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Tag: MRS

  • EFCC recovers N328.9b from Total, MRS, others

    EFCC recovers N328.9b from Total, MRS, others

    The Economic and Financial Crimes Commission (EFCC), Kano Office, has recovered N328,988,296,990.62 from some major oil marketers.

    The retail oil marketers are Conoil Plc, Total Plc, OVH Energy Plc,  Forte Oil and Gas Plc, Mobil Plc, MRS Oil Plc and NIPCO Oil Plc

    The recovery followed a petition against the leadership of the Nigerian National Petroleum Corporation (NNPC) and its subsidiary, Pipelines and Product Marketing Company (PPMC).

    According to a statement by the EFCC Head of Media and Publicity, Mr. Wilson Uwujaren, the breakthrough was the consequence of an investigation into alleged diversion of N40 billion by the affected marketers.

    The statement said: “The petition alleged that a whooping sum of N40 billion had been diverted by the major oil marketers in connivance with the leadership of the NNPC and PPMC.

    “The EFCC in a swift reaction referred the petition to a special task force, who swung into action by conducting discrete investigation.

    “Findings by the operatives of the EFCC revealed that the oil marketers were actually indebted to the Federal Government to the tune of N91,519,485,204.44 between 2010 and 2016.

    “Further investigation into the allegation also revealed that the oil marketers had continued to obtain petroleum products from the government without proper payment, in violation of the NNPC/PPMC credit facility regulations.

    “The probe further led to the discovery of N258,928,926,351.93. Following the latter discovery, the total amount of debt stands at N349,818,411,556.37.

    “Upon the conclusion of the preliminary investigation, officials of NNPC/PPMC and all the managing directors of the concerned companies, which are NNPC retails, Conoil Plc, Total Plc, OVH Energy Plc,  Forte Oil and Gas Plc, Mobil Plc, MRS Oil Plc, and NIPCO Oil Plc, were invited to the Kano Zonal Office of the commission, where their statements were recorded following which the recovery process commenced.

    “So far, a sum of N328,988,296,990.62 has been recovered from the major oil marketers.

    “The outstanding debt now stands at N20,765,919,869.”

    Shady deals in the oil sector, including the fuel subsidy scandal, were said to have cost the nation over N1.3 trillion in 2011.

    But the manipulation of subsidy claim caused uproar nationwide

    The Presidential Committee on Verification and Reconciliation of Fuel Subsidy Payments had initially  indicted 21 firms for fraudulent claims that cost the nation N382 billion. The list was later increased to 25 by the Federal Ministry of Finance based on fresh evidence.

    The former chairman of the committee, Mr. Aigboje Aig-Imoukhuede, said  of the N422 billion scrutinised, N18 billion was found to be duplication and N21 billion was cleared.

    He confirmed that of the 116 oil marketing and trading companies (OM&T) invited, 107 honoured the invitation.

    He said: “Of the N422 billion, N18 billion was found to be duplication. So, the actual amount that was being verified is N403 billion. Of this amount, N21 billion was cleared and that leaves N382 billion as the sum in contention for which the committee recommended that the process of recovery should be made,” the committee report noted.

    “Painstaking efforts were made to ensure fairness; OM&T’s were given the opportunity to come back with as much documentation and even being re-interviewed where necessary.”

     

  • MRS opens 120,000mt Tin Can terminal

    MRS opens 120,000mt Tin Can terminal

    MRS Oil Nigeria Plc has inaugurated a berthing terminal – Dantata Jetty  – with capacity to berth vessels of 80,000 – 120,000 metric tonnes at the Tin Can Island Port in Lagos.

    The  facility, reputed to be the first of its kind in Africa, would save millions of dollars spent yearly by marketers to hire daughter vessels to lift products from from the high seas to the depots.

    With the new terminal, mother vessels can berth at the new Jetty.

    Minister of State for Petroleum, Dr. Ibe Kachikwu, said he was impressed by the information technology  deployed in the facility to monitor the loading of every petroleum product in computers, adding that it is the largest on the continent.

    He said with the computerisation scheme in the facility, the chairman of the company could monitor the loadings from anywhere.

