Controversial Nigerian oil company, Oando Plc, one of the major beneficiaries of Nigeria’s fuel subsidy scam on Wednesday declared that the federal government’s cut of subsidy on petrol hurt its operations, as profit before tax crashed 15 percent to $32 million (about N5b) in Q1 alone, while the company’s net profit declined 76 percent to N3.44 billion (about $21m) in 2011, according to its results released on Wednesday.
Oando’s share price has tumbled steadily in the last one year to a record N14.99 ($0.09 cents), representing a 76 percent fall, a level not seen in almost 9 years when the company dominated the subsidy racket importing more than 80 percent of petrol on behalf of the corruption plagued NNPC.
Oando Plc stock price is expected to fall further as investors seem to have lost confidence in the ability of the company to return to profits without the fuel subsidy racket where it was a major beneficiary. The stock price has declined 13 percent in the last four trading sessions alone.
THEWILL gathered that Oando, a major campaign funds donor to the ruling Peoples Democratic Party (PDP), would have been indicted in the House of Representatives fuel subsidy probe had the House probe not limited itself to subsidy funds paid out to importers only between 2009 and 2011. The Senate’s comprehensive probe is expected to throw more light on the company’s dealings in the subsidy scheme.
In the last one year alone after Petroleum Minister, Mrs. Diezani Alison-Madueke began to clean up the petroleum sector and reduced Oando’s fuel importation allocation to about 10 percent, its subsidiary and cash cow, which imports and distributes petrol has suffered huge loses in revenue.
This was why the major oil marketers led by Oando moved against Diezani and mobilized for her removal as petroleum minister.
Whistleblowers inside Oando Plc run by Managing Director, Mr. Wale Tinubu, told THEWILL that the company has been cash-strapped for a while just as investors have shunned offers by it to sell a part of its subsidiary, Oando Marketing Limited, to raise direly needed cash.
Access Bank Plc has however continued to stand by Oando Plc, providing it with a lifeline to meet its operational obligations. If Access Bank develops cold feet down the line and pulls the plug, Oando Plc will crumble and millions of its shareholders will be burned.
The federal government in January moved to cancel the entire fraudulent subsidy scheme but later adjusted the pump price of petrol to N97 from N65, thereby reducing the margin that a lot of importers had fed fat on.
Source: The Will
