• Kaduna Refinery records N27m daily production loss
From Onyebuchi Ezigbo in Kaduna, 04.01.2010
Management of the Nigerian National Petroleum Corporation yesterday said it would take steps to restructure the operations of the company to make way for profitable ventures that would help cut down on its negative cash flow presently estimated at N200 billion.
The Group Managing Director of the corporation, Muhammed Sanusi Barkindo while speaking at the flag-off of the first-leg of the corporation's transformation campaign at the Kaduna Refinery and Petro-chemical Company Limited, said ahead of the passage of the Petroleum Industry Bill (PIB), all the NNPC subsidiaries, especially the refineries would be capitalised using the joint venture or international joint venture model.
Barkindo, who lamented the ugly state of most of the company's sub-entities, said the refineries last year alone lost about N29 billion while operating at a dismally low capacity utilisation level of 13 per cent, while actual premium motor spirit, PMS produced during the same period came down to about 18 per cent as against the 30 per cent planned yield.
He also noted that the operations of the corporation's subsidiary in the upstream sector, the Nigeria Petroleum Development Company (NPDC) was not particularly encouraging as the outfit was incurring very high production cost which is one of the highest in the industry.
Speaking on the challenges posed by the precarious state of NNPC finances, Barkindo said under the 2008 financial year, NNPC recorded a negative cash-flow to the tune of N326 billion.
"So commercially speaking, NNPC can be said to be technically insolvent. If the corporation were to be operating under the Companies and Allied Matters Act, the company would have been pencilled for liquidation from business", he said.
Part of the huge negative financial profile was recorded through the contracts for the repair of damage pipelines network, especially the Forcados pipeline which gulped N11 billion and the Escravos-to-Lagos pipeline, which cost the company more than N4 billion to fix.
As a result, the corporation said it spent a total of N175 billion on the repair of vandalised pipelines alone since year 2000.
According to Barkindo, the main cause of the low performance of the refineries was mainly due to lack of supply of crude oil to plants.
He said the situation had led to a supply gap of 53 per cent to domestic market, which the corporation tried to fill through product import.
The GMD highlighted some of the steps to be implemented as part of the transformation process ahead of the passage of the Petroleum Industry Bill into law, to include the commercialisation of the various subsidiary units of the corporation, capitalisation of the refineries through a Joint Venture or Incorporated Joint Venture models, development of turnaround, development and execution of a gas and power projects as well as launching of the Nigeria Petroleum Development Company (NPDC) growth plan.
"NNPC will seek for the granting of more valuable oil assets to NPDC in order to provide it with enough platform for sustainable growth", he said
He said the management of the corporation had taken up the challenge to put an end to the ugly situation by convening a retreat in Calabar, the Cross River state capital, where all the leadership of the company agreed on an initiative to reform the system and to purge it of the deficiencies and factors attracting the debt burden.
Part of the initiative was the setting of a 100-day target to substantially cut down on operational costs in all the units of the company to at least N25bn, Barkindo said.
However, he said at the end of the first 100 days of the implementation of the initiative, the company recorded N27bn as cost-savings in its operations while maintaining improved service delivery.
He said the in order to prepare ground for the eventual coming into effect of the PIB and deregulation of the downstream sector, the organisation has decided that it would reduce the cost centres by making most of its SBU's run at a more profitable levels, adding that all the entities with the exception of the Legal, Medicals and Public Affairs sections would be made to be self-reliant.
The Group Executive Director Refining and Petrochemicals, Mr. Austin Oniwon said parts of the main refinery unit, that is the Fluid Catalytic Unit (FCC) is still being worked upon with an expected date of delivery being put at middle of April but that at present production is going on at skeletal basis with a daily capacity of 1.5mbpd.
