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Oil Prices: Nigeria's National Oil Company Announced an Annual Loss of $1.34 Billion

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(Credit: George Osodi/Bloomberg via Getty Images) A fuel attendant uses a handpump to refuel a customer's vehicle at a gas station in Port Harcourt, Nigeria, on Friday, Jan. 15, 2016. With his security forces engaged in fighting Boko Haram's Islamist insurgency in the north, President Muhammadu Buhari can't afford renewed rebellion in the deltaNigerian Economy And Oil In Niger Delta And Port Harcourt
February 6
12:11 AM 2016

Nigeria's national oil company, The Nigerian National Petroleum Corporation (NPCC) just announced a total loss of 267 billion Naira ($1.34 billion) throughout its operation last year. The loss was a result of the gap between the 2.3 trillion naira expenses made by the company and the sales which only covers 2 trillion Naira. 

According to NAM News Network, the numbers are listed in the company's latest Monthly Financial and Operation Report released on Wednesday. The report also revealed that the company lost 11.86 billion Naira in December and 14.29 billion Naira in November, showing consistency in losses over the months.

The report also explained the nature of the loss, whereas 18.8 million naira was a deficit from its Corporate Service Unit, and other 83.09 billion naira loss was from its three refineries combined. NPCC's refineries are The Kaduna Refinery and Petrochemical Company (KRPC), Warri Refinery and Petrochemical Company (WRPC), and Port Harcourt Refining Company.

Nigeria, Africa's largest economy and also the continent's biggest oil producer, has been suffering from the significant drop in crude oil prices over the past few months. The oil industry contributed 35 percent if Nigeria's GDP as the country produces about 1.8 million barrels of oil on daily basis. NPCC itself is Africa's largest producer of crude oil, and its loss reflects other deficit most likely faced by other oil producers.

The company's loss, however, should not be fully attributed to the fall in crude oil prices. Other factors, including widespread corruption, is also believed to contributes to the deficit. Bloomberg reported that Nigeria president Muhammadu Buhari has made it a priority to restructure the NPCC as well as to get rid of its corruption. Previously, President Buhari has also intervened by dispersing the company's board after he was elected president in May. He appointed former Exxon Mobil executive Emmanuel Kachikwu as managing director. Other steps to restructure the company will also involve the privatizing some of the company's assets in 2018.

NPCC is just one of numerous oil company around the world suffering from loss due to oil price crashes. Giant oil company Shell just announced a bigger loss in its part. According to The Guardian, the Dutch group reported an 87 percent fall in annual profits. Oil company BP also took a big hit with a $6.5 billion loss, the worst in its history.

The falling of oil prices have had huge impacts to oil company's profit, and also to local employees. The loss suffered by the company will most likely lead to job cuts that would impact thousands of families in Nigeria, as well as other countries. 

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