Change is the only constant in life, and one’s ability to adapt to those changes determines the person’s success in life. These are the words of American-born Benjamin Franklin several decades ago, and reflect the current efforts of Nigerian Independent Petroleum Company (NIPCO) Plc to significantly grow its gas business amid a myriad of headwinds.
Keeping businesses afloat in Nigeria’s downstream oil and gas sector has become extremely tough, especially after a pandemic era. A lot of companies have divested and the few existing ones have reduced their labour force to stay in business.
Few companies who have struggled to stay in business have witnessed a significant decline in bottom-lines, while others cut dividends to shareholders following dwindling fortunes occasioned by the difficult operating environment.
In a bid to solve these challenges, some companies are embracing fresh opportunities in Nigeria’s gas industry and taking advantage of the federal government’s ambitious decade of gas plan, which involves converting from oil economy to a gas economy.
NIPCO Plc, a company traded on the NASD Plc, a platform for public limited liabilities firms that are not listed on the Nigerian Exchange Limited (NGX) is positioning its gas business to not only remain resilient but also consistently rewarding its shareholders with dividends.
Despite COVID 19 challenges, the company saw a 19percent increase in its Liquefied Petroleum Gas (LPG) business as revenue increased from N44.4 billion in 2019 to N53.1 billion in 2020.
“We were able to do about 35percent of Nigeria’s supply as a depot owner in the LPG sector while in the Automotive Gas Oil (AGO) business, NIPCO remains a supplier of choice by most industrial set-ups,” Suresh Kumar, NIPCO’s managing director said.
Concerning its AGO business, NIPCO recorded a 21 percent increase in revenue from N78.7 billion in 2019 to N104.05 billion in 2020 while its lubricant business also recorded a 6 percent increase in revenue from N35.4 billion in 2019 to N37.5 billion in 2020.
“With the declaration of 2020 as the year of gas by the federal government of Nigeria, the sector is expected to witness more growth to the benefit of stakeholders by exuding more confidence in investors hoping that this initiative will channel more funds to the sector,” Kumar said.
NIPCO, one of Nigeria’s first major investors in Compressed Natural Gas (CNG) business also saw a marginal decline in its alternative fuel business from N6.5 billion in 2019 to N6.4 billion in 2020.
Kumar is optimistic that notwithstanding the enormous challenges in the industry, there are better prospects in 2021.
According to him, the setting up of the National Gas Expansion Programme (NGEP), to deepen domestic utilisation of gas is one of the veritable tools that can enhance the performance of NIPCO Plc in the area of gas marketing.
Nigeria is keen to grow its domestic gas supply to take advantage of its abundant resources.
This move is much needed for Africa’s largest oil producer, which still lags behind many of its continental peers in implementing lower sulphur fuel requirements either for imports or from its domestic refineries.
“The renewed interest of the federal government in utilisation of natural gas as vehicular fuel through NGEP is also expected to give fillip to our company at improving on our bottom lines through the plethora of investment in providing avenues for a cheaper and cleaner alternative source of energy for Nigerians,” he said.
Overall, NIPCO Plc recorded steady growth in revenue and profit in the last five years. It recorded a revenue of N171 billion in 2016, which jumped to N280 billion in 2019. And despite the impact of the Covid-19 pandemic in 2020, the petroleum product marketing firm still grew its revenue to N288 billion in 2020.
Profit before tax followed a similar growth trajectory, rising from N2.2 billion in 2016 to N2.9 billion in 2019 and further to N3.2 billion in 2020 while Profit after tax (PAT) at N1.6 billion in 2020, up from N1.4 billion in 2019.
In line with its determination to ensure value for shareholders, NIPCO Plc maintained the payment of 300 kobo dividend per share each year in the past five years while earnings per share also increased by 10 percent from 788 kobo in 2018 to 870 kobo in 2020.
Although the shock of the pandemic put a lot of pressure on the company’s human capital as they had to grapple with coping with the virus, and keeping pace with work schedules, Kumar said management had to devise several containment measures to ensure utmost safety of the workforce by adhering strictly to all the COVID -19 protocols as enunciated by relevant government agencies.
“It is with immense pleasure that I say that all through the 2020 year, we did not have any downtime due to the fear of the virus, a feat I commend our staff’s dedication towards their work. We are upbeat that with the standards set in, the much dreaded virus will be properly contained in the overall interest of both the employees and you the investors,” he added.
Still looking ahead, Kumar told BusinessDay another major plank in improving the fortunes of NIPCO Plc is in the area of marketing of a wide range of petroleum products the firm engages in.
“We intend to broaden our marketing horizon to ensure the company continues to take sizeable portion in product sales. Our sales volume in LPG is very encouraging, a feat we hope to replicate in white products based on the foundations laid in 2020,” he said.
Speaking on the company’s performance, Chairman of NIPCO Plc, Bestman Anekwe, said they are happy with the progress the company has made over the years.
“We have continually retained the trust and loyalty of our customers by providing high quality products. This is no mean feat in view of the rapidly changing and challenging oil and gas business environment,” Anekwe said.
He noted that the company maintained a focus on strengthening its core businesses by continually assessing areas for improvement, making relevant investments to make certain NIPCO’s model remains efficient, effective and relevant.
“In strengthening and expanding our Liquefied Petroleum Gas (LPG) operations through the deployment of skids across the country, we have been able to penetrate into most states of the country thereby increasing our customer strength greatly,” Anekwe said.
In a proactive move to improve its leadership position in the industry, NIPCO Plc acquired former Mobil Oil Nigeria Plc and changed its name to 11 Plc, a move analysts say might be a game-changer in the company’s operational performance.