    Kachikwu said he had a similar vision for the Nigerian National Petroleum Corporation (NNPC), stressing that as the leader in the downstream sector, the NNPC Downstream should adopt a similar computerisation scheme to reduce losses.

    “That is fantastic; it is important that we get the NNPC to align with this strategy to reduce losses,” Kachikwu said.

    Kachikwu recalled that it was a year ago that he took a decision that the lightering expenses incurred by the NNPC in transferring products from the mother to daughter vessels was becoming unsustainable. “Sayyu (chairman of MRS Oil) heard this and took the decision on this facility,” he said.

    He praised MRS, noting that the acquisition of Chevron Oil had transformed the company from a small firm to a big global one, saying  the Federal Government has the responsibility to improve the ease of doing business to ensure the success of businesses, such as MRS Oil.

    Minister of Power, Works and Housing, Mr. Babatunde Fashola, said MRS Oil deserved commendation “not only for the size, the capacity – the audacity really of what MRS has done but also because it was done by a Nigerian company.”

    According to him, the most important investor in any economy is the local investors because “they will not run away, no matter how tough it is.”

    Fashola said the administration realised this and had remained committed to supporting indigeneous investors, such as MRS.

    “Congratulations also that this investment has come to maturity at a most auspicious time – barely a week after Mr. President launched the economic recovery programme and one of the priority actions in that programme out of the 60 interventions is strengthening our capacity towards self-sufficiency in energy supply,” Fashola added.

  • MRS opens Africa’s largest jetty in Lagos

    eading downstream oil firms, MRS Limited, recorded a landmark feat yesterday with the inauguration of its newly built jetty in Apapa.

    The jetty is the largest in Africa.

    The terminal is the first and only in Africa to berth a mother (large) vessel with a capacity of 60,000 metric tons of cargo and more.

    The jetties don’t accommodate large vessels because of shallow draft.

    Previously such mother vessels berth on the high sea while smaller vessels are used to lighter them.

    The first mother vessel to berth at the facility, MT Navig8, laden with 80,000 metric tons of fuel, was still there yesterday.

    Managing Director of MRS, Alhaji Saidu Dantata, said the terminal can take vessels of 120,000 metric tons capacity.

    Dantata said the new terminal will not only reduce cost substantially for maritime and oil and gas industry operators but also the turnaround time.

    He said: “It will enhance the economy of our country in many ways. We waste over a billion dollars on the high sea, which the common man cannot see.

    “It is only those of us in the industry know where it pinches. This is a country where everyone sits and watches but if we want to move this economy forward, we need to stand up and do what we are supposed to do. If we don’t really get up, we will never make progress. “

    He added: “With the support and encouragement of all of us, we should be able to be an exporting country within the next 5-10 years.

    “If we have four of this terminal, we will not incur demurrage again and besides, we will be able to save at least $1billion a year.

    “This particular terminal can save you at least $200 million a year. Our sea operation is limited because we don’t have the facilities.

    “As a result we incur a lot of losses. This facility will create more employment and more savings.”

  • We didn’t convert NNPC’s products, says MRS

    We didn’t convert NNPC’s products, says MRS

    • Aiteo pays $202m

    MRS Limited has absolved itself from allegations that it expropriated petroleum products belonging to the Nigerian National Petroleum Corporation (NNPC).

    NNPC’s Group General Manager, Group Public Affairs Division,  Ndu Ughamadu, quoted the Chief Operating Officer, Downstream, NNPC, Mr. Henry Ikem-Obih, as saying that MRS expropriated just over 30 million litres of petrol.

    He said the Corporation stored the fuel in its depot in Apapa, Lagos under a throughput arrangement to ensure a robust strategic reserve, adding that MRS has fully complied by returning the 30 million litres of petrol that it expropriated.

    MRS management had disowned the report, saying it was unfounded and malicious, pointing out that the recent publications in the print, electronic and social media alleging that products throughput by NNPC in our terminal was expropriated was untrue. It stated that ordinarily the management would not comment on such issues, but has to because they border on the firm’s integrity.

