19 December 2011, Sweetcrude, ABUJA – The Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Engr. Austen Oniwon, has given indication of government’s plans to forge ahead with the subsidy removal in the New Year, noting that the Corporation and its subsidiaries were primed to benefit from such action.
Oniwon, who spoke to journalists in Abuja after the Annual General Meeting (AGM) of the Pipelines and Products Marketing Company (PPMC) Limited, a wholly-owned subsidiary of the NNPC, also noted that the Corporation and its subsidiaries would perform better once the deregulation policy of government kicks off next year.
The NNPC GMD’s comments are coming at the wake of the 2008 – 2009 report of the PPMC, which revealed a loss after tax of over N19.29 billion for the year 2009, as against N7.51 billion reported in the 2008 accounting year.
Oniwon noted that, “The question is no longer if but when deregulation takes off; definitely the condition of PPMC will improve because we are allowed to at least, at a minimum, recover our operational costs which we are not able to do today.
“If you are able to recover our cost what we are promising Nigerians is that we shall not pass any inefficiency to them because we are also going to compete with other people and we shall be forced to become efficient in our dealings in order to become and remain a player in the system and so PPMC will become more efficient and profitable in a deregulated environment.”
Speaking on the purported subsidy removal next year, Oniwon stated, “I think what people should really look at is that in 2012 budget proposal submitted by the President, there is no provision for subsidy and if there is no provision for subsidy it then becomes illegal for government to pay subsidy.”
He added, “I believe that when the implementation of that budget takes-off, deregulation would have effectively began but you have to help us tell the community that it doesn’t help seeing people queue for fuel at filling stations when there is no scarcity.”
According to Oniwon, the fuel gridlock in the country “wouldn’t last more than one week and the reality will dawn on the people after one week, so why do you punish yourself when you don’t have any need to fill your tanks. We have sufficient product and we want to assure Nigerians that we do have sufficiency for their consumption and there will be no pain, they wouldn’t go through any pain in this festive period.”
The NNPC GMD blamed the losses suffered by the PPMC over the past four years on the incidence of militancy that ravaged the Niger Delta over the years, adding that things were looking up for the company since the introduction of amnesty and return of peace in the region.
He noted that, “Activities of militants during the period under review affected operations of the company negatively; and that was when most of our pipelines were out and one thing is that you pay for this crude at the point when you are taking it and transport it to the refinery so any loss you incur is upon you and must reflect in your books.
“However, hostility in the Niger Delta region was reduced following the government’s amnesty programme, which has succeeded in improving our situation and for our 2010-2011 book, you will see a totally different thing.
“The situation is that the rate of vandalism has considerably dropped as you can see from our figures in 2008 and 2009 but now after the amnesty, most of crude are able to get to the refineries thus the loss is really attributable to crude that you have paid for but could not refine or it was stolen and then also product that was stolen, this situation has consistently improved,” Oniwon added.
The reports showed that the company had suffered losses from its operations over the years, having accumulated losses of N43 billion as at December 31, 2009 (2008: N25.07 billion. Consequently, the going concern basis of the company is threatened by persistent losses which have raised doubts over its ability to continue as a going concern.