Logistics costs rise by 480% to N133bn

Michael Eboh

Dublin, Ireland — The Nigerian National Petroleum Company Limited (NNPCL) has disclosed that it spent N132.610 billion on logistics for the importation of Premium Motor Spirit (PMS), also known as petrol or fuel, in 2023, rising by 480 per cent from N22.881 billion recorded in the previous year.

In its audited statement for the 2023 financial year, the NNPCL stated that the logistics costs involved the selling and distribution expenses incurred in the course of fuel import, storage, marketing and transportation of the product in the year under review.

Particularly, the NNPCL noted that throughput charges, the commission paid to Private Depots Owners (PDOs) for handling of petroleum products on its behalf at the terminals, rose by 583 per cent from N5.658 billion in 2022 to N38.616 billion in 2023.

In addition, the corporation added that marketing and distribution expenses, the amounts paid to acquire services for transportation of petroleum products for discharge at water fed depots in and/or outside the country, grew by 4,485 per cent to N93.994 billion in 2023, from N2.050 billion recorded in 2022.

The NNPCL further stated that the costs incurred for petroleum products sale in 2023 grew by 116.84 per cent to N10.315 trillion in 2023, from N4.757 trillion recorded in 2022, adding that included in this sum is net of under recovery and energy security expenses, otherwise known as fuel subsidy, which stood at N3 trillion in 2023, compared with N2.4 trillion in 2022.

It confirmed that it intends to complete the payment of $1.76 billion for the acquisition of stakes in Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE), noting that at the end of 2023, it holds a 7.25 per cent interest in DPRP FZE.

Providing context for the investment, the NNPCL said: “In September 2021, NNPC Limited proposed to acquire 20 per cent interest in Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE) worth $2.76 billion which was financed by a forward sale agreement of $1.036 billion from Lekki Refinery Funding Limited of which $1 billion was paid to Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE).

“This investment was initially held by NNPC Greenfield Limited (a special purpose vehicle, 100 per cent owned by NNPC) in trust for NNPC Limited. Due to restructuring of the NNPC Limited Post Petroleum Industry Act (PIA) era, the function of this unit has been moved to NNPC Downstream Investment Service (NDIS).

“The balance of the cost of equity investments made in DPRP FZE, which is $1.76 billion has been agreed to be paid in cash instead of the proposed crude discount of a $2.5/ barrel. on the official selling price of crude oil. As at December 31, 2023, NNPC Limited holds a 7.25 per cent interest in DPRP FZE.”

It added that: “In September 2021, it entered into a forward sale agreement with Lekki Refinery Funding Limited to supply 35,000 barrels of crude oil per day for the settlement of the $1.036 billion (N426.2 billion) funding received for the financing of investment in Dangote Refinery. The interest rate for the facility is three-month libor plus 6.125 per cent. As at 31st December 2023, NNPC limited has paid $625 million principal, while $424 million (N324 billion) is still outstanding.”