CHAIRMAN’S STATEMENT.
It is my pleasure and privilege to welcome our distinguished shareholders, special guests, fellow Directors, to the 13th 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, 2016.
This AGM is indeed, another unique one, demonstrating our aggressive sustenance of the inroads we have made in the downstream sector of the petroleum industry in the many years our operation.
THE INDUSTRY:
The year 2016 was one of the most difficult years ever witnessed in the socio- economic development of our dear nation. It was a year plagued with uncertainties over crude oil prices, pipeline vandalism and terrorism, scarcity of foreign exchange amidst other issues. These trends made the business environment more challenging.
Low Crude Oil prices and Pipeline Vandalism
Low crude oil prices continued to impact the economy and the Oil Companies negatively. Crude Oil prices was down as low as $35 per barrel during the year under review and only just started making its way to recovery recently after OPEC decided to reduce output in order to shore up the price.
This was made worse by the renewed attack on Oil facilities in the Niger Delta which brought Nigeria’s crude oil production down from 2.2 million to 800,000 barrels per day. This scenario had negative implications on virtually all the companies in the industry in the year under review.
Scarcity of Foreign Exchange
With over 30 per cent of the Country’s demand for foreign exchange being on fuel importation, the Sector’s appetite for forex resulted in scarcity and a hike in petroleum products in the course of the year. The scarcity of aviation fuel was attributed to the inability of airlines to pay for the product due to lack of forex.
Marketers are yet to offset their debt overhang to foreign suppliers and this has made it difficult to import more products. NNPC has therefore remained a major importer of petroleum products in the country.
Pump Price Increase
The year under review witnessed over 60% increase in the pump price of Premium Motor Spirit [PMS] from N87.50 to N145. The increase in price though rather sharp, was inevitable considering the economic realities.
Underutilized Refineries
The ability of Nigeria’s four state owned refineries installed to refine 490,000 barrels of crude oil daily remained low throughout 2016 on account of the age of the facilities, poor maintenance and pipeline vandalism to supply crude to the refineries.
According to the NNPC, the four refineries worked at only 8.55per cent of their combined capacities from January 2015 to September 2016. These problems rendered the operations of the refineries epileptic and as such, the difficulties lingered.
Petroleum Industry Bill
Despite being drafted in 2007, the Petroleum Industry Bill [PIB] has not been passed into law, consequently creating uncertainties in the sector.
Since its inception, the PIB has been dogged by lack of political consensus and disagreements between the government and global oil majors over its key terms and hopes that it would have been passed in 2016 did not crystallize. In 2016, the PIB was split and from it, the Petroleum Industry Governance Bill [PIGB] emerged.
These factors directly or indirectly resulted in lower revenues thus engendering negative Gross Domestic Product (GDP) growths. This inevitably, plunged Nigeria into an economic recession.
OPERATING RESULTS
Distinguished shareholders, during the last AGM, your company announced a turnover of =N115B and a profit after tax of =N1.4B. However, considering the prevailing difficult environment which we worked in for the Year 2016, your company made a turnover of about =N170B and a profit after tax of =N1.8B.
Dear shareholders, fellow Directors, the Board of Directors is proposing a total dividend of =N563M translating into 300 k per share from the profit after tax. Management has retained the sum of =N1.8B as retained profit to strengthen our working capital requirement.
FUTURE PROSPECTS
As you are aware, your Company took a giant and audacious stride by acquiring ExxonMobil’s 60% equity in Mobil Oil Nigeria Plc. This acquisition has further strengthened our position in the industry, increased our asset base and has given us a platform to widen our footprints. We are optimistic that it will translate to increased shareholder value in the coming years.
All the inroads we have made in Compressed Natural Gas [CNG] and Liquefied Petroleum Gas [LPG] as well as in the retail network 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.
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.