NIPCO: strengthening gas businesses with bold ideas

Olamide Ologunagbe | Business Day

Despite economic disruptions caused by the Russia-Ukraine conflict and the aftermath of the COVID-19 pandemic, NIPCO Plc has released its audited financial statements (AFS) for 2022, a development that showed the firm’s impressive growth across major gas business.

2022 was a tough hurdle for companies in Africa’s biggest economy; a spike in diesel prices since the start of the year, combined with foreign exchange scarcity and high input costs due to a war in East Europe, forced some firms to close shop while the existing ones are struggling to stay afloat.

Yet, findings showed NIPCO Plc has defied odds by tightening its belts, applying cost optimisation strategies and innovative solutions to navigate Nigeria’s weak macroeconomic environment.

Data sourced from the firm’s latest financial statement showed NIPCO’s total revenue increased by 54 percent to N850 bn in 2022 while total profit after tax increased by 209 percent to N17.6 billion from N5.6 billion in 2021.

Total assets increased by 32 percent to N519 billion in 2022 while total liabilities increased by 18 percent to N315 billion in 2022.

CNG business

Further breakdown showed the revenue from the company’s CNG business increased to N11.75 billion from N8.91 billion in 2021.

“The company has continued to deepen domestic gas utilization through access to both CNG for auto use and piped natural gas for industrial usage,” Suresh Kumar, NIPCO’s managing director said in the company’s latest financial statement.

Kumar recently announced the inauguration of its state-of-the-art AutoCNG Filling Station in Ibadan, Oyo State.

According to Kumar, the facility, strategically located at the Mobil Station near the toll gate on the Ibadan-Lagos expressway, marks a significant milestone in the promotion of cost-effective and environmentally friendly transportation solutions.

The managing director noted that NIPCO is strategically positioned to supply CNG to automobiles through its daughter booster stations fed through its CNG cascades in Abuja. Currently, it operates 3 stations and has plans to expand to 10 stations in the short term.

“NGL is a stakeholder in the Federal government’s National gas expansion program with conscious plans to cover the entire country soonest,” Kumar said.

NIPCO has a network of value chain in LPG with about 19,500 metric tonnes of combined storage capacity and 10 loading bays which can truck out over 4,000 tonnes per day.

Kumar told journalists that the company currently has over 250 branded retail stations for white products and over 100 stations for Liquefied Petroleum Gas (LPG), while plans are in progress to build many more.

According to him, the company’s 10 petroleum tanks with electronic radar gauges have a combined capacity of 85 million litres, supported by 10 loading arms and 2 buffer gantries that loads over 200 trucks per day.

Despite rising inflation, the company’s revenue from Liquefied Petroleum Gas (LPG) business increased from N98 billion in 2021 to N133 billion in 2023.

Petroleum products

The revenue from petroleum products increased to N690 billion in 2022 from N440 billion in 2021.

“The Oil and Gas industry, in the year under review faced a lot of challenges, some of which are extraneous to the country,” Kumar said.

Kumar noted that the exceptional performance in 2022 was primarily driven by a comprehensive long-term growth strategy, characterized by prudent resource management, cost optimization, a collaborative team effort, and unwavering support from the Board of Directors.

“Our performance in 2022 was mainly on a long-term growth strategy that was anchored on prudent management of resources, cost optimisation, teamwork, and unflinching support of the Board of Directors,” Kumar said.

LPG business

In the Liquefied Petroleum Gas (LPG) segment, NIPCO achieved a 15.59 per cent growth in revenue, rising from N98.1 billion in 2020 to N113.4 billion in 2021.

The lubricant business also contributed to the positive financial trajectory, with revenue soaring by 32.6 percent to N78.22 billion in 2022 compared to N59 billion in 2021.

Other income registered an uptick, reaching N17.79 billion in 2022 from N13.82 billion in 2021.

Operating profit demonstrated a remarkable surge of 185.8 per cent, climbing to N34.3 billion in 2022 from N12 billion in the previous year.

Finance costs experienced an increase, rising by 162.7 per cent to N7.88 billion in 2022 due to higher interest on loans and overdrafts. Finance income, on the other hand, saw an increase to N2.2 billion in 2022 from N1.08 billion in 2021.

With a focus on delivering value to shareholders, NIPCO Plc raised its dividend payment to N5 per share, and earnings per share saw an impressive growth of 209.2 per cent, reaching N93.86 kobo in 2022, up from N30.36 kobo in 2021.

“The board is pleased to recommend a total dividend of N938.34 billion translating to N5:00k per share from the profit after tax. The management has retained the sum of N7.33 billion as retained profit to strengthen our working capital requirement,” Bestman Anekwe, chairman of NIPCO Plc said.

Net cash from operating activities surged by a substantial 348.3 percent to N75 billion in 2022, compared to N16.73 billion in 2021.

Net cash flow from investing activities showed a loss of N42.2 billion in 2022, primarily due to the increased acquisition of plant and property, compared to a loss of N17.64 billion in 2021.

The year-end figures for 2022 amounted to N65.27 billion in cash and cash equivalents, marking a significant increase from N38.19 billion recorded in 2021.

Kumar expressed optimism despite the industry’s considerable challenges, affirming that better prospects lie ahead for 2023.

While acknowledging the industry-wide challenges, he emphasized that NIPCO is resolutely poised to maintain its leading position.

“Although we still have some challenges, which of course is not peculiar to us as an operator in the industry, if we are to forge ahead as one of the leading players, we hope to take such challenges with all seriousness it deserves,” Kumar said.

Kumar’s upbeat view of the company’s future is rooted in the strategic investment plans orchestrated by the management team, under the board’s insightful direction.

“I am upbeat about the future of your company. My optimism is predicated on the strategic investment plans being marshalled by my management team with the purposeful direction of the board.

“We have expertise and structure in place to expand the infrastructure in Natural Gas consumptions which we foresee as the future of the energy market in Nigeria,” Kumar said.

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