Pipelines and Products Marketing Company Limited (PPMC)

Block ‘c’ NNPC towers
Herbert McCauley way
Central business district
PMB 459,Garki Abuja.

AREA OFFICES: (PROPOSED REGIONAL STORAGE DEPOT COMPANIES)

a) PORT-HARCOURT		b) WARRI- WARRI DEPOT
–        PH DEPOT		– WARRI JETTY
–        OKRIKA JETTY		– BENIN DEPORT
–        ABA DEPOT		– ABUDU PUMP STATION
–        ENUGU DEPOT		– AUCHI PUMP STATION
–        MAKURDI DEPOT		– LOKOJA PUMP STATION
–        CALABAR DEPOT		– ESCRAVOS TERMINAL
–        BONNYEXPORT TERMINAL.
d) KADUNA – KADUNA		e) MOSIMI – MOSIMI DEPOT
		o   ATLAS COVE JETTY & DEPT.
		o   SATELLITE (EJIGBO LAGOS)
		o   IBADAN DEPORT
		o   ORE DEPOT
		o   ILORIN DEPOT
		o   ABAJI PUMP STATION
		o   IZOM PUMP STATION
		o   MINNA DEPOT
		o   SULEJA DEPOT
		o   SARKIN PAWA P/STATION
		o   KANO DEPOT GUSAU DEPOT
		o   ZARIA PUMP STATION
f) GOMBE  – JOS DEPOT
– GOMBE DEPOT
– YOLA DEPOT
– BIU PUMP STATION
– MAIDUGURI DEPOT.

DESCRIPTION OF SERVICES

These include:

• Marketing of refined petroleum and petrochemical products in the domestic as well as export markets, marine services and efficient evacuation of refined petroleum products from the local refineries.
• Construct, maintain, lease and hire pump stations, depots and pipelines for the storage and transportation of petroleum and petroleum products, liquids and gases; transport such liquids and gases by means of such pipelines and to utilize, sell and supply liquids and gases to others, to store the same in tanks or otherwise and to lay, buy, lease, sell and operate such pipelines, tanks and other storage facilities.
• Carry on the transportation by ships of crude oil, petroleum products, and petrochemical products and to perform other activities relating thereto.
• Collect and evacuate crude oil, refined oil, liquefied natural gas, liquefied petroleum gas or other allied products from various oil fields, oil terminals or refineries in the Federal Republic of Nigeria or elsewhere and to transport such to anywhere in Nigeria or elsewhere in the World.

MAJOR PRODUCT TYPES                               SPECIAL PRODUCTS

Premium Motor Spirit (PMS)                         Paraffin Wax

Dual purpose Kerosene (DPK)                     Base oil

Automotive Gas Oil (AGO)                           Bitumen

Aviation Turbine Kerosene (ATK)                 Asphalt

Liquefied Petroleum Gas (LPG)                     Carbon Black

Low Pour Fuel Oil (LPFO)

High Pour Fuel Oil (HPFO)

PRODUCTS CAPACITY HOLD (STORAGE)

PMS          994,500 CUBIC METERS

DPK          430,700 CUBIC METERS

AGO         673,100 CUBIC METERS

ATK            74,000 CUBIC METRES

EQUITY STRUCTURE AND THE PLANNED MODE OF privatisation.

PPMC is a wholly owned subsidiary of Nigerian National Petroleum Corporation (NNPC) with a legal status of Limited Liability Company incorporated in 1988, having a paid up share capital of Five Million Naira (N5, 000,000) divided into 5,000,000 ordinary shares of N1 each.

MODE OF privatisation.

In view of its relatively large size and the huge investment funds required, PPMC is to be privatised after “unbundling of its core bulk transport business from its storage depot core business (tank farms)”. This would attract more companies/ investors thus adding to industry competitive intensity. The tank farms are to be further “unbundled” to create four regional storage depot companies (RSDCs) and regulated as “Open Access” companies, as follows:

• RSDC Port Harcourt Zone
• RSDC Mosimi Zone
• RSDC Kaduna Zone
• RSDC Warri Zone.

