CHAIRMAN’S STATEMENT.
It is my pleasure and privilege to welcome our distinguished shareholders, special guests, fellow Directors, to the 14th Annual General Meeting [AGM] of your great company, NIPCO PLC and to present to you, the Directors Report, and the company’s financial statements for the year ended 31st December, 2017.
This event provides an opportunity to appreciate the support and co-operation of our esteemed stakeholders in the 2017 financial year.
THE INDUSTRY:
From a rather negative 2016 where crude oil prices went as low as $30 per barrel, coupled with pipeline vandalisation by militants and sabotage, 2017 yet another difficult year, marked some recovery in the sector, albeit, the reccurring problems still outweighed the slight gains recorded during the year under review.
The Forcados pipeline explosion in February, 2016 which was largely responsible for the economic recession was repaired and in June, 2017, it came back into full operation adding about 250,000 barrels a day of crude oil output. This amongst other factors, lifted Nigeria out of recession.
Oil prices
In 2017, oil prices enjoyed a relative growth, due to the Oil freeze Agreement by members of OPEC and non-members led by Russia. By the end of the year 2017, oil prices had steadied at an average of $60 per barrel after hitting $64 per barrel in November, 2017.
Our dear country Nigeria was one of the few countries exempted by the group to return to its oil production before the Agreement. This gesture helped Nigeria to leap out of recession in the third quarter of 2017.
Petroleum Industry Bill
The Petroleum Industry Governance Bill (PIGB) is one of four bills seeking to entrench the reforms under the Petroleum Industry Bill. In May 2017, the Nigerian Senate passed the first part of the bill (to take care of the governance aspect of the PIB) after over 12 years in the works. It is expected that in the coming year, the other parts of the PIGB will also be passed into law by the National Assembly.
Scarcity of Premium Motor Spirit (PMS)
Much of the successes recorded in the sector was however marred in the last month of the year when fuel queues resurfaced in major cities in the country.
This perennial problem of the downstream sector stemmed largely from the inappropriate pricing of petrol, which arose from the pricing cap imposed by the Federal Government on imported petroleum products. Despite the fluctuation in the international price of crude oil and the high exchange rate, the pump price of PMS was capped at N145 per litre .
The Federal Government also remained heavily indebted to the marketers due to arrears of subsidy claims, associated with unpaid interests and foreign exchange differentials. This impacted negatively on the marketer’s ability to continue their operations. Whilst many companies owed workers arrears of salaries, others were also at the verge of shutting down their tank farms, whilst the scarcity continued.
The Federal Government through the Department of Petroleum Resources (DPR) made concerted efforts to protect the public from marketers engaged in hoarding or selling above regulated prices by sealing off their Stations.
OPERATING RESULTS
Distinguished shareholders, during the last AGM, your company announced a turnover of N 170 B and a profit after tax of N 1.8 B. Notwithstanding the tough operating environment, your company made a turnover of about N 205 B and a profit after tax of N2.1 B. This result is rather commendable considering the harsh environment we operated in last year. We are hopeful that we will sail on calmer waters in the coming year.
Fellow shareholders, the Board of Directors is proposing a total dividend of N 563 M translating into N3:00k per share from the profit after tax. Management has retained the sum of N 2.1B as retained profit to strengthen our working capital requirement.
FUTURE PROSPECTS
I am optimistic that despite the numerous challenges in the downstream sector, NIPCO’s management would continue to place emphasis on transforming the company’s systems and processes to deliver higher value to all stakeholders.
We are not oblivious of the fact that to achieve the foregoing, we must improve on our core competencies and exploit other business ventures and opportunities.
Consequently, we have achieved considerable growth in Compressed Natural Gas [CNG] as a viable alternative to fuel motorists in Nigeria. The Liquefied Petroleum Gas [LPG] retail network is on course and will continue to be sustained and expanded.
It is because of your unflinching support and constructive partnership over the years that NIPCO has attained this enviable height in the industry. Our footprints in the industry are getting stronger and deeper with our acquisition of ExxonMobil’s 60% equity in Mobil Oil Nigeria Plc through our subsidiary- NIPCO Investments Limited.
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 continues to keep us together as one big family.
Chief Dr. Bestman P. Anekwe.
Chairman.