Refineries Perform Below 20% as Losses Persist

NNPCThe Nigerian National Petroleum Corporation (NNPC) Tower
  • Refineries Perform Below 20% as Losses Persist

The consolidated performance of three of Nigeria’s refineries in Warri, Kaduna and Port Harcourt is below 20 per cent, the latest financial and operations report of the Nigerian National Petroleum Corporation has shown.

Similarly, the loss in revenue by each of the facilities has continued to drag despite the steady amount of crude oil they are taken it.

An analysis of the latest ring-fenced refineries performance in August 2016 as released by the NNPC showed that the precise consolidated capacity utilisation of the three refineries was 19.9 per cent.

This, however, was an improvement over 6.74 per cent that was recorded in July 2016.

The three refineries are the Warri Refining and Petrochemical Company, the Kaduna Refining and Petrochemical Company, and the Port Harcourt Refining Company.

The report further stated that the consolidated revenue losses of the three facilities dropped from the 5.13 per cent in July to 3.23 per cent in August.

On the individual performance of the refineries in August, the NNPC said the capacity utilisation of the WRPC was 14.28 per cent of crude oil plant capacity of 125,000 barrels per day.

The capacity utilisation of the KRPC and the PHRC was put at 18.78 per cent and 19.52 per cent, while their plant capacity was 210,000bpd and 110,000bpd, respectively.

The report stated, “The total crude produced by the three local refineries for the month of August was 359,081 metric tonnes (2.63 million barrels), compared to crude processed in July of 126,756MT (929,275 barrels).

“For the month of August, the three refineries produced 328,314MT of finished petroleum products out of 356,081MT of crude processed.”

The NNPC, however, explained that the improved capacity utilisation of the facilities was due to the success achieved by the domestic refineries.

It said, “For the first time in several months, the three refineries operated concurrently despite crude pipeline vandalism in the Niger Delta region. However, the three refineries continue to operate at minimal capacity.”

Some stakeholders in the oil and gas sector have called for the sale of the country’s refineries, while others urge the government to desist from providing incentives to the facilities.

For instance, while speaking during the Second Presidential Economic Communication Workshop in Abuja on Thursday, the Chief Executive, Economics Associates, Dr. Ayo Teriba, stated that instead of providing incentives to refineries, the government should partner private investors in joint ventures to revamp the facilities.

He said, “There shouldn’t be incentives for refineries. If incentives could not help out in the Nigeria Liquefied Natural Gas, why do you think it will work out in refineries? Government can go into joint venture with investors on refineries. It opened up the space in the telecoms sector and we know how that sector has grown. It should do so for refineries.”

In the road map for the oil and gas sector tagged Seven Big Wins unveiled recently by President Muhammadu Buhari, the Federal Government stated that it would spend between $1.4bn and $1.8bn to rehabilitate the country’s refineries within two years in a bid to reposition the industry.

It stated that the rehabilitation would be carried out with the participation of the private sector as the road map represented the short and medium-term priorities to grow the Nigeria’s oil and gas industry from 2015 to 2019.

Part of the implementation strategy of the road map is for the government to ensure integrity assessment of all existing refineries and formulate investment plans to refurbish the facilities and improve their capacities.

The government, in the report, said the short-term objective within two years would be the execution of a comprehensive rehabilitation programme under private sector participation to improve operations and increase capacity utilisation.

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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