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NNPC Trading Deficit Rises by 128%, Refineries Lose N8.5bn

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refineries
  • NNPC Trading Deficit Rises by 128%, Refineries Lose N8.5bn

The Nigerian National Petroleum Corporation saw its trading deficit rise by 128.5 per cent in July to N11.87bn, with the nation’s crude oil refineries responsible for most of the loss.

The NNPC, in its latest financial and operations report obtained by our correspondent on Friday, noted that the N11.87bn deficit was an additional loss of N6.68bn relative to the previous month’s deficit of N5.19bn.

The refineries lost a total of N8.52bn in July, as their combined capacity utilisation dropped to 11.94 per cent.

The country’s refineries are the Warri Refining and Petrochemical Company, Port Harcourt Refining Company, and Kaduna Refining and Petrochemical Company.

The Kaduna refinery, which did not process any crude in June and July, lost N3.6bn in July; Port Harcourt refinery lost N2.63bn; and the WRPC recorded a deficit of N2.28bn.

The corporation said, “The unimpressive performance of the downstream is mainly due to high crude oil inventory and the shutdowns of the KRPC and the WRPC during the period.

“Also, the unavailability of some of the major secondary units in the PHRC in July 2017 accounted for the non-production of some light end products with the corresponding increase in operational expenditure as a result of several maintenance interventions.”

Total crude processed by the three domestic refineries for July was put at 224,584 metric tonnes, which translates to a combined yield efficiency of 89.11 per cent compared to crude processed in June, which stood at 231,836MT, translating to a combined yield efficiency of 86.64 per cent, according to the report.

The refineries produced 160,642MT of finished petroleum products out of 224,584MT of crude processed at a combined capacity utilisation of 11.94 per cent compared to 12.73 per cent combined capacity utilisation achieved in June.

“The deprived operational performance is attributed to the WRPC and the PHRC downtime during the month under review. The ongoing revamping of the refineries will enhance capacity utilisation once completed,” the NNPC said.

The corporation said it had been adopting a merchant plant refineries business model since January 2017, taking cognisance of the products’ worth and crude costs.

It said the combined value of output by the three refineries (at import parity price) for July amounted to N24.83bn while the associated crude plus freight costs and operational expenses were N24.13bn and N9.21bn, respectively.

“This resulted in an operating deficit of N8.52bn by the refineries. Also, during the period under review, refineries combined capacity utilisation was 11.94 per cent with the PHRC, recording the highest capacity utilisation of 24.18 per cent,” the NNPC said.

It said the petroleum products (the Premium Motor Spirit and the Dual Purpose Kerosene only) produced by the domestic refineries in July amounted to 80.18 million litres, compared to 186.26 million litres in June.

The corporation said its operating revenue for June and July was N295.75bn and N269.30bn, respectively, representing 79.54 per cent and 73.23 per cent of the monthly budget.

Similarly, operating expenditures for the same periods were N300.98bn and N281.18bn, respectively, which also represented 94.74 per cent and 88.52 per cent of budget for June and July, respectively.

According to the report, other drags to the month’s performance include shutdown of Trans Niger Pipeline and production shut-in to Que Iboe Terminal and Bonga Terminal.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Economy

Illegal Withdrawals: Rep To Investigate NNPC, NLNG Over $1.05bn

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House of representatives

Rep To Investigate NNPC, NLNG Over Illegal Withdrawal of $1.05bn from NLNG Account

The Nigerian House of Representatives has concluded plans to investigate illegal withdrawal of $1.05 billion from the account of the Nigerian Liquefied Natural Gas Limited (NLNG) by the Nigerian National Petroleum Corporation (NNPC).

The decision followed the adoption of a motion titled ‘Need to Investigate the Illegal Withdrawals from the NLNG Dividends Account by the Management of NNPC’ moved by the Minority Leader, Ndudi Elumelu, on Tuesday.

The House adopted the motion and mandated its Committee on Public Accounts to “invite the management of the NNPC as well as that of the NLNG, to conduct a thorough investigation on activities that have taken place on the dividends account and report back to the House in four weeks.”

