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NNPC slumps back to negative, posts N27bn deficit

By Michael Eboh

ABUJA — After a brief respite in the month of May, the Nigerian National Petroleum Corporation’s, NNPC, financials, weekend, returned to negative, as it announced a deficit of N26.51 billion in its operations for June 2016.

The NNPC in its Monthly Financial and Operations Report for June 2016, obtained, yesterday, said this represented a significant decline from a surplus of N274 million reported in May, 2016.

The NNPC explained that the deficit in the month of June was mainly due to a decrease in its revenue generation as a result of 13.30 per cent or N14.9 billion decline in petroleum products sales by the Products and Pipeline Marketing Company, PPMC, in addition to an increase in products distribution costs.

It said: “Also, June 2016 operations witnessed the major impact of incessant vandalism. During the month, more than 261 vandalized points were recorded.

“In Nigerian Petroleum Development Company, NPDC, a substantial portion of crude oil sales for the month estimated to be in excess of the deficit could not be realized due to force majeure declared by Shell Petroleum Development Company, SPDC, as a result of vandalized 48-inch Forcados export line.”

Another reason for the deficit, according to the NNPC, is due to pension intervention by corporate headquarters to bridge the funding gap as well as the one-off gratuity payment.

The report further stated that the NNPC recorded group operating revenue of N118.39 billion, dropping by 16.94 per cent from N142.53 billion recorded in May, while its operating expenditure rose to N144.90 billion, compared to N142.26 billion in May.

However, explaining the surplus recorded in May, the NNPC said:  “The reported trading surplus reported in May 2016 was as a result of increase in cash flow due to increase in pump price of PMS.

“The upward review resulted to a trading surplus of N0.27 billion and not ‘net profit’ because there are other expenses that ordinarily should have been netted off.”

In its analysis of its financials in June, the NNPC said total export revenue of $288.17 million was recorded in June, 2016, representing 85 per cent increase, relative to preceding month’s performance, adding that crude oil export sales contributed $198.53 million or 68.89 per cent of the dollar transactions compared with $89.13 million contribution in the previous month.

Also, the report stated that export gas sales amounted to $66.56 million in the month of May, 2016.

To this end, the NNPC recorded total export proceeds of $219.26 million in June 2016 as receipt against $149.88 million in May 2016, adding that contribution from crude oil amounted to $163.59 million, while gas proceeds was $49.12 million and miscellaneous receipt amounted to $6.55 million.

It said:   “Poor performance is attributable to upsurge in attack and sabotage of oil facilities in the Niger Delta. At Forcados Terminal alone, about 380,000 barrels of oil per day were shut in since February 2016, following the force majeure declared by SPDC.

“A number of crude oil liftings were deferred until the repair is completed.   Other major terminals affected by the renewed spate of vandalism include Bonny, Usan and Que Iboe.

“The domestic crude oil and gas receipt during the month amounted to N105.74 billion, consisting of N3.06 billion from domestic gas and the sum of N102.68 billion from domestic crude oil.

‘’Of the N102.68 billion receipt from crude oil, the sum of N49. 78 billion ($252.71 million) was transferred to Joint Venture (JV) Cash Call, being a first line charge and to guarantee continued revenue stream to Federation Account.   The JVCC funding is a first line priority statutory provision in the 2016.

“Funding approved JVCC commitments is necessary to protect current and future production and the vice versa is detrimental and unlawful.

“NNPC transferred the sum of N55.96 billion into Federation Account during the month under review from the net domestic crude oil receipt of N102.68 billion. Also, the 23rd installment of the refund to FG of N6.33 billion was remitted to Federation Account.”



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