* Kaduna Refinery sees zero revenue, posts N55bn loss * P/Harcourt plant loses N509bn * Rehabilitation ongoing at PH refinery, says Minister
Dublin, Ireland – The Nigerian National Petroleum Corporation, NNPC, owned refineries in Kaduna and Port Harcourt have recorded another woeful performance, the recently released 2020 financials for the companies have shown.
The perennially under-performing refineries recorded losses from their operations as has been the case in the past years.
Specifically, the 2020 audited financial statement of Kaduna Refining and Petrochemical Company, KRPC, showed the company’s woeful financial performance continued in the 2020 financial year, as it posted zero revenue and recorded a loss of N55.77 billion during the year.
As for Port Harcourt Refining Company, PHRC, the midstream subsidiary of the NNPC, its retained losses rose to N509.737 billion as at December 31, 2020, growing by 5.96 per cent from N481.062 billion as at the same period in 2019.
KDPC – Zero revenue, N55bn loss
According to KDPC’s 2020 audited financial statement, the company had in 2019, posted revenue of N37.269 million, and announced a loss of N65.993 billion.
However, the company recorded a lower income of N36.06 million in 2020.
The major drivers of the company’s loss, according to the financial statement, included direct cost and administrative expenses, which stood at N10.479 billion and N17.77 billion, respectively; and ‘reversal of Material Revaluation Surplus Actuarial (Expenses)/Benefit on Liability’, which stood a N27.538 billion.
Explaining further, the report revealed that the direct cost of Kaduna Refinery comprises depreciation of right of use lease for refinery assets – N5.53 billion; employee benefits – N9.79 billion and other direct cost N685.52 million.
The major expenditure items under administrative expenses include maintenance – N257.857 million; security – N233.73 million; training expenses – N200.81 million; local and international travels – N327.26 million; consultancy fees – N59.04 million; licences – N14.63 million; safety consumables and awareness – N11.61 million; and office expenses – N125.789 million.
A part of the statement read: “For the year 2020, the company did not earn any income through processing fee due to the shutdown of the plants and the ongoing turn around maintenance.”
However, despite the shutdown, the company spent N26 billion on staff salaries and emoluments and still performed corporate social responsibilities.
Specifically, the company stated that it made a donation of N2.718 million to charitable organisations, compared to zero donation for the same purpose in 2019.
It added that: “The Company was involved in local community development service. This development service programme was directed to the host community and other surrounding communities. The total amount spent on local community development in 2020 was N22.055 million (2019: Nil).”
Giving a breakdown of staff emoluments for 2020, KRPC disclosed that salaries and wages gulped N7.301 billion, compared with N8.049 billion in 2019; deaths benefits stood at N7.75 million, as against N18.39 million in 2019; while other employee benefits stood at N18.707 billion, compared with N26.457 billion in 2019.
It, however, explained that death benefits represented the money paid to next of kin of employees that died during active service, and burial expenses incurred by the company.
PHRC – Total loss rises to N509bn
The management of Port Harcourt Refining Company, PHRC, the midstream subsidiary of the Nigerian National Petroleum Corporation, NNPC, said the company’s retained losses rose to N509.737 billion as at December 31, 2020, growing by 5.96 per cent from N481.062 billion as at the same period in 2019.
According to the company’s 2020 audited financial statement, this was as a result of the loss of N28.67 billion recorded from normal operating activities in the 2020 financial year, compared to a loss of N46.95 billion.
However, the company said it recorded a total comprehensive loss of N53.179 billion in 2020, rising from N50.53 billion recorded in 2019.
It posted zero revenue for 2020, yet it recorded processing expenses of N12.35 billion, compared with N22.22 billion in 2019; and administrative expenses of N19.215 billion, compared with N25.19 billion in 2019.
Providing explanations for the loss, it said: “The losses have arisen principally from the inability of the company to refine single drop of crude in year 2020 and other previous years in quantities and at rates above its break-even points, hence it was unable to earn enough revenue to cover its costs.”
However, the company set a 2023 target for a cessation of the recurring loss, while it noted that the Federal Government and the NNPC had commenced moves to stem the tide of its woeful financial performances.
It said: “However, the parent company, Nigerian National Petroleum Corporation (NNPC) is committed to continuing to support the sustenance of its operations through adequate funding. After the balance sheet date but before the signing of the accounts, the parent company, Nigerian National Petroleum Corporation (NNPC) with support from the Federal Government, approved the sum of $1.5 billion to rehabilitate the aging plants towards productive and profitable use.
“Without doubt, if this plan is fully executed, the reoccuring losses will stop in the year 2023 which is the expected date of completing phase one of the rehabilitation project.”
The company spent N22.548 billion on salaries, wages and other benefits of its workforce in 2020, dropping by 1.59 per cent from N22.195 billion recorded.”
Irrespective of its zero revenue and huge loss, the company still made donations and community development assistance of N32.398 million in 2020, as against the sum of N154.942 million incurred in 2019.
It added that “the company also extended support to the host communities by way of palliative for COVID-19 pandemic to the tune of N6.6 million.”
Rehabilitation ongoing at PH refinery – Sylva
Meanwhile, the Minister of State for Petroleum Resources, Timipre Sylva, says the Federal Government has commenced a comprehensive rehabilitation of the country’s moribund refineries starting with the Port Harcourt refinery.
He said the Port Harcourt refinery exercise would be followed by the rehabilitation of the Warri and Kaduna refineries, respectively. He said work on the Warri and Kaduna refineries will commence soon
The minister announced this in an address at the 2021 convocation of the Petroleum Training Institute, Effurun, Delta State, saying the exercise was in response to “a recent approval given by the Federal Executive Council for the comprehensive rehabilitation of all the refineries in Nigeria.”
He did not give a timeline for the completion of work on the Port Harcourt refinery and the commencement of those of Warri and Kaduna refineries. According to him, the ministry was working to secure approval of the Federal Executive Council for comprehensive rehabilitation of all refineries in the country.
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