Refineries Not Maintained Since 2008 -Experts

modular refinery
  • Refineries Not Maintained Since 2008 -Experts

There has been no major turnaround maintenance carried out in any of the nation’s four refineries since 2008.

Giving this startling revelations were experts at a public forum in Lagos recently. The event was at the Aret Adams Foundation 15th Annual Lecture series 2018.

Tagged: ‘Refineries in Nigeria: Challenges and prospects’, the forum attracted experts in the down and upstream of the petroleum industry.

The Nigerian National Petroleum Corporation (NNPC) has four refineries, two in Port Harcourt (PHRC), and one each in Kaduna (KRPC) and Warri (WRPC).

In a communiqué signed by Mr. Egbert Imomoh, Chairman, Board of Trustees, Aret Adams Foundation and his Vice, Charles A. Osezua, the cross-section of experts observed that the refineries were in state of disrepair as a result of neglect by successive governments.

In the communiqué which reads in part, they noted that the total installed capacity of four major existing refineries in Nigeria is 445,000bpsd. These plants (old Port Harcourt Refinery, Warri and Kaduna Refining and Petrochemical Company and new Port Harcourt Refinery) have within the last 15 to 20 years had a poor operating record with average capacity utilisation hovering between 15 and 25% per annum.

While commenting on some of the challenges facing the refineries, the experts observed that the ownership structure was partly to blame for the parlous state of the refineries.

“The refineries are 100% owned by the government, they have no independent control of or access to their funds and all requests for funds to carry out maintenance are subject to prolonged and multilayered bureaucratic processes and considerations initially by the refinery management committee, followed by NNPC internal processes and finally by the Federal Executive Committee depending on the amounts required.”

Besides, they said no major turnaround maintenance has been carried out in any of the refineries since 2008.

Specifically, they said the last TAM in PHRC was carried out in 2000 as against the established best worldwide practice of conducting TAMs every two to three years.

In spite of the challenges facing the industry, the experts noted that opportunities exist to attract investors given that even if all the current refineries were operating at maximum capacity, there still exists a robust demand for petroleum products. “Current aggregate product demand is put at equivalent refining capacity of 750,000bpd. Hence at least 300,000bpd capacity is required right now. With population growth, the shortfall in refinery capacity would rise to about 550,000bpd by 2028 assuming a growth rate of 3% per annum. Furthermore, Nigeria actually supplies petroleum products to neighbouring African countries through informal channels. An investor could target to formalize this.”

The existing refineries, they stressed, should be rehabilitated and brought back into operation to least at 80-90% capacity utilisation. “This is actually a least cost option compared with building greenfield refineries of equivalent capacities. This can be achieved either through a private sector led financing and rehabilitation initiative as is currently being pursued by NNPC, or through outright divestment of majority equity shareholding to the private sector from the current 100% ownership by government.”

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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