- Dormant Refineries Post Losses in Nine Consecutive Months
The fortunes of Nigeria’s refineries have continued to plummet as the plants posted losses for nine consecutive months, the Nigerian National Petroleum Corporation has said.
Findings from NNPC’s latest monthly financial and operations report showed that the refineries recorded continuous monthly losses from May 2018 to January 2019.
The refineries include Warri Refining and Petrochemical Company, Kaduna Refining and Petrochemical Company and Port Harcourt Refining Company.
Further analysis of NNPC’s January 2019 report showed that since January 2018, only the WRPC was able to make profits in February (N129.91m) and April 2018 (N575.16m).
From January 2018 to January 2019, the KRPC and the PHRC only made a profit in April 2018, as all the refineries started losing money on a monthly basis beginning from May last year.
Further analysis of the report showed that the KRPC posted the highest loss of N3.74bn for January 2019, as it stayed dormant and failed to refine any crude oil from February 2018 to January this year.
The PHRC recorded N2.11bn loss in January 2019 and the refinery was idle from July 2018 to January this year, as it could not refine a drop of crude in the seven months.
Also, the WRPC lost N2.51bn in January 2019, but the report showed that of the country’s three refineries managed by the NNPC, only Warri refinery was able to process some volumes of crude oil from January 2018 to January this year.
Our correspondent observed that between January 2018 and January 2019, the WRPC only recorded zero capacity utilisation in January, September and October, in 2018.
In January this year, the Warri refinery processed 104,459 metric tonnes of crude and posted a capacity utilisation of 19.76 per cent.
It was also observed that the consolidated loss of the refineries for January 2019 alone was N8.36bn.
The NNPC stated in the report that it had been adopting a merchant plant refineries business model since January 2017.
It said, “The model takes cognizance of the products worth and crude costs. The combined value of output by the three refineries (at import parity price) for the month of January 2019 amounted to N33.69bn, while the associated crude plus freight costs and operational expenses were N31.58bn and N10.47bn respectively.
“This resulted to an operating deficit of N8.36bn by the refineries.”
President Muhammadu Buhari government had promised to increase the performance or output of the nation’s refineries to about 90 per cent by 2019. But this did not materialise during the first term of the President, which elapsed on May 29, 2019.
In May 2017, the erstwhile Minister of State for Petroleum Resources, Dr Ibe Kachikwu, while speaking as a guest on BBC Hard Talk in London, vowed to resign if the country failed to attain self-sufficiency in the refining of petroleum products by 2019.
When asked to state the year that Nigeria would be self-sufficient in refining petroleum products, Kachikwu replied, “I have said 2019, and that is the target that I gave.”
On whether he would leave office if he failed to achieve the target, the minister replied, “Yes, of course. That is the reason why you are in government.”
The former minister, during the interview, revealed that the government’s target was to get the refineries working at 90 per cent operational capacity.
“Those refineries were down before the President came. Since coming, we’ve been able to get them back to produce seven million litres versus zero.
“That’s not the 90 per cent template but we’re now refurbishing the refineries.”
NNPC To Resume Oil Exploration In Sokoto Basin
The Nigerian National Petroleum Corporation on Thursday announced plans to resume active oil exploration in Sokoto Basin.
A statement issued in Abuja on Thursday by NNPC spokesperson, Kennie Obateru, said the corporation’s Group Managing Director, Mele Kyari, said exploration for crude would resume in the Sokoto Basin.
The statement read in part, “Kyari also hinted of plans for the corporation to resume active exploration activities in the Sokoto Basin.”
The NNPC boss disclosed this while receiving the Governor of Kebbi State, Atiku Bagudu, who paid Kyari a courtesy visit in his office on Thursday.
In October 2019, the President, Major General Muhammadu Buhari (retd.), had during the spud-in ceremony of Kolmani River II Well on the Upper Benue Trough, Gongola Basin, in the North-East, said the government would explore for oil and gas in the frontier basins across the country.
