Home Economy Slowdown In Exploratory Activities: Constrain NOCAL’s Revenue Generation… BSE Annual Aggregate Performance Report 2023 Asserts

Slowdown In Exploratory Activities: Constrain NOCAL’s Revenue Generation… BSE Annual Aggregate Performance Report 2023 Asserts

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By: Linda Gbartie

MONROVIA: Portfolio of State Enterprises Annual Aggregate Performance Report 2023 (BSE) has revealed that the National Oil Company of Liberia (NOCAL’s) operating revenue decreased by USD2.09 million or by 36 percent from USD5.74 million during FY2022 to USD3.64 million in FY2023.

According to the Report, the oil company did not provide details of its operating revenue for 2023 to allow for a more comprehensive analysis of its current revenue-generating capacity.

The report, however, asserted that analysis of the NOCAL’s performance over the last five years indicates a marked growth in its operating revenue from USD0.21 million in 2019 to USD3.64 million in in FY2023.

The report indicated that the total subsidy received by NOCAL from the Government of Liberia was US$0.98 million and 161% when up compared with the amount received in 2022.

The second edition of the Annual Aggregate Performance Report of the BSE was released at a daylong workshop that borders on “Presentation on Improving Governance of State-Owned Enterprises and Reducing the Fiscal Risks,” sponsored by the World Bank, and held at Mamba Point Hotel on Tuesday, May 28, 2024 in Monrovia.

The report covers the activities of the eighteen state-owned entities currently covered by the BSE, and provides a comprehensive analysis of their operations and financial activities individually and collectively in line with their statutory responsibilities.

The BSE was established in 1985 to coordinate the activities of all state-owned Enterprises (SOEs).

Its coordination of state enterprise sector involves oversight of SOE’s operations, professional advice to the government on issues relating to the state enterprise sector, regulation of the sector through the recommendation of policy options and the implementation of policies when approved, and providing strategic leadership and director for SOEs.

The report contained that the total subsidy received by NOCAL from the Government of Liberia was US$0.98 million and 161% up when compared with the amount received in 2022.

The NACOL was established in April 2000 by an act of the National Legislature to represent the strategic interest of Liberia in the exploration of liquid and gaseous hydrocarbon deposits and reserves.

The Company holds all of the country’s rights, titles, and interests in liquid and gaseous hydrocarbon deposits and reserves whether potential, proven, or actual to facilitate the development of the oil and gas industry.

NOCAL generates its revenue from petroleum sharing contracts and the sales of seismic data by TGS and NOPEC.

According to BSE, the analysis of the Oil Company performance provided in the report is based on the unaudited annual financial account that the company submitted to it, as such, its operating revenue decreased by US$2.09 million or by 36% from US$5.74 million during FY2022 to US$3.64 million in FY2023.

The Report indicated that NOCA’s operating expenditure for FY increased by US$0.90 million or 62% from US$1.47 million during 2022 to US$2.37 million at the end of 2023.

Additionally, the Report disclosed that the key drivers of NOCAL ’s operating expenditure were the cost of goods and services which make up about 69% of the total spending for the year.

The Oil Company operating expenditure grew over the last five years (2019-2023) by a CAGR of 5% from US$1.83 million in FY2019 with a growth driven significantly by an 11% growth in spending on goods and services over the same period.

“NOCAL EBITDA ( Earnings Before Interest, Tax, Depreciation, and Amortization) fell significantly by US$ 2.40 million or 52% from US$4.63 million in 2022 to US$2.25 million during 2023.

From FY2019 to FY2023, its EBITDA improved from a deficit of US$1.63 million to a surplus of US$4.64 million during 2022 and US$2.25 million in 2023.

For the FY under review, the net operating surplus dropped by 55% from US$4.63 million in 2022 to US$2.10 million at the end of 2023 after depreciation expense of US$0.15 million,” the report mentioned.

Furthermore, the BSE report indicated that at the end of the year, the balance sheet of the company grew by US$2.71 million or 72% from US$3.77 in 2022 to US$6.48 million at the end of December 2023.

Meanwhile, the report highlighted that the slowdown in exploratory activities in Liberia since 2014 is the key factor that continues to constrain the revenue generation of NOCAL, as such, according to the company’s management, it has tried to maintain a low-cost profile over the last years to mitigate the operational challenges created by the non-performance of revenue, and taking up more debts to finance its funding gaps.

The report added that the total revenue generated by the subsector for 2023 amounted to US$2.70 million, 18% up when compared to the outturn in 2022 as such Liberia Water and Sewer Corporation (LWSC) was the key driver of the subsector’s total operating revenue for 2023, contributing about 97% and total subsidies received by both entities for the year amounted to US$0.89 million, with total receipt by NHA, accounting for 100%.

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