NNPC retail makes N18.4b profit in three months, says Kyari
Group Chief Executive Officer of the Nigeria National Petroleum Company Limited, Mele Kyari has said that the NNPC Retails Limited made a profit of N18.4 billion in the first quarter of 2023.
Kyari said the development was due to the acquisition of the OVH Energy in 2022 by the NNPCL.
He disclosed this at the resumed investigative hearing of the Ad-hoc Committee on the acquisition of OVH Energy by NNPCL on yesterday.
He also said that the company now has over 900 fuel stations spread across the country, while controlling about 30 percent of market in the down stream sector of the petroleum industry.
According to him, the organisation did nothing wrong in the acquisition of OVH energy as it was purely a business decision that has began to yield result less than one year after it was done.
He said: “This company came into existence as a result of the passage of the Petroleum Industries Act, which included the creation of a commercial oil company that will work for all.
“You also decided that the shareholders of this company will be the federation, meaning that the overall 200 million Nigerians are shareholders in this company.
“It is part of the law that we should protect national interest in ways to guarantee energy security. It is very clear that there is huge relationship between energy security and national security anywhere in the world. Countries go to war to ensure energy security.
“It is on the basis of this and to discharge our responsibility as proscribed by the law, we do need to have capacity to have control over the down stream sector of the economy.
“We started NNPC Retail Limited in the year 2000 and until the period of acquiring the OVH chain, we were not able to grow organically. We only had 48 stations that we owned and a mirage of companies that are affiliates all over the country, some of which were non-functional fuel stations. They could not serve the purpose because there were dealers who could not pay for the cost of the products and we had locations were we could not guarantee either the quantity or quality of the products sold.
“We failed to grow organically for 23 years. The only way to bridge that gap is to do something strategic and this is very difficult in our industry. You have to acquire other people’s assets if you want to grow to achieve the objective of the PIA and grow this company to the business we want it to be.
“The corporation has been a loss making corporation for many years. With the transformation that came into the company before the PIA and after the PIA, this company is now a net profit company, declaring profit for its shareholders.
“We saw the opportunity to acquire this asset and add to our portfolio so that we can meet the requirements of the law. Right now, we are in control of 30 percent of the market in the down stream by this acquisition. No company will come to the public to announce that but is selling the company except by auction or acquisition.
“Acquisition of companies are always within internal processes of the company and every company has its own internal processes.
“In the case of OVH, they had two options. It is either they go to the exchange and sell 100 per cent equity or do a management buy out.
“This is not new and this what OVH opted for. We had no idea that they were doing this. They got to the point of sale. We saw the opportunity and waited for the deal to be closed and then latched on it and we are proud that we made this acquisition.
“We have nothing to hide, this is a commercial relationship. We did nothing wrong. We know that there are acquisitions that have taken place in this country, far less in scale and value than what we got.
“We have taken this acquisition through all the gamuts of processes and procedures established by the Companies and Allied Matters Act, the PIA and memorandum and article of association. So, there is nothing hidden.
“We have seen it in the media that it was a corrupt acquisition and this is far from the truth. It is painful, but we have agreed. To serve the country and it will come at a cost.”
Speaking on the gains recorded from the acquisition, Kyari said “Five years backward, the NNPC Retails Limited’s highest profit came in 2021 of N6.593 billion. But in the first quarter of 2023, after the acquisition of OVH, we made a profit of N18.4 billion. It is nothing because we have expanded, we have more footprint, have better brand and greater capacity in terms of our market share.
“We were struggling to reach 15 to 20 percent in 23 years. But we are hitting 30 percent of market share in less than one year. This is the dramatic change that has happened to this company as a result of this acquisition. We are proud of this acquisition.”
He disclosed that, “petitioners had earlier written to the Economic and Financial Crimes Commission (EFCC) to establish whether anything wrong took place. They did an investigation into this and it was concluded that we did nothing wrong.”
He also denied speculations that it plans to move its headquarters in Abuja to Lagos.
According to him, 70 percent of the operation of the NNPCL is done around the Lagos area, adding that, “if you move everyone involved in this operation from Lagos to Abuja, it will increase cost geometrically and take you away from your operations.
“What we did was to merge our operations with OVH Limited, move the right people to turn right places and keep the registered head office in Abuja. The biggest market for this operation is in the Lagos area and we did not create this company to lose money.
“That is why we moved some of our staff to those locations because we have assets there. We are proud to say that this acquisition has paid off because we made N18.4 billion profit in one quarter.”
On employment of expatriates in the NNPC retails, he said, “You created a national oil company with international affiliation, a company that must do business with the world. There is no company of our size that does not have expatriate employees. The MD they are talking about, I had to beg him to stay because he had the option of leaving. We are currently recruiting expatriates into areas where we don’t have the expertise.
“Many people will tell you that our country is a war zone and the only way you can dilute this is to show them world that you are a peaceful country and there is no better way than to show that expatriates agree to come and work with you.
“As we speak today, we have combined 320 companies owned dealers operated assets, 619 dealer-owned, dealer operated assets, amounting to about 939 fuel stations different from what you used to know.”
The Chairman of the Committee, Hassan Nalaraba, commended the NNPCL GCEO, Kyari for clearing the air on the petition.
Nalaraba noted that the committee will conduct an oversight visit to the OVH facilities to ascertain what is on ground.
He said much is expected from the GCEO and like the saying goes, “to whom much is given, much is expected.
“Let me talk like the president, I don’t envy you, I don’t envy you at all, you requested for the job and so we expect much from you.”
He said the GCEO could be re-invited for further clarifications because the committee still had a week to submit its report, adding that there was need to have an interface with him in the course of oversight.
Also, in his remarks presented by the House Leader, Prof Julius ihonvbare said the investigation was not aimed at witch-hunting anybody, saying, “there is no way the House will witch hunt an agency of government.”
He said further that, “in the 10th Assembly, there is total commitment to join hands with the executive and other branches of government to reposition and rebuild this country.
“It is not going to be based on conflict, but shared understand and exchange of ideas, mutual respect and the commitment to doing the right thing. There is nothing the NNPC will do that will not attract public interest. This is a very critical one. You may have taken the best decision.”
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