Oil marketers’ profits drop to N3.58billion *As 2 Companies incur N1.57billion losses
Oil marketers’ profits drop to N3.58billion
*As 2 Companies incur N1.57billion losses
Facts emerged that most Major Oil Marketers in the country now are incurring huge financial losses in their operations, as financial results in the first quarter of 2020, shows losses and significant decline in their profits.
Financial Business News gathered that three out of seven Oil Marketing Companies listed on Nigerian Stock Exchange, posted a total loss of N1.57billion from January to March 31, 2020, while two firms recorded profits fall of N3.58billion, within the same period under review.
For instance, MRS Oil Nigeria Plc, reported the biggest loss in the first quarter under review, as its loss increased by 45.21 per cent to N1.06billion, from N730.64million in the same period last year.
Financial records revealed that Its quarterly revenue rose year-on-year to N17.87billion from N13.51billion.
More so, Total Nigeria Plc, a subsidiary of French Oil Major, posted a loss of N163.22million in first quarter of 2020, down from the N474.09million loss recorded in the same period, the previous year.
Its unaudited financial records revealed that its revenue declined to N70.24billion in the period under review, from N77.42billion in the same period in 2019.
At present, Total is the only International Oil Company still operating in the downstream sector of Nigeria’s economy.
Also, Eterna Plc incurred a loss of N265.89million in first quarter of 2020, compared to profits of N530.09million recorded the same period in 2019.
The Company’s revenue plunged to N17.49billion in the period under review, from N60.47billion in first quarter of 2019 fiscal year.
Similarly, Ardova Plc, formerly Forte Oil Plc, recorded profit after tax decline of 85 percent, from January toMarch 31, 2020.
Its profit after-tax dropped to N497.44million in this quarter from N3.32billion in the same period last year.
Its unaudited interim financial records, showed that quarterly revenue increased year-on-year to N52.05billion from N42.56bn.
In June 2019, Ignite Investments and Commodities Limited became the majority shareholder in Forte Oil, after the former majority shareholder, Mr Femi Otedola, divested its full 75 per cent direct and indirect shareholding in the Company.
Therefore, by January 2020, the Company’s name changed to Ardova.
In the same vein, 11Plc, formerly known as Mobil Oil Nigeria Plc, experienced profit after tax decline of 37 percent, from January to March 31, 2020.
Its after-tax profit dropped to N1.28billion in the quarter under review, from N2.04billion in the same period last year. Its profit before tax dropped to N1.91billion from N3.02billion.
The records also revealed that United States-based ExxonMobil sold its 60 percent stake in Mobil Oil Nigeria in 2017 to NIPCO Investment Limited, a wholly-owned subsidiary of Nipco Plc in 2017.
Speaking during a webinar on Nigeria Petroleum Downstream Consultative Summit, the Chairman, Major Oil Marketers Association of Nigeria, MOMAN, Mr Adetunji Oyebanji, said,
“If you as investor, had put money in one of the quoted companies on Nigerian Stock Exchange (NSE), involved in downstream oil sector, your investment over 10 years would have turned negative,”
His words, ” Many investors,, particularly depot owners had their businesses foreclosed and their assets are with the Asset Management Corporation of Nigeria, leading to job losses.
“Over the last 10 to 15 years, virtually all the multinational players involved in downstream operations had divested and exited the downstream oil sector in Nigeria.
“Even some of the entities who bought over those assets have themselves divested. If all these don’t tell you that there is need to be some radical changes in the industry, I don’t know what else tells the story, beyond all these crises.
“The sector, like every other aspect of the economy needs significant investment.”
Oyebanji, who is the Managing Director of 11Plc, said, “What is going to bring about that investment is full deregulation of the industry, to create a level playing field for everybody to grow at his own pace and based on his own efficiency, as well as operational strength.
“So, we are urging government to take bold steps by fully deregulating the industry”.
Thus, the sharp drop in crude oil prices following outbreak of coronavirus saw the landing cost of petrol hitting a low record in March, thereby wiping off subsidy on the product. The pump price of petrol, which is still being regulated by the government has been reduced to N125 per litre from N145 per litre on March 18, 2020, effective March 19.
Recall that, the Petroleum Products Pricing Regulatory Agency announced on March 31 a price decrease of N123.50 to N125 per litre, effective April 1. It announced a new price band of N121.50 to N123.50 on May 31.
“The recent introduction and implementation of an automatic fuel price formula will ensure fuel subsidies, which we have eliminated, do not re-emerge,” the Federal Government told IMF in the letter dated April 21, 2020.
Until recently, the Nigerian National Petroleum Corporation, NNPC has been the sole importer of petrol into the country for more than two years, after private oil marketers stopped importing the commodity due to crude price fluctuations, among other issues.
“With NNPC taking over almost 100 per cent of imports until recently, and then fixing very low margins for operators, who take these products for distribution, a lot of the depot operators have not been able to continue to operate,” the Chairman, Depot and Petroleum Products Marketers Association of Nigeria, Mrs Winifred A, said at the webinar.