Elumelu said, “The House is aware that the dividends from the NLNG are supposed to be paid into the Consolidated Revenue Funds account of the Federal Government and to be shared amongst the three tiers of government.

“The House is worried that the NNPC, which represents the government of Nigeria on the board of the NLNG, had unilaterally, without the required consultations with states and the mandatory appropriation from the National Assembly, illegally tampered with the funds at the NLNG dividends account to the tune of $1.05bn, thereby violating the nation’s appropriation law.

“The House is disturbed that there was no transparency in this extra-budgetary spending, as only the Group Managing Director and the corporation’s Chief Financial Officer had the knowledge of how the $1.05bn was spent.

“The House is concerned that there are no records showing the audit and recovery of accrued funds from the NLNG by the Office of the Auditor-General of the Federation, hence the need for a thorough investigation of the activities on the NLNG dividends account.”

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Economy

FG Gives Radio, Tv Stations Debt Relief, Writes Off 60 Percent Debt

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TSTV

FG Reduces Tv, Radio Stations Licence Fee by 30%, Writes Off 60% Debt

The Federal Government has reduced the existing licence fee paid by all open terrestrial radio and television stations by 30 percent.

The Minister of Information and Culture, Lai Mohammed, disclosed this at a press conference in Abuja on Monday.

He said the Federal Government has also decided to write off 60 percent of the N7 billion loan owed the government by television and radio stations.

He explained that the N7 billion is the total outstanding from television and radio stations on the renewal of their operating licences.

Mohammed, however, said for any station to benefit from the 60 percent debt relief, such a station must be ready and willing to pay the remaining 40 percent within the next three months.

According to him, the debt relief offer would open on July 10th and close on the 6th of October.

Mohammed said, “According to the NBC, many Nigerian radio and television stations remain indebted to the Federal Government to the tune of N7bn.

“Also, many of the stations are faced with the reality that their licences will not be renewed, in view of their indebtedness.

“Against this background, the management of the NBC has therefore recommended, and the Federal Government has accepted, the following measures to revamp the broadcast industry and to help reposition it for the challenges of business, post-COVID-19:

“(a) 60 per cent debt forgiveness for all debtor broadcast stations in the country; (b) the criterion for enjoying the debt forgiveness is for debtor stations to pay 40 per cent of their existing debt within the next three months.

“(c) Any station that is unable to pay the balance of 40 per cent indebtedness within the three-month window shall forfeit the opportunity to enjoy the stated debt forgiveness.

“(d) The existing license fee is further discounted by 30 per cent for all open terrestrial radio and television services effective July 10, 2020.

“(e) The debt forgiveness shall apply to functional licensed terrestrial radio and television stations only. (f) The debt forgiveness and discount shall not apply to pay TV service operators in Nigeria.”

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Nigeria’s Inflation to Average 12.2 Percent in 2020 Says PwC

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Inflation

PwC Says Inflation Will Average 12.2% in 2020

PricewaterhouseCoopers (PwC) has predicted that the nation’s inflation rate will average 12.2 percent in 2020.

In the report titled ‘Demand and supply shocks from COVID-19 keep inflation higher for longer’, the company based its projection on the rising cost of goods and services due to the supply shocks to commodity and the COVID-19 negative impacts on the economy.

The report explained that the supply disruption brought about by lockdown measures put in place to mitigate COVID-19 spread pushed headline inflation to its highest in 23 months in the month of May 2020.

Nigeria’s headline inflation rose by 12.4 percent year-on-year in the month of May. Its fastest pace of increase in 26 months, according to the National Bureau of Statistics (NBS).

However, PwC said because of the growing global uncertainty due to the projected second wave of COVID-19 and declining household incomes, headline inflation will increase from the average of 11.4 percent recorded in 2019 to average 12.2 percent in 2020.

“Barring a second wave of the pandemic, which could further threaten outlook for global economic growth, coupled with the absence of major shocks to food supply in Nigeria, inflation outlook for rest of the year could be influenced by two factors. Firstly, the elevated base effect, and secondly, waning household incomes. The first factor is likely to have a greater impact.”

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