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Road traffic passes the head offices of the Nigerian National Petroleum Corp. in Abuja, Nigeria, on Wednesday, October 21, 2015. A drop in crude prices in the past year has put pressure on public finances, while the naira has declined seven per cent against the dollar this year. (Photo: George Osodi/Bloomberg)

Nigeria’s State oil giant reduces annual loss after slashing costs

Road traffic passes the head offices of the Nigerian National Petroleum Corp. in Abuja, Nigeria, on Wednesday, October 21, 2015. A drop in crude prices in the past year has put pressure on public finances, while the naira has declined seven per cent against the dollar this year. (Photo: George Osodi/Bloomberg)

Nigeria’s State oil company said its annual loss shrivelled to just a few million dollars last year as costs shrank across its operations.

Nigerian National Petroleum Corp (NNPC) published audited accounts on Thursday, only the second such release in its 43-year history, as the company gradually opens up to public scrutiny. It’s a significant shift since Nigeria’s oil industry — the largest in Africa — generates about half of all government revenue.

NNPC’s net loss narrowed to 1.7 billion naira (US$4.5 million) last year from 803 billion naira in 2018, the Abuja-based company said, citing the impact of contract renegotiations, cost cuts, and greater efficiency across its divisions.

Nigerian naira and US dollar bills notes (Photo: Nairametrics)

The State producer is working to “prune down running costs and grow revenues”, Chief Financial Officer Umar Ajiya said in an e-mailed statement. The outlook for 2020 “looks promising”, he said, without elaborating.

Continued cost cuts suggest NNPC could be profitable this year, yet the company — like oil producers around the world — has faced plummetting demand as the coronavirus crisis forces widespread lockdowns.

In June, NNPC published its annual report for 2018, which contained an audited account of all its subsidiaries for the first time.

Its 2019 report has appeared just four months later and shows a 479—-billion-naira profit for Nigerian Petroleum Development Co — its exploration and production unit — up from 179 billion naira in 2018. Earnings at the Integrated Data Services division soared to 23 billion naira from 154 million naira.

Chief Financial Officer of Nigerian National Petroleum Corp Umar Ajiya
(Photo: Nairametrics)

NNPC operates joint ventures with oil majors, which together pump almost all of Nigeria’s crude. It’s also responsible for supplying refined fuel to the nation’s 200 million people. Its four decrepit refineries continue to bleed cash, losing 154 billion naira in 2019 amid shutdowns for repairs.

The company hopes to stem those refining losses in its 2020 accounts, it said in the statement.