CHAIRMAN’S SPEECH.
Distinguished shareholders, members of the Board of Directors of Nipco Plc, esteemed customers, representatives of the various regulatory bodies, gentlemen of the press, invited guests, ladies and gentlemen; it is with profound honor that I, on behalf of the Board of Directors of Nipco Plc welcome you to the 15th Annual General Meeting of our great company.
In the course of this meeting, I shall present to you the Directors Report & Financial statement for the year ended December 31, 2018. Before doing so, please permit me to highlight a few aspects of the business environment that significantly affected our performance in the year under review.
BUSINESS OUTLOOK:
The year 2018 without any doubt was a challenging year marked by significant global and local financial and economic developments which impacted on our business in both negative and positive ways. This applies to all operators in the oil and gas industry as it started on an intriguing note with the continuation of the nationwide premium motor spirit scarcity. The scarcity was occasioned by the inability of marketers to import refined products as NNPC was the sole importer of premium motor spirit; and also due to pipeline vandalisation and outright diversion of product by some nefarious marketers.
The resilience of our brand enabled us to successfully weather the socioeconomic headwinds and utilize inherent opportunities.
Furthermore, Nigeria’s inability to refine requisite petroleum products domestically in order to meet local demands also continued to render the downstream sector vulnerable to foreign exchange volatility particularly for independent marketers.
OIL SECTOR GDP:
The National Bureau of Statistics (NBS) report shows that the oil sector contributed 8.55% to the total real GDP during the period under review. This is a reduction on both quarter on quarter and year on year bases, as the sector contributed 9.61% in Q1 2018 and 9.04% in the corresponding quarter of 2017 respectively.
Meanwhile, the report further reveals that average daily crude oil production in Q2 2018 was 1.84 million barrels per day – which is a reduction from the oil production in the first quarter 2018. Oil production in the period under review was also relatively lower to the corresponding quarter of 2017 by 0.03 million barrels per day when output was recorded at 1.87 million barrels per day.
The reduction in the oil sector GDP can be directly linked to the slight decline in the crude oil price – after maintaining a steady rise in January ($65.32 per barrel). It further rose to $76.98 in May, before it fell to $74.4 per barrel in June
FOREIGN CAPITAL INFLOW:
The Oil and Gas Sector in the country suffered huge set back in its bid to attract Foreign Direct Investment in the Q3 2018. The first quarter of 2018 recorded the highest foreign capital inflow in the sector as over $80 million worth of investment came into the sector. The first quarter foreign capital inflow was the highest with $85.62million, dropping by 70.98 percent to $24.85million in the second quarter, while it further dropped by 68.9 percent to $7.73million in the 3rd quarter of 2018.
PETROLEUM INDUSTRY GOVERNANCE BILL (P.I.G.B):
The Petroleum Industry Governance Bill being one of the four parts of the proposed PIGB Law passed in 2017 by the National Assembly yet suffered a setback as the President refused to give assent to the Bill. The delay in giving assent to the PIGB resulted in investment setbacks in the sector.
OPERATING RESULTS:
Distinguished shareholders, during the last AGM, your company announced a turnover of N207B and a profit after tax of N2.1B. However, regardless of the prevailing difficult environment which we worked in, your company was able to sustain its steady growth through strategic expansion of some of its core business activities and made a turnover of about N254B and a profit after tax of N1.5B. 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.
Dear shareholders, fellow Directors, the Board of Directors is proposing a total dividend of N563M translating into 300k per share from the profit after tax.
FUTURE OUTLOOK:
Distinguished shareholders, I feel proud to say that even in the face of the challenging business environment, NIPCO Plc has maintained its culture of outstanding performance and industry leadership by focusing on pursuing its major objectives. We are yet improving on our core competencies and remain committed to our vision of being the First choice company in the Oil & Gas Industry to all stakeholders.
We have maintained a constant expansion of our retail outlets and furthermore our company has maintained the lead in the LPG subsector by doubling the number of LPG skids and plants all over the country. Our strategy and approach to our pursuit of venturing into the upstream sector will give us a competitive advantage to explore even new frontiers in the business environment.
Being mindful of the Nigerian economy due to the slide in oil prices in late 2018 coupled with the output cut imposed by OPEC and the projection of Real GDP growing above 2% in 2019, we have entrenched global best practices in every area of our operations so as to ensure good corporate governance and higher returns on your investment.
CONCLUSION
In conclusion, 2018 was indeed an interesting, challenging and successful year for NIPCO Plc. More so, the concerted efforts of all our stakeholders made it possible for us to sustain our profitability streak in the year.
I seize this opportunity to appreciate you all, our dear shareholders whose unflinching loyalty remains one of our greatest assets, and our staff whose drive and unwavering commitment to duty sustained our noteworthy performance.
I express my gratitude and deep appreciation to my colleagues, the board of directors and executive management team who ensured that we have a smooth sail and safe anchorage even with the huge challenges in the local and global business environment.
I also want to appreciate our regulators and stakeholders: Securities and Exchange Commission, the Nigerian Stock Exchange, the Corporate Affairs Commission, the NNPC, NLNG, PPPRA, PPMC, DPR and PEF for their continued support to our highly esteemed company.
Distinguished Shareholders, Ladies and gentlemen, I welcome you to the 2019 financial year with unflinching hope and assurance of an improved performance of our company.
Thank you.
Chief Dr. Bestman P. Anekwe.
Chairman.