    It said: “NNPC’s claims are false, malicious and unfounded. It is clearly a misrepresentation of the workings and processes of the downstream operations. It is unfortunate that the national oil firm has chosen to repeatedly distort facts and malign the integrity of our company.

    “For the sake of clarity, MRS is not a storage company, rather it is a throughput company. It is important at this point to explain in lay man’s terms, what throughput means. Throughput is akin to a banking arrangement. In a throughput contract, we act as a product bank to different customers who we throughput products for, but because of the operational process involved in replenishing stock, we have seven days from when we receive the demand to provide the products if we have stock out. This act of storing the products in a co-mingled state (where products belonging to various customers are mixed) and loaded out on demand is called throughput and is usually for a 30-day period.”

    Meanwhile, following extensive reconciliation between the Nigerian National Petroleum Corporation (NNPC) and the Aiteo Group, the Corporation said  yesterday that the group has paid in full all its outstanding indebtedness to its downstream entities  amounting to $202,344,838.62.

    The NNPC’s Group General Manager, Group Public Affairs Division, Ndu Ughamadu stated this in a statement.

    He said the amount includes AITEO’s share of the $184million total indebtedness by three companies on crude swap obligations plus AITEO’s other downstream liabilities.

    Aside AITEO, two other companies were involved in the crude swap under deliveries. They are Televaras Group of Companies and Ontario Oil Gas Limited.

    Ughamadu Televaras has pledged to make a first tranche payment of $17.2 million, adding that NNPC is still engaging Ontario Oil & Gas Limited for mutual settlement.

    Following its engagement with the NNPC on the issue, AITEO Group has demonstrated cooperation and commitment towards a successful recovery process.

    Ughamadu said the Corporation shall continue to provide further update on the recovery process, saying  that in line with its pledge to provide members of the public with periodic updates on its recovery efforts for crude swap under deliveries, the NNPC is pleased to confirm that it has now reached a final settlement with AITEO Group.

  • Reps threaten warrant of arrest against recalcitrant oil company chiefs 

    The House of Representatives has threaten to issue warrant of arrest against Chief Executive officers (CEO) of some major oil companies for failing to honour it’s invitations.

    The oil companies that include Total Nigeria Plc, Mobil Nigeria, NIPCO, Forte Oil, Oando and MRS among others were being investigated for alleged huge debts and criminal acts of sabotage by oil marketers.

    Chairman, ad hoc committee mandated to carry out the investigation, Abdulahi Gaya Wednesday expressed concern over the attitude of the affected CEOs that have consistently failed to either honour the Committee’s invitation or failed to provide requested documents for the investigation.

    He said: “Before we started this investigation, what we did as a committee was to sit down to digest and see the best way out and fortunately for us, so far we have recovered a lot of money, huge amount of money.

    “We called PPMC to give us information on the outstanding of oil marketers and they came and told us. We then sent letters to 17 oil marketers to send in documents and tell us their own part, the outstanding.

    “We also requested that they come and defend it but instead of doing that, they are sending representatives. Why are sending persons that are not part of their organizations?”

    According to him, the investigation was to ascertain the veracity or otherwise of the claims of the Petroleum Product Marketing Company (PPMC) as well as the oil marketers who are the actors on the matter with a view to ensuring that the Nigerian government was not short-changed in anyway.

    Gaya, who revealed that 50 percent of the debts arising from default by  oil marketers has been recovered, however did not disclosed the actual amount recovered so far.

    While he noted that the amount was stipulated in the documents obtained from various stakeholders, the lawmaker expressed optimism that 80 percent of the money would be recovered by the end of the investigation.

  • MRS not owing FCMB N6.2b, says management

    MRS not owing FCMB N6.2b, says management

    The management of MRS OIl and Gas Company Limited yesterday denied owing First City Monument Bank (FCMB) N6.2billion.

    The oil company was reacting to a report (not in The Nation) titled: “Major oil firm, MRS owes FCMB N6.2b”.

