of refined petroleum products.
The Refinery will strengthen local and indigenous investment in the oil industry and boost the production capacity of refined crude products in the country.
According to OPEC, Nigeria’s petroleum products import of $58.75 billion, outstrips the country’s crude oil export of $45.12 billion, at the end of 2019. This development is expected to reduce the importation of petroleum products in Nigeria.