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NNPC Records N240bn Loss in 13-month Petrol Supplies

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NNPC - Investors King
  • NNPC Records N240bn Loss in 13-month Petrol Supplies

Between March 2017 and March 2018, a period of 13 months, the Nigerian National Petroleum Corporation (NNPC) incurred a loss of N240,304,755,518 as under-recovered expenditure in importing petrol at the international market price and selling at the federal government’s regulated pump price of N145 per litre, according to the corporation’s monthly financial report.

Also, the report, which showed that 80.26 million litres of petrol was consumed in March 2018, also indicated that in February 2018, Nigeria’s oil production volumes declined by about 7.588 million barrels on account of multiple production shut-ins mostly on crude oil export terminals and pipelines.

Under-recovery is another term to describe subsidy, which arises as a result of the difference between the landing cost of refined products and the official prices.

The corporation in its March 2018 financial and operations report – the latest so far, indicated that it lost N240.3 billion for keeping petrol pump price at N145 per litre at that period, and this loss represents the amount that should be paid to it afterwards as petrol subsidy claims, assuming the federal government is still operating the subsidy regime.

The monthly report was released in Abuja by the NNPC and obtained by THISDAY.

According to the NNPC report, N240,304,755,518 was recorded as under recovery for the 13-month period; N17,619,360,579 recorded as crude oil losses; products losses was N8,334,022,400; while pipeline repair and management costs resulted in N129,688,449,152.

A further breakdown of the figures indicated that in March 2017, NNPC recorded an under-recovery of N8,206,727,836; in April, it was N8,206,727,836; and in May, it was N7,743,923,020; and between June, July, August, September, October, November, and December of 2017, the corporation netted under-recoveries of N11,792,197,288; N10,250,012,947; N7,938,985,582; N7,521,590,052; N6,848,622,525; N16,785,193,827; and N15,676,576,185, respectively.

In January 2018, it recorded N45,782,705,844 as under-recovery; N59,519,058,738 in February; and then N34,032,433,839 in March.

NNPC said: “In the downstream sector, NNPC continued to ensure increased petrol supply and effective distribution across the country. In March, 2018, 2.49 billion litres of petrol were supplied by NNPC translating to 80.26 million litres/day to sustain seamless distribution of petroleum products and zero fuel queue across the nation.

“The corporation is maintaining an eagle eye on the daily or petrol evacuation figures from depots across the nation, and engaged where necessary the Nigerian Customs Service (NCS) through existing Joint Monitoring Team.

“In March 2018, pipeline break stood at 224, of which 25 pipeline points either failed to be welded or ruptured/clamped. Thus 199 pipeline points were vandalised as against 125 recorded last month. PHC-Aba and Aba-Enugu pipeline segment accounted for 177 points or 88.94 per cent of the affected pipeline points.”

“NNPC transferred the sum of N73.01 billion into Federation Account for the month under review. From March 2017 to March 2018, Federation, JV, and FG for debt repayment received the sum of N851.65 billion, N672.02 billion and N6.33 billion respectively,” said the report

The NNPC further explained that while the country’s total oil production at that period was 56.24 million barrels, it could not get about 7.588 million barrels to the surface and market because it had issues at the Qua Iboe, Forcados, Bonny, Bonga, and Agbami oil terminals.

Based on the report’s claim that the average price of crude oil at that period was $63.37 per barrel, THISDAY’s calculations indicated that about $480,851,560 (7.588 million barrels multiplied by $63.37 per barrel) may have been the possible monetary loss from the shut-ins.

It stated that out of the 56.24 million barrels of crude oil and condensate that was produced, and which represented an average daily production of 2 million barrels, Joint Ventures (JVs) and Production Sharing Contracts (PSC) contributed about 33.44 per cent and 38.14 per cent respectively, while Alternative Financing (AF), Nigerian Petroleum Development Company (NPDC) and independents accounted for 13.55 per cent, 7.32 per cent and 7.54 per cent respectively.

On the production shut-ins, the report stated that at the Qua Iboe Terminal, about 160,000 bpd of oil was shut-in throughout February 2018 due to the aging facilities and integrity issues.

At the Bonny Terminal, it noted that the Trans Niger Pipeline (TNP) was shut down from February 13 to 16, 2018 due to a leak in the Bodo area with the loss of approximately 120,000 bpd of production.

At the Forcados Terminal, it explained that about 180,000 bpd of production was deferred due to shut down of the Trans Forcados Pipeline (TFP) as a result of leakage of hot taps in the Oteghele axis for five days in February 2018.

The Bonga Terminal, it noted, experienced about 55,000 bpd of shut-in due to plant shutdown for water flood gray lock leak repairs from February 4 to 15, 2018.

In addition, it said a shut-in of 215,000bpd was experienced as a result of complete shut down for water flood gray lock leak repairs for five days at the Bonga Terminal.

At the Agbami Terminal, it said production was shut-in for seven days to mitigate the impact of wind direction on flare that set off smoke and thermal alarms resulting to the shut-in of about 24,000 bpd.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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