    In a statement, MRS said: The attention of MRS OIL & GAS COMPANY LIMITED hereafter referred to as (“MRS” or “ the Company”) was drawn to the above captioned and we wish to categorically state as follows:

    “MRS reaffirms that the Company does not owe FCMB the amount claimed in the publication, this is evidenced by the report of our forensic auditors MCL Solutions Ltd. MRS, it’s forensic auditors and lawyers have has made various attempts to reconcile this account with FCMB unsuccessfully. This led to our forensic auditors having to report the matter to CBN forintervention, as can be seen from attached correspondences.

    “MRS is aware that FCMB has embarked on a smear campaign to tarnish the image of the Company and its directors judging by the antecedent and recorded actions against the Company; one of which was the case filed against MRS at the High Court of Lagos State, whichwas later struck out by the court.

    “It will appear that this fraudulent manner of extorting monies from clients through overcharge is fast becoming the modus operandi of FCMB. It will be recalled that an online report was recently circulated where FCMB had overcharged a client by 1bn Naira, as reported in the case of Zumaxvs FCMB.

    “The incompetence of the FCMB team, is further demonstrated where names of people who are not and have never been directors of the MRS are mentioned in the referred publication. For the avoidance of doubt, Messrs Patrice Alberti, Andrew Gbodume and Paul Bissohong are not directors of MRS.

    “We therefore wish to assure our customers and business associates that we are NOT indebted to FCMB as claimed and published.

    “Our lawyers have been instructed to take appropriate remedial actions.

    “The company wishes to assure the general public that MRS Oil & Gas Company Limited will continue to transact its business with the highest ethical standards and in accordance with the extant laws of the Country’’.

  • MRS Oil Nigeria: Losing fuel

    MRS Oil Nigeria Plc’s high financial leverage continued to compound its sluggish business performance, underlining a complex situation that has, in recent years, continuously decimated the profitability and returns of the petroleum-marketing company.

    Audited report and accounts of MRS for the year ended December 31, 2012 showed that the company remained under extreme pressures from its dependence on bank loans, the resultant high interest expense and less-than-optimal turnover.

    While turnover grew by 11.5 per cent, an increase of 163 per cent in interest expenses overran the profit and loss accounts, leading to declines of 73 per cent and 67 per cent in profits before and after tax respectively. The worsening bottom-line passed on to shareholders, with further reduction in cash dividend by about 67 per cent.

    However, one-third reduction in outstanding loans relieved the edgy balance sheet position. While total assets dropped by about 24 per cent, total liabilities declined by 32 per cent, leaving the company in better financing position. Modest improvement in working capital and lower gearing ratio underlined a commendable balance sheet restructuring, although it still remained substantially susceptible.

     

    Financing structure

    Total balance sheet size stood at N55.6 billion in 2012, indicating a drop of 23.5 per cent from N72.7 billion recorded in 2011. Balance sheet size was depressed mainly by 32 per cent decline in current assets from N49 billion to N33.2 billion. Long-term assets had slipped from N23.7 billion to N22.4 billion.

    Meanwhile, total liabilities also dropped by 32 per cent from N53.71 billion to N36.54 billion. Current liabilities had declined by 36 per cent from N46.76 billion to N30.1 billion, reflecting similar decline in bank loans from N21 billion in 2011 to N13.46 billion in 2012. While the paid up share capital remained unchanged at N127 million, some 254 million ordinary shares of 50 kobo each, total equity funds inched up from N18.99 billion to N19.05 billion.

    The decline in loans and current liabilities and the stability of the equity funds mixed into better financing structure. Debt-to-equity ratio improved from 111 per cent in 2011 to 71 per cent in 2012. The proportion of equity funds to total assets also improved from 26 per cent to 34 per cent.

     

    Efficiency

    MRS undertook major staff downsizing in 2012 as average number of employees nearly halved from 203 persons in 2011 to 109 persons in 2012. Staff costs declined correspondingly from N1.53 billion to N812.7 million. Average staff cost per employee dropped slightly from N7.51 million to N7.46 million. Notwithstanding the restructuring, staff performance and productivity as well as general cost efficiency were relatively weak. Average contribution of each employee to the bottom-line halved from N6.96 million in 2011 to N3.48 million in 2012. Without the huge interest expenses, other costs were still slightly higher. Cost of sales and operating expenses amounted to 99.2 per cent of turnover in 2012 as against 98.8 per cent in 2011.

