The Nigerian National Petroleum Corporation (NNPC) has said commencing and continuing new oil and gas projects have been seriously slowed down by the liquidity challenges in the sector. NNPC, however, noted that despite the crisis brought about by the COVID-19 pandemic and the effect on its activities, it was working diligently to ensure that for the first time in decades, its shareholders would be paid dividends by the end of 2020.
Speaking during a media parley in Abuja, Group Managing Director of NNPC, Mallam Mele Kyari, stated that the organisation was now more open to public scrutiny with its decision to publish its audited financial report for the first time in 43 years. Kyari noted that other transparency initiatives taken by the corporation included its monthly financial reports and joining as a supporting organisation of the Extractive Industries Transparency Initiative (EITI). He added that although the pandemic had prevented the corporation and its partners from attaining the three million barrels per day crude oil production target, NNPC was determined to cut its losses and become a profit making concern.
The NNPC boss said the national oil corporation had been able cut its losses by over N800 billion between 2018 and 2019, stressing that based on its projections, it would declare dividends in 2020.
Kyari stated that the crisis in the global oil market had forced companies, including NNPC to further cut down losses, rework project costs, as well as review the production cost per unit of crude oil to remain competitive.
The GMD declared that in the recent past, only the current administration of President Muhammadu Buhari had not interfered in the operations of NNPC. He said this had given the corporation the free hand to take decisions based on facts and figures.
According to him, “There is no company in the country which has cut its losses within one financial year by N800 billion. We have improved efficiency by cutting 97 per cent in our losses.
“NNPC has never published its audited financial statement in 43 years. We came and started doing that and released the 2018 financial statement. We were not afraid of doing that and there were a lot of criticisms that we lost money in refinery operations and pipeline business.
“Our vision is that NNPC will become a company of excellence and declare dividends to Nigerians and shareholders. We are optimistic that at the end of 2020, NNPC should be able to declare dividends to Nigerians, in spite of the impact of the COVID-19 pandemic.”
Kyari reiterated that the COVID-19 pandemic resulted in a net industry loss of about $1 trillion this year.
He said, “According to industry analysis carried out in quarter one, 2020, E&P companies are at risk of losing about $1 trillion in revenue by the end of 2020.
“With new lockdown orders due to resurgence of COVID-19 in Europe and other industrial nations, the estimated revenue shrinkage may likely grow above Rystad Energy estimates by the close of 2020.
“This financial impact and the resultant poor liquidity position is making funding of both existing and new projects more difficult as companies cut spending and defer projects.”
On the issue of political meddling in the operations of NNPC, Kyari explained that having worked for the corporation for almost three decades, it was under the Buhari administration that all forms of interferences stopped.
He stated, “I can confirm that the privilege we have today in NNPC of having unfettered control without any distraction or interference to make decisions and be accountable and responsible for our decisions has never happened until this government.
“I can tell you this because I have been around for 29 years and have worked closely with top management of the NNPC for about 15 years. This is the only president who has never asked NNPC to do something.
“The president only wants to know and be sure that what we are doing is in the best interest of the country.”
The GMD stated that Nigeria remained more of a gas country than oil, disclosing that the corporation’s new focus is on gas development, as it is the most resilient source of energy in the energy transition process.
He explained, “The only hydrocarbons that survived during the COVID-19 with minimal negative change was gas. Gas will help the country out of its major challenge of electricity. The biggest challenge we have here is to take electricity to homes and industries and to use the resources we have to create that energy this country needs.
“Today, the two reasons we are not getting electricity are because the production is low and we are not able to transmit it to those who need it. That means there is a bottleneck in transmission and distribution system.”
Kyari said despite the difficult times in the industry, NNPC was able to maintain its obligations to the Federation Account for seven months without fail.