NNPC Reveals Why Nigeria Loses $150 million Every Day, Defends Low Earnings

Over $150 million is lost daily by the country according to the Chief Financial Officer (CFO) of the Nigerian National Petroleum Corporation (NNPC) Limited, Umar Ajiya.

Pipeline vandalism and sideline production have been preventing the Nigerian oil industry from performing optimally, resulting to NNPC Limited reporting N674 billion net profit for 2021, which is far below its peers in the global market. 

Speaking on the challenges faced by the oil industry, Ajiya said operators are shutting down operation through force majeure due to the high level of oil theft that as seen the country’s terminals get about 10 barrels of crude, out of the 100 barrels sent. 

Recall that the Group Managing Director of the NNPC Limited, Mele Kyari, had disclosed that an illegal 4km pipeline was discovered. The pipeline stretches from Forcados in Delta State to the sea. 

Also, a loading port, which has been operating in the last nine years was discovered. Ajiya said the challenges are making Nigerian government lose revenue. 

“At a point in this country, we had reached 2.3 to up to 2.7 million barrels per day just before the Covid-19 pandemic, but with the incessant vandalism and theft, our operators can no longer tolerate such theft levels that you send 100 barrels and you probably get 10 barrels at the terminals, so, as a consequence of that, some of them have declared force majeure and shut-in, so it is deferred production and consequently deferred revenue for us and the nation.” Ajiya told Arise TV on Wednesday. 

He also stated that the revenue of NNPC Limited has been improving cause the company is being held accountable. This has also led the firm to drive down costs. 

“We have tender approval limits set for the businesses; so, the contracting pass has significantly been curtailed and the final say for contracting passes has to happen at the headquarters without compromising operational efficiency and safety. 

“We have tried to optimize resources and expenditures where it is absolutely necessary, we have reduced the overhead costs in the refineries, reduced the manpower levels at the refineries, and redirected the workforce at the refineries to the businesses that require the additional workforce.” Ajiya said. 

Meanwhile, the chief financial officer explained the reason NNPC Limited’s earnings is lower than its other counterparts across the world. He faulted hinderances, and said the Petroleum Industry Act (PIA) is helping to curb them now. 

“The fact remains that with the Petroleum Industry Act (PIA) in place, such hindrances have been removed, and so the NNPCL will be able to do better like other companies in terms of performance and profits of dividends to its shareholders. Those hindrances that have now been eliminated by the PIA will help us deliver profits in billions of dollars.”