….NOCAL’S Performance Report Reveals
By Necus M. Andrews
Financially challenged National Oil Company of Liberia (NOCAL) has budgeted for its Fiscal year 2016/17 US$1,584,000 as personnel or employees’ expense, the performance report for State Owned Enterprises (SOEs) has revealed.
The report provides an analytical review and evaluation of SOEs with key consideration to revenue and expenditure targets, capital investment, and profitability margin.
It is aimed at providing financial oversight management with strategic focus on monitoring and evaluating SOEs performance to ensure fiscal discipline, transparency and accountability of SOEs operations.
The amount, which has been budgeted for spending 2017, indicates that 37 employees will benefit.
Cllr. Althea E. Sherman, Interim President and Chief Executive Officer (CEO) of NOCAL recently told The NEWS that instead of 155 employees, the company now has 37 employees due to financial problems caused by the reduction in the price of oil on the global market.
Cllr. Sherman further told the paper in a communication dated February 22, 2017 that NOCAL has experienced significant challenges due to the decline in global oil prices which affected its revenue generating capacities.
The performance report said NOCAL’s operating revenue from for 2017 is US$575,000. The money according to the company is from its collections.
A budget of US$4,585,000 is being reflected in the FY 2016/17 as loan from the Liberian government to NOCAL.
The amount of US$2,105,851, according to the report, is being budgeted by the Interim Management Team in the FY 2016/17 for goods and services/others expense.
The report put the total expenses of the Oil Company to US$3,689,851 for Fiscal Year 2016/2017.
“Risk to Business Performance: The entity faces both operational and solvency risks. Working capital at the end of the first quarter is negative US$2.67 million with a current ratio of 0.40. NOCAL will have no cash to run its operations if its current liabilities were to be liquidated,” the report said.
Amidst this US$1 million budget for personnel expense, the report said NOCAL has a high debt ratio of 96% which indicates a likelihood of illiquidity and insolvency.
Operating Revenue achieved during the 1st quarter consists of income from operations.
“Thus, total revenue is US$1.3 million representing a 25% budget attainment for fiscal year FY2016/17. The entity did not receive GOL subsidy during the quarter. According to the planned budget, the entity receive US$1.3 million loan from the Government, which will be repaid. Interest accrued on the loan for first quarter FY2016/17 is US$0.097 million,” the report said.
The National Oil Company of Liberia (NOCAL) was established in April 2000 by an Act of the Legislature for the purpose of holding government’s rights, titles and interests in the deposits and reserves of liquid and gaseous hydrocarbons within the country.
The FY2016/2017 quarter one Consolidated Financial Performance Report was prepared in accordance with the Public Finance Management Act of 2009, which requires the, analysis of individual SOEs report for consideration and publication.