Nigeria

Cost of pipeline vandalisation, oil theft hit N159bn in 1 year

Nigeria loses $1.35b (N481b) to oil theft — NEC
Nigeria loses $1.35b (N481b) to oil theft — NEC

By Michael Eboh

At the backdrop of the huge costs and losses attributable to product theft and facility vandalisation, the Nigerian National Petroleum Corporation, NNPC, has indicated that it would still be financially stable in the current year to next year.

The national oil firm also indicated that its operations would not be fundamentally hampered by the adverse impact of the Coronavirus (COVID-19) Pandemic on the global oil industry.

The Corporation stated that expenses and losses associated with oil theft and pipeline vandalisation was N159 billion in 2019.

According to its 2019 financial report, crude oil and petroleum products losses, valued at N32 billion were recorded in the year under review, while pipeline repairs and management costs gulped N127 billion.

The NNPC noted that these funds were deducted from its earnings before remittances were made to the federation account, adding that it made total cash payment of N1.428 trillion to the Federation Account.

Though the NNPC noted that the COVID-19 pandemic would impact certain areas of its finances, it noted, however, that the overall impact on its financial stability would not be severe.

It said the Corporation operates in the essential class of the economy and still enjoys the privileges of arrangements to draw funds from the escrow account.

It further noted that there were no plans to liquidate any of its operations or to cease trading in the near future, apparently at the backdrop of intensified efforts towards passage of the Petroleum Industry Bill and the attendant unbundling of the Corporation.

The NNPC stated: “In the light of these recent developments and its underlying impact, it is expected that the impact of the COVID-19 pandemic will extend towards the following areas of the financial statements: revenue, trade receivables and accounts payable.

“Management is confident that the financial impact of the pandemic will not be severe as the group operates in the essential class of the economy and the arrangement to draw from the escrow account has not been withdrawn.”

Assets grew 18.5%

Meanwhile, the net value of the NNPC’s oil and non-oil assets appreciated by 18.5 per cent to N4.67 trillion in 2019, from N3.94 trillion recorded in its 2018 financial year.

In the financial statement, the NNPC put the cost of the assets as at January 1, 2019 at N4.9 trillion, and as at December 31, 2019, the cost rose to N5.84 trillion. This was in comparison to net book value of N4.01 trillion as at January 1, 2018 and N4.9 trillion as at December 31, 2018.

The value of depreciation of the assets stood at N1.18 trillion as at December 31, 2019, compared with N967.24 billion as at December 31, 2018, while the net book value, also known as net assets value, stood at N4.67 trillion as at December 31, 2019, compared to N3.94 trillion as at December 31, 2018.

Giving a breakdown of the assets, the audited report stated that the net assets value of the evaluation and exploration assets stood at N891.01 billion, compared to N542.04 billion in 2018; oil and gas properties dropped to N3.12 trillion in 2019, from N3.17 trillion recorded in 2018; while other property, plant and equipment’s net book value stood at N657.32 billion in 2019, compared to N3.94 trillion recorded in 2018.

Under its oil and gas properties, the NNPC valued its gas pipelines and other facilities at N334.37 billion in 2019, compared to N247.24 billion in 2018; while decommissioning cost stood at N557.43 billion in 2019, compared to N531.73 billion.

The NNPC puts the value of its oil pipelines/storage and depot system at N258.43 billion in 2019, compared to N280.22 billion in 2018; oil wells were valued at N981.15 billion in 2019, compared to N796.34 billion; Kaduna Refinery, Warri Refinery and Port Harcourt refinery were valued at N146.18 billion, N101.16 billion and N265.19 billion in 2019, respectively, compared to their net book value of N156.41 billion, N108.31 billion and N274.89 billion in 2018, respectively.

In addition, the net book value of Kaduna Petrochemical company, Warri Petrochemical company and assets in progress stood at N36.19 billion, N30.62 billion and N406.48 billion in 2019, respectively; compared to N38.46 billion, N32.06 billion and N702.6 billion in 2018, respectively.

Furthermore, while the NNPC said its loss for the year 2019 stood at N1.76 billion, its Group’s total comprehensive loss stood at N20.18 billion, compared with N68.95 billion in 2018.

Vanguard News Nigeria.

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