Kaduna Refinery incurs N64.5 bln operational loss without earning any income ~Report
By Oludare Mayowa
The evidence that the country’s refineries are drain pipes on government finance was further confirmed on Sunday as the Nigerian National Petroleum Corporation (NNPC) released the financial position of its subsidiaries to the public.
According to the financial statement of the Kaduna Refining and Petrochemical Company (KRPC) published by the oil giant, the company recorded an operational loss of N64.54 billion at the end of its 2018 financial year, compared with N111.89 billion losses posted in the previous year.
Unlike the previous year when the company earned a total revenue of N2.24 billion, Kaduna Refinery did not earn any income in 2018, according to the report.
The company losses were recorded as a result of the cost incurred on overhead, traveling allowances, office stationeries and other sundry expenses not related to its primary responsibility.
For instance, the company spent N662.15 million on both local and overseas traveling in 2018 against N783.25 million spent on the same items in the previous year.
Also, the company paid a total of N843.88 million as consultancy fees in 2018 compared with N171.45 million in 2017, while it expended N45.28 million on public relations and publicity in the year.
It spent N447.70 percent on training expenses in the financial year compared with N340.20 million spent on training in the previous year.
“The company incurred a net loss of N64.34 billion the year ended December 31, 2018 compared with N111.90 billion in 2017 and as of the date, current assets exceed current liability by N429.98 billion compared with N361.19 billion in 2017,” the company wrote in the financial report.
It said its losses have arisen principally from its inability to operate profitably under the current processing contract with its parent company NNPC.
“KRPC’s primary sources of revenue is from the processing of crude oil for NNPC. The processing fees are determined solely by NNPC, without consideration for related costs and are significantly lower than the costs incurred to produce,” the company said.
“In the year under review, the company did not earn any income from processing fees due to the nonfunctioning of the company. The high cost is also due to the current structure of the organization whereby the company bears the total cost of personnel expenses,” Kaduna Refining company said. #GFD