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Refineries Perform Below 20% as Losses Persist

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NNPC - Investors King
  • 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.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Economy

Akinwumi Adesina Says It Is Impossible for Businesses to Survive Without Generator in Nigeria

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Akinwumi Adesina

The President of the African Development Bank (AFDB), Akinwumi Adesina faulted the lack of reliable power supply in Nigeria as a hindrance to industrial growth in the nation.

Speaking at the 49th Annual General Meeting of the Manufacturers Association of Nigeria in Abuja, Adesina stated that Nigerians spend $14 billion yearly on generators and fuel. He further went on to quote a report by the International Monetary Fund (IMF) which stated that Nigeria loses $29 billion annually, about 5.8 percent of its Gross Domestic Product due to a lack of reliable power supply.

He went on to note the various challenges affecting manufacturing in the country stating that lack of reliable power supply in the country is a major challenge to manufacturers. His words were “To be a manufacturer in Nigeria is not an easy task. You succeed not because of the ease of doing business in the country, but by surmounting multiple constraints that limit industrial manufacturing. Today, the major challenge facing Nigeria’s manufacturing is the very high cost and unreliability of electricity supply. Load shedding and the inconsistent availability of electrical power have resulted in high and uncompetitive manufacturing costs.

He went on saying “Today, no business can survive in Nigeria without generators. Consequently, the abnormal has become normal. Traveling on a road one day in Lagos, I saw an advertisement on a billboard that caught my attention. It was advertising generators with the bold statement, we are the Nation’s number one reliable power supplier!!”

He then went on to proffer potential solutions to the problem, saying that Nigeria should invest in different means of energy generation to ensure the efficiency of the local industries. He suggested there should be massive investment in variable energy mixes, including gas, hydropower resources, and large-scale solar systems to ensure stable baseload power for industries to direct power preferentially to industries and to support industrial mini-grids and concentrate power in industrial zones. In addition, he suggested the development of more efficient utilities which would reduce the technical and non-technical losses in power generation, transmission and distribution systems.

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World Bank Says Nigeria’s Economy is Static, Per Capita Income Unchanged in 40 Years

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The World Bank claims Nigeria’s per capita income has been static since 1981, which is a total of 40 years.

The Country Director of the World Bank, Shubham Chaudhuri said this at the breakout panel session of the 27th Nigerian Economic Summit on Lightning Nigeria: Solution framework for power recovery held in Abuja.

He further went on to advise Nigeria’s economic managers to quickly assemble potent strategies to harness the robust potential of the country.

He went on to say that the medium-term development plan for 2021-2025 is set on the development agenda for sustainable growth driven by new and emerging sectors. He claimed about three million Nigerians come of working age yearly, but surveys have shown that they aspire to go abroad to earn a better standard of living.

Per Capita Income is an Economic indicator that indicates the average income earned per person in a country in a specified year. It is calculated by dividing the country’s total income by its total population. In 1981, according to World Bank data, Nigeria’s per capita income was $2,180.2 and per capita income was $2,097 in 2020, meaning there has been no significant change in four decades.

 Earlier in the session, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed called for a paradigm shift in running the country’s economy through comprehensive and targeted reforms, a reorientation of national values, and a radical shift in attitudes to taxation and public financial management. 

She said, “This is consistent with the focus of this administration on targeted investment in critical infrastructure and social development.

 The Nigerian Economic Summit is the flagship event of the Nigerian Economic Summit Group (NESG) and it is organized in collaboration with the National Planning Commission (NPC). The Nigerian economic summit has consistently focused on job creation, small and medium-sized enterprises (SME) growth, competitiveness, dismantling the pillars of corruption, encouraging sustainable growth and development, and aligning home-grown long-term agenda with the UN sustainable development goals. The 27th Nigerian Economic Summit has the theme Securing our Future: The Fierce Urgency of Now.

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East African Countries to Discuss Economic Recovery and Investments Promotion this Week in Kigali

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More than 100 decision-makers and economic stakeholders will gather in Kigali this week to discuss the road to social and economic recovery and how to attract investments in East Africa. The meeting known as the 25th session of the Intergovernmental Committee of Senior Officials and Experts (ICSOE), will take place from 27 to 29 October 2021. 

The ICSOE is the annual gathering of the office for Eastern Africa of the UN Economic Commission in Africa (UNECA) organised in collaboration with the Rwanda Ministry of Finance and Economic Planning. The theme of this year’s meeting is: “Strengthening resilience for a strong recovery and attracting investments to foster economic diversification and long-term growth in Eastern Africa”.

Dr Mama Keita, Director of UNECA in Eastern Africa said that the Covid-19 pandemic has weakened the economic conditions of all countries in the region. She stressed that the ICSOE meeting will provide a platform for various stakeholders from governments to have a conversation with experts and private sectors on the needed economic recovery and on how to re-ignite the engines of trade and investment.

Dr Uzziel Ndagijimana, Minister of Finance and Economic Planning said that this meeting is timely and significant. “This is the time for Rwanda to discuss with other countries of the region the potentials and the ability to rise and be responsive to the socio-economic challenges, exacerbated by the Covid-19 crisis.

According to Ms Keita, the African Continental Free Trade Area (AfCFTA) is undoubtedly critical to support the recovery from the severe adverse impacts of the Covid-19 pandemic, increase the economic multiplier in the region and will help countries to build back better, grow their economies and create jobs that foster inclusive growth.

The participants at the meeting will discuss thematic issues such as deepening Regional Value Chains, environment for investment Opportunities and Interlinkages between peace, security and development.

The subregional office for East Africa of UNECA serves 14 countries: Burundi, Comores, RD Congo, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Rwanda, Seychelles, Somalia, South Sudan, Tanzania and Uganda.

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