The Nigerian National Petroleum Corporation (NNPC) has recorded N2.75 billion reduction in its trading deficit in January 2017 compared with what was achieved in December 2016, putting the total trading deficit at N14.26 billion.
“This represents about 16.19 percent improvement compared to N17.01 billion recorded in December 2016, in spite of the corporation’s challenging situations which limit its aspiration to profitability,” the latest NNPC’s Monthly Financial and Operations Report for January released on Monday in Abuja disclosed.
The report further said the combined installed capacity utilization of its refineries located in Port Harcourt, Warri and Kaduna increased by about 29 percentage points in January 2017 compared with their performance in December 2016.
The report attributed the improvement to the implementation of the 12 Business Focus Areas (BUFAS) strategy introduced by the Group Managing Director, Mr Maikanti Baru.
According to the report, the refineries benefitted from the introduction of a new Refineries Business Model under the 12 BUFAS strategy which has transformed them from “tolling plants to merchant plants” thereby placing them on the path of profitability.
The Port Harcourt Refining Company (PHRC) and Warri Refining and Petrochemical Company (WRPC) also posted surpluses of N5.1 billion and N404 million respectively.
Under the new refinery model, each refinery purchases crude oil at export parity price, processes and sells the corresponding products on its own account.
“This is different from the previous Tolling Plant model where the refinery does not take title to the crude, but rather charges a tolling/processing fee to the owner of the crude which was PPMC on behalf of the Corporation,” the report stated.
Apart from PHRC and WRPC, five other subsidiaries of the Corporation also posted surpluses. These include the Nigerian Petroleum Development Company (NPDC), the Nigerian Gas Pipelines and Transport Company (NGPTC), NNPC Retail, the National Engineering and Technical Company (NETCO), and the Integrated Data Services Ltd (IDSL).
It listed some of the factors that impeded the Corporation’s performance to include the production shutdown of the Trans Niger Pipeline and Nembe Creek Trunkline due to leakages; the shutdown of Agbami Terminal for a mini Turn-Around-Maintenance; and the subsisting Force Majeure declared by SPDC as a result of the vandalized 48-inch Forcados export line after its restoration in October 17, 2016.