By Udeme Akpan

With the outbreak of the Coronavirus pandemic, popularly known as COVID-19, significant reduction in economic activities, drop in oil demand, and the collapse of oil prices, many oil and gas companies were compelled to embark on cost optimization, contract renegotiation, and operational efficiency.

Loss reduction

Barely a year after, the adoption of these strategies has started yielding fruits. Take the case of the Nigerian National Petroleum Corporation, NNPC, as an example. In its latest 2019 Audited Financial Statement, AFS, obtained by Vanguard, NNPC recorded a 99.7 per cent reduction in its loss profile from ₦803 billion in 2018 to ₦1.7 billion in 2019.

Administrative expenses

Besides, the General administrative expenses witnessed a 22 per cent dip from ₦894 billion in 2018 to ₦696 billion in 2019.

Performance improvement

Furthermore, the majority of the subsidiaries posted improved performance namely, the Nigerian Petroleum Development Company Limited (NPDC), which recorded ₦479 billion profit in 2019 compared to ₦179 billion in 2018, representing a 167 per cent increase; the Integrated Data Services Limited (IDSL) recorded ₦23 billion profit in 2019 compared to ₦154 million in 2018, representing 149.66 per cent increase; the Petroleum Products Marketing Company (PPMC) recorded ₦14.2 billion profit in 2019 compared to ₦9.3 billion in 2018, representing 52 per cent increase; while the Refineries have maintained the same level of losses as in 2018, which would likely reduce due to cost optimization in 2020.

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Transparency, accountability

Unlike in the past, the operations of the current Mallam Mele Kyari-led NNPC is mainly enhanced through transparency and accountability.

In line with his earlier promise, the 2019 report has been published on the Corporation’s website for all stakeholders and the public.

This is also in consonance with the principles of the Extractive Industries Transparency Initiative (EITI) of which it is a partner.

Progress

NNPC began its journey in transparency with the coming of Mallam Mele Kyari as Group Managing Director, GMD in 2018.

It published its 2018 Audited Financial Statement earlier in the year for everyone to see, rather than maintaining the old style of surreptitiously submitting it to statutory agencies, including the Office of the Auditor General of the Federation.

It was also listed as an EITI-partner company, thereby officially sealing its commitment and by extension Nigeria’s commitment to transparency issues in the world.

2020 Outlook

Based on the current efforts, there are indications that the NNPC would make more progress on its journey towards profitability in 2020. In other words, the Corporation would likely fulfil its destiny, as the biggest and most profitable national oil company in Africa.

Already, the Corporation’s spokesman, Dr Kennie Obateru, has quoted the NNPC Chief Financial Officer (CFO), Mr Umar Ajiya, as saying that, “the 2019 AFS goes further to demonstrate our unwavering commitment to the principle of Transparency, Accountability and Performance Excellence (TAPE) while the outlook for 2020 looks promising because of the Management’s strong drive to prune down running cost and grow revenues.”

NEITI comments

Meanwhile, the Nigeria Extractive Industries Transparency Initiative (NEITI) appears to be pleased with some stakeholders, including the NNPC and government agencies covered by its 2019 oil and gas industry audit exercise for improved compliance in their submission of the audit templates used for data gathering.

Speaking at the release of the compliance assessment in Abuja, the Executive Secretary of NEITI, Waziri Adio, stated: “The data submission compliance rate for the 2019 oil and gas audit is very impressive. It is remarkable not just because of the massive improvement across the board but also because this improved compliance happened with all the restrictions imposed by COVID19.

“This underscores the strong commitment of the affected companies and government agencies. We commend them and urge them to keep it up.”

Vanguard