Distinguished Shareholders
It is my utmost pleasure to welcome you all to the 12th Annual General Meeting [AGM] of our great company, NIPCO Plc. I am pleased to present a brief report of your company’s performance for the year ended 31st December, 2015 and an outlook for the year 2016.

It is a well known fact that 2015 was a very challenging year for operators in the downstream sector of the nation’s oil and gas industry. Your company is not immune from the plethora of challenges and global happenings, even as concerted efforts were put in place to contain its effect on your company. In the course of the year, the industry was seriously hampered by dwindling oil price, delayed subsidy payments which resulted in the paucity of funds for operators to meet their financial commitments to scores of their stakeholders.

The second and third quarter of the year was very challenging for downstream sector players as majority of them found it increasingly difficult to source foreign exchange to import petroleum products which is the mainstay of the business. This brought the entire nation back to the dark days of fuel scarcity as fuel queues became the order of the day except for few stations like Nipco stations that had products to dispense. It is important to point that your company has been lauded by one and all for its effort in keeping its retail stations with regular availability of product right through the periods of difficulty. Many downstream companies had to contend with low capacity utilization which further resulted in general decline of revenue in the sector as a whole.

Also, in the course of the year, the industry was greatly affected by the ever sliding price of crude oil which reached as low as 37 USD to a barrel. Crude price leaves one with no hope of rebounding anytime soon.

Despite these challenges, the company continued its focus on prioritizing the skill development of its manpower. Personnel in all cadres in the organization were kept abreast of issues facing the industry not only in the nation but across the Globe, through daily news bulletin .In-plant and external training courses were organised for staff to acquaint them with international best practices in the industry.

Our visibility in our host community and the outlets increased with our brand enhancement and meaningful contribution to the communities we operate in.We have played significant roles in the area of education and sports , deepening the use of LPG as domestic cooking fuel through series of sponsored programmes as part of our Corporate Social Responsibility initiatives.

The company’s sales and marketing strategies together with our competitive pricing policy ensured that we maintained a considerable market share in all our lines of business .To maintain this trend, we would continue relentlessly in implementing new initiatives to maximize our position in the industry .

Nipco’s operation was given a big morale boost by the Honorable Minister of State for Petroleum Resources, Dr Ibe Kachikwu’s maiden visit to the company ,when he remarked thus “this is a Nigerian investment and it sits in our territory and we must do everything that we can do to encourage companies like this to get bigger and profitable so that they can employ more people “. The resounding confidence reposed in the company by scores of stakeholders to meet the growing needs of the industry remained a major plank in our continued transformation journey in 2015.
Sectorial Performance:

RETAIL DIVISION
This division is the fulcrum of our entire activities as the avenue of brand enhancement through the array of outlets spread across the country. We intend to continue increasing our market presence & market share of petroleum products through the acquisition of more outlets at strategic locations.

LIQUEFIED PETROLEUM GAS [LPG]

This division was able to build on its 2014 growth pattern by ensuring improvements in throughouts following a marked increase in supply. We stepped up our interventions in deepening the use of LPG as domestic cooking fuel by distributing free gas cylinders and burners to Apapa residents for the second year running.

Our numerous skids across the country has continued to serve as reliable source of getting gas for both domestic and industrial users with premium placed on accurate filling . Our LPG skid program for retailing LPG continues to grow year on year with significant market participation.

INDUSTRIAL SALES – AGO

We remained the preferred supplier of Automated Gas Oil [AGO] to major industries based on our track record of consistent availability, product quality and prompt delivery to the nooks and cranny of the country.

Our storage ability has also been raised through construction of additional tank farms to ensure that we meet the upsurge in demands by our esteemed customers.

COMPRESSED NATURAL GAS [CNG]

Our pioneering efforts in the realm of facilitating use of Compressed Natural Gas as auto fuel continued to elicit support from stakeholders even as number of vehicles running on gas has been on the increase. The large state of the art compression station at Ibafo, Ogun State supplies gas to hundreds of commercial vehicles plying Lagos –Ibadan as well as Lagos – Benin expressway.

Concerted efforts are also on to improve infrastructure so as to enable our JV Company – Green Gas Ltd [floated by NGC & NIPCO] meet the industrial demands of many companies along the Lagos – Sagamu interchange by a pipe line which is in the advanced stage of commissioning.

CORPORATE SOCIAL RESPONSIBILITY [CSR]

The determination to make a positive impact in the communities in which we operate and the country at large continues to be the driving force of our Corporate Social Responsibility initiatives in 2015.

We empathized with the people of the North East region of the country with the donation of relief materials to ‘Internally Displaced People’(IDPs) in Gashua, Yobe State. Our interventions in the area of education and sports development in our host communities was also on the surge in 2015 with the sponsorship of scores of events in these areas in public primary schools in Lagos State.

AWARDS AND RECOGNITION

Our unwavering commitment at improving the lots of our host communities through interventions in the realm of education and sports among others has continued to elicit plethora of awards. In the year under review, the number of awards and recognition we received include:

• National Association of Energy Correspondents [NAEC] awards for ensuring distribution of fuel at government approved rates and for consistently supporting the association to improve the quality of reportage in the oil and gas industry.
• Lagos State Universal Basic Education Board [SUBEB] through Apapa Local Government Education Authority for enhancing quality of education and sports promotion in the LGA.
• Apapa Community through the Baale of Marine Beach, Apapa for the yearly donation of LPG accessories to women to deepen use of gas as domestic cooking fuel.

OUTLOOK

I will like to crave your indulgence to let you into our outlook in 2016. In 2016, despite daunting outlook for the entire industries & businesses across the nation caused by the low crude prices, we will strive to build on the successes of the proceeding years as your company has been demonstrating in the past.

Significant investment was made in the construction of additional tanks with a total storage facility of 34 million litres of petroleum products. This is expected to drive the company to further consolidate its leadership role in the downstream sector. The new tankages have raised the total storage facility of the company to 84 million litres i.e. an increase of 80%.

The project which was commissioned in the last month can store all grades of white products and has been linked to the reception point at the Apapa jetty as well as the ten point loading gantry in the terminal. It is also expected that your company may make further inroads into Lube marketing with an extensive impact on our operations.

2016 is expected to be another difficult year to pass through for all global oil producing nations and companies in the sector, considering the declining oil prices in the international market with no much signs of early recovery. The paucity of foreign exchange to meet the demand of oil importation of petroleum products is expected to remain a challenging one. It is laudable that Nigerian Government spearheaded by the President himself and the Minister of State for Petroleum, are taking leadership roles and initiatives amongst crude oil producing countries to firm up the oil prices.

Your company’s emphasis will be placed on minimizing the impact of these largely extraneous factors on the organization as we look forward and strive hard in delivering our targets in 2016.

APPRECIATION

I would like to thank you our Shareholders for your continued support and confidence reposed in us, and also appreciate our customers, suppliers and every stakeholder for their patronage and understanding.

I wish to place on record our deep appreciation to the Government of Nigeria, & other key state owned companies & Government parastatals like NNPC, NGC, PPPRA , DPR, PEF & all other key departments of the Government for their continued confidence and support for this great company.

My heartfelt appreciation equally goes to the Board of Directors under the visionary leadership of Chief [Dr] Bestman Anekwe whose policy guidelines contributed immensely to the sustained growth pattern of the company. Once again, I thank you.

Venkataraman Venkatapathy,
Managing Director