Decline in global crude oil prices and government controlled margins that cushion the oil companies from inflationary increases in operating expenditure has negatively affected Engen profits leading to 11.4 percent decline in the year ended December 2018.
Engen Botswana Chairman, Dr Shabani Ndzinge stated that the group expects decline in profits from P299.2 million recorded in the year ended 2017 to P265.2 million in 2018. “This is mainly attributable to the decline in global crude oil prices in the latter part of 2018 and no adjustment in the government controlled margins that cushion the company from inflationary increases in operating expenditure,” said Ndzinge.
The results would be published by 31 March. Crude oil prices declined by 11.4 percent to 57, 36$ per barrel in December, from 64, 75$ per barrel in November 2018. In its first half of 2018, the group recorded 44 percent increase in profit before tax to P101, 1 million, compared to the same period in the prior year. This was attributed to inventory gains being higher than the comparative period in 2017 due to movements in international crude oil and finished products prices.
The company stated that sales volumes in 2018 were lower than those recorded in 2017 mainly due to inconsistent supply of LPG from the company’s refinery in Durban. Statistics indicate that the slate receivable from government increased from P226 million to P305 million as of June 2018. Presenting the results last year Engen Managing Director, Chimweta Monga said,” While government made some payments to the industry towards the slate under-recovery in the second quarter of 2018, a substantial amount remains unpaid thereby affecting the liquidity of the oil marketing companies,” he said.