NIPCO PLC – CHAIRMAN’S SPEECH FOR AGM 2021

Distinguished shareholders, members of the Board of Directors of NIPCO Plc, Esteemed customers and representatives of the various regulatory bodies, gentlemen of the press, invited guests, ladies and gentlemen; It is with great pleasure and delight that I welcome you to the 18th Annual General Meeting of NIPCO Plc and to present to you the Annual Report and Accounts for the financial year ended 31 December 2021.

At this 18th AGM, I would like to highlight a few things, but first a quick review of the economic and financial environment in which our company operated in 2021.

BUSINESS ENVIRONMENT

2021 recorded successes in the Covid 19 vaccination and in the easing of restrictions. As predicted, we saw the global economy bounce back from the Covid 19 induced contraction with the IMF estimating its real growth at 5.9% in 2021 from -4.4% in 2020.

The continuous expansion in monetary and fiscal policies across the globe also bolstered demand and resuscitated the manufacturing and service sectors. However, this sustainability was threatened by the emergence of the Delta & Omicron variants of the Covid-19 virus. Also, the stimulus programs put in place to combat the negative impact of the pandemic brought about the inflationary pressures in many economies.

Regardless, Nigeria’s economy driven by the authorities’ aggressive infrastructural drive and expansionary monetary stance, continued to gain momentum in aiding the economy’s exit from recession. The Central Bank of Nigeria sustained its intervention programs by: making disbursements of N43.2billion to farmers; Injecting N5.9billion to finance large scale agricultural projects and putting another N261.9billion under its 1trillion manufacturing intervention.

It also released 498billion to Households & Small &Medium Enterprises. As reported by National Bureau of Statistics (NBS), Gross Domestic Product (GDP) grew by 0.51 percent, 5.01percent, 4.03 percent and 3.98 percent in Q1, Q2, Q3 and Q4 respectively.

These monetary stimulus packages alongside the lifting of movement restrictions helped to improve Nigeria’s real output growth rate to 3.40% in 2021 from a contraction of 1.92% in 2020.

FOREIGN EXCHANGE

The exchange rate continually remained under pressure across all foreign exchange market segments and the situation became aggravated due to the huge dollar demand and a decline in foreign exchange inflow from the foreign capital channels, remittances and non-oil exports.

It depreciated from N410/$ at the end of 2020 to N415/$ in the second half of 2021 at the Investors ‘and Exporters’(I&E) Window. The CBN implemented policies such as the stoppage of sale of foreign exchange to Bureau De Change (BDC) operators and frequent intervention in the foreign exchange market to support the local currency.

OIL SECTOR

This sector which remains the country’s largest foreign exchange earner remained subdued, due to the lingering impact of muted global oil demand triggered by COVID-19 pandemic. The Oil sector contracted by -8.30percent compared to -8.89percent recorded in 2020.

Data from the NBS showed that the sector’s contribution to the economy declined to 5.19percent at N1.055 trillion in the 4th quarter of 2021, down by 3.68basis points from the 5.87% contribution in the corresponding period in 2020. It further showed that the nation in the 4th quarter of 2021 recorded an average oil production of 1.50mbpd recorded in the same quarter of 2020 and lower than the 3rd quarter 2021 production volume of 1.57mbpd by 0.07mbpd.

OPERATING RESULTS/ DIVIDEND

Distinguished shareholders, during the last AGM, your company announced a turnover of =N= 288B and a profit after tax of =N1.6B. However, considering the tough business environment which we worked under for the Year 2021, your company made a turnover of about =N=299B and a profit after tax of =N=2.01B.

To demonstrate our unwavering commitment, we have ensured that a significant portion of our profit is set aside for you. The Board is pleased to recommend a total dividend of =N=609.9M translating into =N=3:25k per share from the profit after tax for the financial year ended 31st December 2021. The Management has retained the sum of =N= 1.4B as retained profit to strengthen our working capital requirement.

We acknowledge the impressive performance of our high performing team in their consistent delivery of superior value to you our highly esteemed shareholders.

LPG/WHITE OIL
We remain continuously happy with the progress our company has made over the years. We remain committed to strengthening and expanding our LPG operations through the deployment of more skids across the country. We have been able to penetrate into most states of the country thereby increasing our customer strength greatly. We maintained a focus on making relevant investments to ensure that our model remains efficient, effective and relevant.

We recorded a superior performance in our sales volume both in white oil and Liquefied Petroleum Gas.

CORPORATE SOCIAL RESPONSIBILITY
NIPCO Plc is a corporate responsible citizen committed to making impact on the society at large. Through our sustainability and corporate social responsibility initiatives, we have continued to deliver projects that benefit our host communities.

MACROECONOMIC OUTLOOK

2021 which was a year of recovery for many economies and businesses across the globe remained a tough one. Notwithstanding the challenges in the year under review, we were able to capitalize on the inherent opportunities within the business environment to record a performance that further attests to our resilience as a company.

Most economic analysis suggests a continuous positive domestic growth in 2022. The IMF projects that the economy will grow by 2.6percent in 2022, while the World bank projects a growth rate of 2.5percent. more so, the Federal Government projected a more ambitious GDP growth rate of 4.2 percent and 13 percent inflation rate for 2022.

I see numerous immense opportunities opened by our strategic investments in building up diverse lines of businesses. Your company has the plan to further maintain our competitive edge by continuing in the installation of more LPG Skids and the establishment of more Gas plants, ensuring that we have the needed support for optimal performance in our operations. Our diversification into the hospitality business is engendering good results which will impact positively on our shareholders take home dividend in the coming years.

CONCLUSION
Indeed, 2021 was a very successful year for NIPCO PLC. The superb performance recorded was made possible by the collective efforts of all our staff, Management and Board. I am thankful to the Management, Board and staff of our Company for their loyalty, unwavering hard work and dedication which enabled the Company to deliver such an outstanding performance today.

I appreciate our customers and shareholders for their unflinching loyalty and trust in the Company and its operations. I appreciate our regulators from Securities and Exchange Commission, NASD and the Corporate Affairs Commission for their consistent engagements and supervision. I also appreciate our stakeholders – NNPC, NLNG, PPPRA, PPMC, DPR and PEF for their continued support.

Ladies and gentlemen, I welcome you to the 2022 financial year, with resolute assurance of our continued outstanding performance.

Chief Dr Bestman P. Anekwe
Chairman