For NNPC Limited, the past three years have been remarkable as it moved from a loss-making government controlled entity in 2018 to a vibrant, commercially driven conglomerate with a N674.1 billion profit in 2021.
The company which had posted losses of N807 billion in 2018 and N1.7 billion in 2019 became profitable for the first time in 44 years when it recorded a profit of N287 billion in 2020
The remarkable turnaround saw the company grow its profit ratio by 183 percent in four years, 2018 to 2021, a significant achievement given the drastic drop in the international price of crude oil over the period.
The company backed up that performance with a contribution (first in over a year) to the Federation Account revenue for the month of June, 2023 by remitting N123 billion (made up of N81 billion monthly interim dividend and N42 billion 40 PSC profit oil) in addition to compliance on payment of royalties and taxes.
This occurred after President Bola Tinubu ended petrol subsidies that finally deregulated the downstream sector of the oil and gas industry and freed NNPC Limited cash flows for trading activities.
And as part of measures to push operational cost further down and boost profit margins, the company has shut down all unviable Strategic Business Units, SBUs, leaving it with only 21 subsidiaries. Notably, it has merged its oil field services, the Integrated Data Services Limited, IDSL, and Frontier Exploration to become NNPC Services Limited, EnSERV, with focus on exploration, seismic data management, and general oilfield services.
The national oil company has also streamlined its shipping operations with three entities, NIDAS Shipping Services, NIKOMA Shipping Services and Marine Logistics merged to become NNPC Shipping Company.
A source familiar with NNPC and its operations told Vanguard that the company has also brought the ongoing rehabilitation of its three refineries located in Port Harcourt, Warri and Kaduna under a single supervision.
According to the source, who didn’t want to be named, “in a bid to optimise and reduce overhead costs, a couple of companies were merged and others were optimized for better operability and profitability. The former refining and petrochemical directorate was merged with downstream for better alignment with an improved cost effective structure.
“There were 25 subsidiaries in NNPC Limited prior to reorganization. All unviable SBUs were shut down in a bid to reduce overhead cost and optimize revenue. Businesses with duplicated functions were merged for economies of scale and optimization. New units were created like New Energies. This led to the reduction in the number of subsidiaries from 25 to 21
“The three refineries are currently undergoing rehabilitation and are managed as rehabilitation projects supervised by a refinery coordinator. Once completed, the plan is to hand the assets over to reputable third parties with experience to operate and maintain them”, the source added.
Speaking on the funding for the rehabilitation of the refineries, the source faulted the allegation that $1.6 billion was borrowed under former President Goodluck Jonathan.
“Under President Jonathan, no money was borrowed for Turn-Around Maintenance. Under President Muhammadu Buhari, only $1 billion was borrowed. Rehabilitation is still on-going”.
Checks by Vanguard showed that the cost approved by the Federal Government for the rehabilitation of the nation’s three refineries were $1.5 billion, $740 million and $548 million for Port Harcourt, Kaduna and Warri refineries, respectively.
