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Finance Nigeria's state oil firm makes trading profit of N250billion

Nigeria's state oil firm, the NNPC, has announced a trading profit of N250billion for the year of 2016.

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NNPC makes trading profit of N250bn play

R-L: NNPC's financial heads, Isiaka Abdulrazaq; Mal. Bello Rabiu and Anibor Kragha at a recent briefing.

(Twitter)

 

  • Nigeria's NNPC has announced a trading profit of N250billion for the year of 2016.

  • Abdulrazak also said he was able to clear the corporation’s unaudited accounts from 2011 to 2016 which was up from a deficit of N123 billion in 2015.


The Nigerian National Petroleum Corporation (NNPC) has announced a trading profit of N250billion for the year of 2016.

The announcement was made by the Nigeria's state oil's Group Executive Director, Finance and Accounts, Isiaka Abdulrazak.

In the NNPC's quarterly publication, Abdulrazak said his office inherited 65 unaudited financial statements between 2011 and 2014.

Abdulrazak also said he was able to clear the corporation’s unaudited accounts from 2011 to 2016 which was up from a deficit of N123 billion in 2015.

The details of the trading profit

Giving details of the trading profit, Abdulrazak said: “In August 2015, when the present management of the Finance and Accounts Directorate took over the mantle of leadership, we inherited a total of 65 unaudited financial statements for NNPC corporate and its subsidiaries covering 2011 to 2014.

“The major elements consist of a review of the Group Audited Financial Statements, particularly for 2016 reveals a positive shift to a trading profit of N250 billion from a trading deficit of N123 billion in 2015, indicating a 300 per cent improvement in trading performance.

“This is despite the decline in the average price of crude oil to as low as 345 dollars per barrel in 2016, compared to 51 dollars in 2015, and 110 dollars in 2014,’’ he said.

Forcing down costs and improving revenue generation

Abdulrazak said it was also critical to point out that the 2016 result was a reflection of management’s philosophy to enhance profitability by forcing down costs and improving revenue generation.

For example, we have discontinued sub-commercial business arrangements such as offshore processing arrangements, disadvantaged crude for product exchange swap and poorly-managed strategic alliances.

“To improve revenues, there have been a number of new initiatives such as the introduction of Direct Sale Direct Purchase, a 20-25 per cent cut on all commercial contracts among others.

“Also, revenue analysis shows a 10 per cent increase from N2 trillion to N2.3 trillion between 2015 and 2016.

“Further analysis shows a 75 per cent increase in petroleum product sales from N820 billion to N1.4 trillion, attributable to the partial deregulation of petrol price,’’ he said.

According to him, the statement of financial position has been riddled with persistent losses over time and this had eroded shareholders’ equity.

Success under new management

Abdulrazak said the directorate under his watch had recorded successes that include managing foreign exchange intervention pool for importation of petroleum products and savings on insurance premiums.

“This has so far led to more than 340 million dollars year-on-year savings in premiums payable over the period of 2015 to 2018 (about 45 per cent) effective reduction in year-on-year premiums.

“Other successes include reducing the unwieldy number of accounts managed by the corporation from more than 2,000 to a little fewer than 200. All the old accounts under commercial banks have been fully reconciled and closed.

“Another is the settlement of the cash call arrears and self-funding mechanism for joint venture operations, successfully negotiating an agreement 6.8 billion dollars to 5.1 billion dollars, a 25 per cent drop and the implementation of the self-funding mechanism for upstream joint venture operations for the federation.

“This has resulted in higher government take in royalties and taxes, sustained reserves development and production, restoring investors’ confidence, thereby creating windows for financing opportunities,’’he said.

Abdulrazak also said in recognition of the achievement, the NNPC board had further mandated management to clear the remaining outstanding reports for the period 2013 to 2016.