Chief financial officer, of Nigerian National Petroleum Corporation (NNPC) Limited, Umar I. Ajiya has said that the incessant oil pipeline vandalism has significantly affected the earnings of the Corporation.
Ajiya, while giving a breakdown of the entity’s 2021 financials on Arise TV said the corporation spent N26.9 billion on pipeline management costs.
He added that the corporation is losing about $150 million every two days as a result of its inability to meet the OPEC quota of 1.8 million due to continuous vandalism.
NNPC Limited, which adopted a limited liability company status earlier this year, posted a post-tax profit in the sum of N674 billion for 2021, climbing higher by 135% year-on-year profit growth from N287billion the previous year, according to its audited earnings report.
Ajiya said the performance would have been more outstanding if the operations in the year under review were free from incessant vandalism, crude oil, and product theft among others.
He noted that the nation will witness a boost in crude oil production by the end of October 2022 which will result from measures taken to clamp down on crude oil thieves, including hiring security contractors.
What the Corporation is saying
Ajiya said: “The reality is that the vandalism has impacted significantly on our bottom line, especially in this era where we have higher oil prices, and we are operating about 1.2 million barrels on average currently.
“At a point in this country, we reached up 2.3 million to 2.7 million barrels per day before the time of COVID.
“With the constant vandalism and theft, our operators can no longer tolerate such a level of theft where we send 100 barrels and get 10 at the terminal.
Tax revenue and royalties have all declined significantly because we are unable to monetise the production.
“And on the pipeline contract, yes we have surveillance contract on the product line, but this has become a fertile ground for several communities living along the right of way. When we bump products, we don’t get the products out of the depot and as a consequence of that, we have changed the operating model to allow the private sector to come in, invest their money under build, operate, and transfer such that they can manage those pipelines and we guarantee them to pass those products through that line. That’s how we intend to manage pipeline vandalism on the product line.
“Similarly on the crude line, we have brought in security contractors to compliment the efforts of security agencies and that’s also yielding some results. We hope that by the end of this October we should be able to see some good results coming out of that”.
What you should know
- The group chief executive officer, of Nigerian National Petroleum Company Limited, Mele Kyari, had on Tuesday announced that the NNPC as a corporation grew its profit after tax from N287 billion in 2020 to N674 billion in 2021.
- Kyari, who disclosed this at a press conference in Abuja, said the 2021 profit was contained in the group’s audited financial statement of the oil firm for the year ended December 31, 2021.
- He noted that in September 2021, Mr. President graciously approved the publication of the 2020 NNPC group audited financial statement, in which NNPC declared a profit after tax of N287 billion for the first time in its 44 years.“Despite our challenging operating environment, we strongly believe that NNPC has the potential to sustainably deliver better value to its esteemed shareholders”.