Nigeria's Transmission Unit Sees Lower Profits, Despite Higher Tariffs
Nigeria's state producer Nigerian National Petroleum Corporation last week reported full year profits for its gas transmission and processing subsidiary.
Executives at the subsidiary, Nigerian Gas Processing and Transportation Company (NGPTC), however gave no details about how much would be invested in badly needed infrastructure. Officials told NGW October 9 that profits will be reinvested in gas but declined to elaborate.
The NGPTC subsidiary reported October that its 2016 profit was naira 15.81bn ($43.7mn) after tax, down 30% from naira 22.6bn the previous year. Almost half the profit – naira 8.05bn ($22mn) – was due to a tax credit deferred from 2015. Profits declined despite higher turnover.
NGPTC chairman Saidu A. Mohammed said October 5 that revenues from gas transmission and processing in 2016 increased by 41% to naira 219.5bn from naira 155.5bn in 2015, owing to higher transportation tariff charges, plus new commercial customers that came on stream.
The company transmits not only NNPC gas, but also gas produced by third parties such as Shell, Eni and independents like Seplat.
"An overview of NGPTC's business performance for the year 2016 shows that 307bn ft3 (8.7bn m3) of gas was [sold and] transmitted, as against the planned 463bn ft3, achieving 66.4% of the target,” said Mohammed. That was 4% less than its 319.25bn m3 transmitted in 2015.
NGPTC faced challenges from the recurring ‘vandalism’ last year of the Escravos-Lagos Pipeline System 1 (ELPS1) and Trans Forcados pipe, he said.
More gas though is being produced this year and delivered to power plant and industrial customers, plus Nigeria LNG, than in 2016.
The business changed its name to NGPTC in 2016 from its original name, Nigerian Gas Company (NGC) to better reflect its activity. NNPC at the same time spun off a new separate NGC subsidiary to market its equity gas, Nigerian Gas Marketing Company (NGMC). NGC first started trading in 1988.
Gas profits are barely used to fund capital projects in the gas sector but rather used to fund government expenditure, said Chiagozie Hilary Nwokonko of Nigerian law firm Streamsowers & Kohn at last month’s Nigeria Gas Summit conference in Lagos.
Omono Okonkwo