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Nigeria’s Listed Oil Companies Reap Big From Fuel Subsidies

Nigeria’s Listed Oil Companies Reap Big From Fuel Subsidies

From BusinessDay

Listed companies in Nigeria’s downstream petroleum sector outperformed the Nigeria Stock Exchange (NSE) in 2013 even as the sector had been enmeshed in a series of probes relating to fuel subsidy payments.

This consequently led to the delay in disbursements of payments by the ministry of finance, and slowing the growth potential of the sector.

However, the subsequent payments of subsidy arrears after thorough reconciliation by the finance ministry enabled some of the companies pay back loans owed to banks thus reducing finance cost and boosting operational performance as can be seen from the results of five firms in the downstream sector namely: Forte oil Plc, Conoil Nigeria Plc, Oando Nigeria Plc, Total Nigeria Plc, and Mobil Nigeria Plc.

Forte Oil has a superb 12M13FY result as it recorded double digit growth in revenue of 40.7 percent y/y to N128.02 billion from N90.98 billion 12M12FY ,while pre-tax profits surged by 467percent to N6.52 billion year end 2013.

The company recorded higher returns to the owners as return on Asset (ROA) jumped to 5 percent 2013FY from 2 percent 2012FY, while Return on Equity ( ROE) remained flat at12 percent 2013FY from13 percent 2012FY.

Conoil Plc also had an impressive performance in the review period as its revenue grew by 6 percent to N121.81 billion as against N114.77 billion-this is still lower than the double digit growth rate, while pretax profits jumped by 341 percent to N3.08 billion.

Written by Patrick Atuanya & Bala Augie | Read more from BusinessDay