A transport logistics company is to be created from PPMC pipeline system assets and marine transport assets, and privatised as a regulated common carrier transport logistic company.

The privatisation offer would ensure sale through International Tender for four equity share blocks of 20 percent each, with the highest bidder having the right to operate and manage the facility on behalf of other buyers.

SECTOR DATA   (MACRO-ENVIRONMENT)

DOWNSTREAM SECTOR

Nigeria’s downstream oil sector comprises of four refineries, an extensive pipeline transport, storage and retail distribution network, a gas company and a petrochemicals complex. All these assets, with the exception of the retail distribution network, are owned, managed and operated by NNPC.

The four refineries are located at Kaduna, Warri and Port Harcourt (two refineries in Port Harcourt). The refineries have a total rated capacity of 445,000 barrels per day. The refineries at Warri and Kaduna also have petrochemicals processing capacity.

The product transportation and storage network is the sole responsibility of the Pipelines and Products Marketing Company (PPMC), a wholly owned subsidiary of NNPC. It comprises over 5000 kilometres of products pipelines, 17 depots, 3 refinery-based product tank farms, 9LPG plants, two jetties and one export terminal. PPMC sources for and distributes refined petroleum products across the entire country. It evacuates refined products from the Nigerian refineries, and receives imported products, which is subsequently distributed across the country through a network of pipelines and depots.

Profit & Loss Account: 1997-2001

	1997 N’M	1998 N’M	1999 N’M	2000 N’M	2001 N’M
Turn Over
Tariff Income	5,849	4,109	11,057	15, 540, 751	23, 661, 844
Other Income	86	480	202	416, 747	518, 851
Subvention	2,531	3,482	_-_
(1) Income	8,466	8,071	11,259
Less: Cost of operation
Marine Expenses	5,212	3,503	3,338	(4, 062, 434)	(10, 215, 706)
Pipeline Leasing Charges	–	–	831	(692, 052)	(696, 094)
Pipeline Maintenance	–	655	756	(3, 179, 577)	(5, 677, 177)
Admin & Distr. Expenses	3,745	4,416	7,248	(7, 545, 992)	(8, 660, 744)
	8,957	8,574	12,173
(2) Loss before Tax	(491)	(503)	(914)	477, 443	(1, 069, 026)
(3) Taxation	(27)	(30)	(45)	(65, 791)	(66, 921)
(4) Loss after Tax	(518)	(533)	(959)	411, 652	(1, 135, 947)

 PROSPECTS

PPMC’s infrastructure represents the largest oil and gas network of pipelines and storages currently available in the West African sub-region. The organization was hitherto characterized by inefficiency and various acts of vandalism, partly because government had 100% ownership. With recent reforms in the economy, pipelines and depots have become the main arteries through which the bloodstream of the national economy will flow. The potentials are enormous, including expansion into the sub-region. More specifically

• The pipelines will assist marketers and refiners transport their products to the market and other points.
• The depots are located inland and at the coastlines, offering storages for products preparatory to making them available in the market.
• The Jetties have already indicated high potentials; there is a temporary lease arrangement in place between users that were denied access and the PPMC.

Currently, daily demands for petroleum products stand at nearly 30million litres. With more efficient operations, PPMC pipelines can move up to 80% of these products.  This is in addition to crude oil movement to the refineries. The PPMC inland depots have a combined storage capacity of 2,138,000M3 (about 80 days reserve); while the export terminal at Bonny provides additional advantage for exports.

It is envisaged that after the privatisation of the enterprise, utility output of the facilities would be raised by 30-40% in the first year. A 10% point annual rate of improvement will enhance the attainment of an optimal utility level within five years.

PPMC has a leading position in distribution and storage facilities. The network would be difficult and costly for competitors to duplicate. This provides potential investors with strong customer base and the needed avenue for expansion within the ECOWAS region.

It is expected that the current, on-going round of reforms would enhance prospects for business opportunities. Reforms should also yield significant growth in industrial capacity output, growth in population and enhancement of Nigeria’s per capita income, all of which enriches business prospects.