He said due to the imcomplete nature of the rehabilitation process at the place, the plant has been recording production losses of N26 per litre of PMS
Source: http://www.thisdayonline.com/nview.php?id=169854
From Onyebuchi Ezigbo in Kaduna, 04.01.2010
Management of the Nigerian National Petroleum Corporation yesterday said it would take steps to restructure the operations of the company to make way for profitable ventures that would help cut down on its negative cash flow presently estimated at N200 billion.
The Group Managing Director of the corporation, Muhammed Sanusi Barkindo while speaking at the flag-off of the first-leg of the corporation's transformation campaign at the Kaduna Refinery and Petro-chemical Company Limited, said ahead of the passage of the Petroleum Industry Bill (PIB), all the NNPC subsidiaries, especially the refineries would be capitalised using the joint venture or international joint venture model.
Barkindo, who lamented the ugly state of most of the company's sub-entities, said the refineries last year alone lost about N29 billion while operating at a dismally low capacity utilisation level of 13 per cent, while actual premium motor spirit, PMS produced during the same period came down to about 18 per cent as against the 30 per cent planned yield.
He also noted that the operations of the corporation's subsidiary in the upstream sector, the Nigeria Petroleum Development Company (NPDC) was not particularly encouraging as the outfit was incurring very high production cost which is one of the highest in the industry.
Speaking on the challenges posed by the precarious state of NNPC finances, Barkindo said under the 2008 financial year, NNPC recorded a negative cash-flow to the tune of N326 billion.
"So commercially speaking, NNPC can be said to be technically insolvent. If the corporation were to be operating under the Companies and Allied Matters Act, the company would have been pencilled for liquidation from business", he said.
Part of the huge negative financial profile was recorded through the contracts for the repair of damage pipelines network, especially the Forcados pipeline which gulped N11 billion and the Escravos-to-Lagos pipeline, which cost the company more than N4 billion to fix.
As a result, the corporation said it spent a total of N175 billion on the repair of vandalised pipelines alone since year 2000.
According to Barkindo, the main cause of the low performance of the refineries was mainly due to lack of supply of crude oil to plants.
He said the situation had led to a supply gap of 53 per cent to domestic market, which the corporation tried to fill through product import.
The GMD highlighted some of the steps to be implemented as part of the transformation process ahead of the passage of the Petroleum Industry Bill into law, to include the commercialisation of the various subsidiary units of the corporation, capitalisation of the refineries through a Joint Venture or Incorporated Joint Venture models, development of turnaround, development and execution of a gas and power projects as well as launching of the Nigeria Petroleum Development Company (NPDC) growth plan.
"NNPC will seek for the granting of more valuable oil assets to NPDC in order to provide it with enough platform for sustainable growth", he said
He said the management of the corporation had taken up the challenge to put an end to the ugly situation by convening a retreat in Calabar, the Cross River state capital, where all the leadership of the company agreed on an initiative to reform the system and to purge it of the deficiencies and factors attracting the debt burden.
Part of the initiative was the setting of a 100-day target to substantially cut down on operational costs in all the units of the company to at least N25bn, Barkindo said.
However, he said at the end of the first 100 days of the implementation of the initiative, the company recorded N27bn as cost-savings in its operations while maintaining improved service delivery.
He said the in order to prepare ground for the eventual coming into effect of the PIB and deregulation of the downstream sector, the organisation has decided that it would reduce the cost centres by making most of its SBU's run at a more profitable levels, adding that all the entities with the exception of the Legal, Medicals and Public Affairs sections would be made to be self-reliant.
The Group Executive Director Refining and Petrochemicals, Mr. Austin Oniwon said parts of the main refinery unit, that is the Fluid Catalytic Unit (FCC) is still being worked upon with an expected date of delivery being put at middle of April but that at present production is going on at skeletal basis with a daily capacity of 1.5mbpd.
He said due to the imcomplete nature of the rehabilitation process at the place, the plant has been recording production losses of N26 per litre of PMS
Source: http://www.thisdayonline.com/nview.php?id=169854
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