     

    Profitability

    MRS suffered considerable decline in profitability in 2012 with both outward profit and loss figures and underlying indices crashing to new lows. Average pre-tax profit per unit of sales dwindled from N2 in 2011 to 50 kobo in 2012 just as average return on each unit of N100 assets slumped from N1.90 to 70 kobo. The negative bottom-line performance was mainly orchestrated by significant increase in interest expenses, which overwhelmed the headroom created by modest growth in sales. Total turnover rose by 11.5 per cent from N71.49 billion to N79.73 billion. Top-line performance was driven largely by about 20 per cent increase in premium motor spirit from N49.15 billion to N58.92 billion. Total turnover was moderated by substantial declines in automotive gas oil, which dropped from N7.28 billion to N6.28 billion and dual purpose kerosene, which dropped from N2.54 billion to N1.71 billion.

    With 14.5 per cent increase in cost of sales from N64.67 billion to N74.02 billion, gross profit dropped by 16.3 per cent from N6.82 billion to N5.71 billion. Total operating expenses however decreased by 15.6 per cent from N5.98 billion to N5.05 billion. Non-core business income was almost flat at N1.07 billion compared with N1.09 billion in previous year. Finance expenses jumped by 163 per cent to N1.36 billion as against N517 million in previous year, laying the foundation for significant declines in pre and post tax profits. Profit before tax slumped to a low of N379 million in 2012 compared with N1.41 billion in 2011 while profit after tax dropped from N616 million to N205 million.

    Underlying fundamentals of the company were generally on the downtrend. Gross profit margin dropped from 9.5 per cent to 7.2 per cent. Profit before tax margin slipped to 0.5 per cent as against 2.0 per cent. Return on total assets dropped from 1.9 per cent to 0.7 per cent while return on equity dwindled to 1.1 per cent compared with 3.2 per cent recorded in previous year.

    The low profit performance depressed actual dividend payouts and the sustainability of even such payouts. With basic earnings per share dropping from N2.43 to 81 kobo, the company reduced dividend by the same margin. Gross dividend dropped from N178 million to N59 million, representing a dividend per share of 23.34 kobo for the 2012 business year as against 70 kobo paid for the 2011 business year. Dividend cover also dimmed from 1.94 times in 2011 to 1.37 times in 2012. Net assets per share was flat at N75.02 in 2012 as against N74.76 in 2011.

     

    Liquidity

    The liquidity position of the company meanwhile improved considerably during the period. Current ratio, which fundamentally indicates the ability of the company to meet emerging financing obligations, improved from 1.05 times in 2011 to 1.10 times in 2012. The proportion of working capital to total turnover also improved from 3.1 per cent to 3.9 per cent. Debtors/creditors ratio stood at 41 per cent in 2012 as against 52 per cent in 2011.

     

    Governance and structures

    Formerly known as Chevron Oil Nigeria Plc, MRS Oil Nigeria is owned by about 24,000 shareholders. One of the major downstream oil companies, MRS Africa Holdings Limited (Bermuda) holds 60 per cent majority equity stake in MRS Oil Nigeria while ZSL holds 7.71 per cent equity stake. Sundry Nigerian individuals and institutions hold the remaining 32.3 per cent equities. While the board has remained stable, the management of the company has seen many chief executives in recent period. Alhaji Sayyu Dantata, who doubles as the Chief Executive for MRS Oil Group, still chairs the board of MRS Oil Nigeria.

    Meanwhile, Mr Paul Bissohong was appointed the acting managing director following successive resignations of Mr Shardhashis Prasad and Mallam Musa Yahya.

     

    Analyst’s opinion

    The latest earnings report further underlines the need for a thorough review of not only marketing and financing strategies but also the long-term business growth strategy. While it made commendable effort to reduce short-term indebtedness, the company needs to still undertake substantial deleverage. Besides, it needs to develop a sustainable sales growth and cost management strategies to stabilise earnings and break the chequered trend that has marked the performance curve over the years. The overall performance outlook raises the urgency of a deeper restructuring.