Distinguished Shareholders, members of the Board of Directors, invited guests, ladies and gentlemen, it is with great pleasure that I welcome you all to the 12th Annual General Meeting of our great company – NIPCO PLC, and to present to you, the Directors Report, and the company’s financial statements for the year ended 31st December, 2015.
It is to the glory of God that we celebrate indeed another unique AGM thus demonstrating our diligent sustenance of the inroad we have made in the downstream sector of the oil and gas industry in Nigeria.
THE NATION:
The year 2015 evidently witnessed a lot of activities in the socio-political and economic environment with the emergence of Muhammadu Buhari as the new President of Nigeria in one of the most keenly contested elections in our nation’s history.
In keeping with his promise of sanitizing the sector and ensuring transparency, the President set into motion, a major restructuring exercise at the NNPC with the appointment of Dr. Ibe Kachikwu as the new Group Managing Director (GMD) of NNPC.
His appointment was received with lots of accolades given his background and pedigree and especially considering the fragile state of the Industry at the time of his assumption of office and the arduous task ahead including dealing with the effects of falling oil prices, pipeline vandalism, frequent Turn Around Maintenance (TAM), fuel subsidy, fuel scarcity, improved funding for Joint Venture operations and other downstream challenges amongst others.
THE INDUSTRY:
The crash and continued plummet of the price of crude oil to its lowest level in nearly a decade impacted negatively on the Industry and inevitably, the Nigerian economy. The year witnessed a sharp drop in the nation’s income from crude oil sales. Nigeria’s crude oil, which was once highly desired, easy to refine light sweet crude became difficult to sell as there was a glut of products.
The country had to embark on discounted sales just to get its cargoes off the high seas. According to the monthly publication of Financial and Operational report of the NNPC, Nigeria’s total export crude oil/gas receipt for January to August 2015 was $3.420B, a sharp decline of over 67% from September 2014 when the receipts were at its peak.
EXCHANGE RATE VOLATILITY / UNAVAILABILITY OF FOREX:
Since substantial portion of Nigeria’s foreign exchange earnings is tied to oil and with shortened revenue in dollar terms, the Naira, in an alarming and record breaking free fall exchanged for as high as =N=290 to the dollar as at December, 2015. This led to scarcity of Dollars as the demand for foreign exchange far outweighed the supply, further compounding and increasing the pressure on the Naira.
This made it nearly impossible to import products and further complicated the fuel scarcity.
FUEL SCARCITY
A greater part of the last quarter of 2015, saw the country engulfed by a protracted fuel crisis due to inadequate supply of petroleum products despite assurances from the Federal Government that it would abate.
Arrears of Subsidy payments made it impossible for marketers to open up fresh Letters of Credit to finance the importation of PMS. Even when the Federal Government opened up the allocation of import permits, marketers were faced with challenges of sourcing Foreign Exchange. Hence, the scarcity continued until the beginning of the Yuletide.
The Department of Petroleum Resources (DPR) also made concerted efforts to protect the public from marketers engaged in hoarding or selling above the Government regulated prices. Erring Marketers had their service stations either sealed off or their products distributed to the public free of charge.
OPERATING RESULTS
Distinguished shareholders, during the last AGM, your company announced a turnover of =N=145B and a profit after tax of =N 2.3 B. However, considering the prevailing difficult environment which we worked in for the Year 2015, your company made a turnover of about =N=115 B and a profit after tax of =N=1.4 B.
This, though not an improvement on the previous year is rather commendable considering the harsh environment we operated in last year. We however, assure you that we are well prepared to weather this rather grim period in our industry. We wish to assure our esteemed Shareholders and Investors that Management will not rest on its oars and is even more resolved to brace all odds in achieving superior shareholders value in the industry in line with the Board’s long standing policy of exceeding shareholders expectations.
Dear shareholders, fellow Directors, the Board of Directors is proposing a total dividend of =N= 563 M translating into 300 k per share from the profit after tax. Management has retained the sum of =N= 1.2 B as retained profit to strengthen our working capital requirement.
FUTURE PROSPECTS
Our focus in the coming year will be to continue to build an integrated petroleum company that would fit better into the energy reforms of the government while delivering greater value to both our customers and the shareholders. Our retail division has continued to grow.
The management’s efforts must be commended considering the upscale remodeling of all the retail outlets which it undertook in the previous year and which is still ongoing. Its knack for service delivery ensured that all the retail outlets remained wet with products irrespective of the prevailing difficulties in the industry. Our foray into the Compressed Natural Gas Market has continued to grow with over 4,000 vehicles currently running on gas.
We have also seen an impressive increase in patronage from industries as more of them are converting to CNG to power their plants. The surge is gathering momentum and we will not stop until every car in Nigeria runs on Natural gas. Our distribution network in the Liquefied Petroleum Gas (LPG) market was also further enhanced in 2015.
Your Company continued its nationwide campaign to see that all Nigerians fully embrace the use of domestic gas. It is our firm belief that all great companies were built with the spirit of team-work and constructive partnership. Without your help, support and loyalty over the years, NIPCO PLC would not have become the corporate icon it is today.
CONCLUSION
On behalf of the Board of Directors, I wish to thank most sincerely our esteemed customers, whose continued confidence and patronage have sustained our impressive performance over the years. I cannot thank the management and staff enough for their hard work and dedication to duty.
The result you have seen today bears good testimony to the level of their commitment and dedication. May I also on behalf of the Board, thank our valued shareholders for the confidence reposed in the Board and the company, especially the massive support in the last one year.
I want to assure you all of our commitment to increase returns on your investments. I want to extend my profound gratitude to the relevant Government agencies including NNPC, NLNG, PPMC, PPPRA, DPR and PEF for their continued support to our great company. I thank you all for your kind attention, and may the Almighty God continue to keep us together as one big family.
Chief ( Dr.) Bestman P. Anekwe.
Chairman.