[By Sopuruhi Onwuka]
Campaigns by the Nigerian National Petroleum Corporation (NNPC) to improve operating margins in the industry by reducing cost components yielded a significant 54 percent increase in its commercial activities last November.
Monthly Financial and Operating Report (MFOR) regularly published by the corporation’s group public affairs division attributed the leap in profit to cost reduction strategies adopted by the management of the corporation in the face of dwindling revenue.
According to the report cited by the Group General Manager in charge of Public Affairs, Dr. Kennie Obateru, the NNPC group operating revenue in the month under review actually decreased by 0.02 percent from October level.
Crude oil and natural gas exports pulled in $108.84 million or roughly N54 billion in the month, and petroleum products trading and marketing operations returned some N226 billion, Dr Obateru stated.
Combined with other income flows in the month, NNPC Group’s operating revenue stood at ₦423.08 billion, some 0.02 percent or N0.09 billion lower than total income the N423.17 billion posted by the corporation in October.
Swing in profit resulted mainly from cost cuttings in the month under review when NNPC slashed expenditure by 1.16 percent or N4.81 billion from N414.46 billion in October to N409.65 billion in November. Overall, expenditure as a proportion of revenue was 0.97 in November 2020 as against 0.98 in October 2020.
The corporation’s gas business arm, the Nigeria Gas Company (NGC) led cost reduction in its operating overheads, and the NNPC Corporate Headquarters also cut deficits by 38 percent, Dr Obateru declared in the statement.
According to Dr. Obateru, the cost reduction strategy adopted by the management buoyed aggregate profit by N4.72 billion from N8.71 billion in preceding October to N13.43 billion in November, representing a significant 54 percent jump.
He also pointed out that the NNPC’s financial performance in the month was bolstered by the engineering services performance by the engineering services unit of the corporation, Nigerian Engineering and Technical Company (NETCO), and improved trading activities posted by Duke Oil Incorporated.
Bulk of the corporation’s revenue flowed from its signature crude oil and gas exports which returned $108.84 million or N54 billion in the month, indicating a 70.33 percent increase from October.
According to Dr Obateru, crude oil export sales earned the corporation princely $73.09 million or some N36.5 billion, representing a significant 67.15% increase in the group’s dollar transactions from the previous month. He also declared $35.75 million or N17.8 billion export gas sales income in the month.
Full year income from crude oil and gas export from November 2019 to November 2020 stood at $2.89 billion or N1.4 trillion.