He outlined the basins to include the Benue Trough, Chad Basin, Sokoto and Bida Basins.
Buhari had also stated that attention would be given to the Dahomey and Anambra Basins which had already witnessed oil and gas discoveries.
Kyari restated NNPC’s commitment to the partnership with Kebbi State for the production of biofuels, describing the project as viable and in tandem with the global transition to renewable energy.
He said the rice production programme in the state was a definite boost to the biofuels project.
Kyari said the linkage of the agricultural sector with the energy sector would facilitate economic growth and bring prosperity to the citizens.
He was quoted as saying, “We will go ahead and renew the Memorandum of Understanding and bring in any necessary amendment that is required to make this business run faster.”
The Kebbi State governor expressed appreciation to the NNPC for its cooperation on the biofuel project.
Bagudu said the cassava programme was well on course but the same could not be said of the sugarcane programme as the targeted milestone was yet to be attained.
Kebbi state is one of the states that the NNPC is in partnership with for the development of renewable energy.
Nigeria To Benefit As G-20 Approves Extension Of Debt Relief Till December
Finance ministers of G-20 countries have approved an extension of debt relief for the world’s poorest nations till December 2021.
David Malpass, World Bank president, made the announcement at the virtual spring meeting, on Wednesday.
TheCable had earlier reported that the G-20 countries will meet this week to consider an extension of the debt freeze.
The G-20, is a group of finance ministers and central bank governors from 19 of the world’s largest economies, including those of many developing nations, along with the European Union.
G-20 countries had established a debt service suspension initiative (DSSI) which took effect in May 2020.
Nigeria had benefited from the initiative which delivered about $5 billion in relief to more than 40 eligible countries.
The suspension period which was originally set to end on December 31, 2020 was extended to June 2021.
Malpass said the extension to December 2021 will boost economic recovery and promote job creation in low income countries.
He urged countries to be transparent in their approach to the debt service payment extension.
“On debt, we welcome a decision by the G20 to extend the DSSI through 2021. The World Bank is also working closely with the IMF to support the implementation of the G20 Common Framework,” he said.
“In both these debt efforts, greater transparency is an important element: I urge all G20 countries to disclose the terms of their financing contracts, including rescheduling, and to support the World Bank’s efforts to reconcile borrower’s debt data more fully with that of creditors.
“Participation by commercial creditors and fuller participation by official bilateral creditors will be vital. I urge all G20 countries to instruct and create incentives for all their public bilateral creditors to participate in debt relief efforts, including national policy banks. I also urge G20 countries to act decisively to incentivize the private creditors under their jurisdiction to participate fully in sovereign debt relief efforts for low-income countries.
“Debt relief efforts are providing some welcome fiscal space, but IDA countries need major new resources too, including grants and highly concessional resources. From April to December 2020, the first DSSI period, our net transfers to IDA and LDC countries were close to $17 billion, of which $5.8 billion were on grant terms.
“Our new commitments were almost $30 billion, making IDA19 the single largest source of concessional resources for the poorest countries and the key multilateral platform for support. To recover from COVID, much more is needed, and we welcome the G20’s support for advancing IDA20 by one year.”
IMF / Fiscal Monitor Report April 2021 Forecast
Unprecedented fiscal support by governments during the pandemic has prevented more severe economic contractions and larger job losses, but risks remain of long-term scarring the International Monetary Fund says in its Fiscal Monitor report released on Wednesday (April 7) in Washington, DC.
Meanwhile, such support, along with drops in revenues, has raised government deficits and debt to unprecedented levels across all country income groups, said Vitor Gaspar, Director of the Fiscal Affairs Department at the IMF.
“The first lesson one year into COVID-19 is that fiscal policy can act timely and decisively. The fiscal policy response was unprecedented in speed and size looking across countries. We also learned that countries with easier access to finance or stronger buffers were able to give more fiscal support. They’re also projected to recover faster,” said Gaspar.
Average overall deficits as a share of GDP in 2020 reached 11.7 percent for advanced economies, 9.8 percent for emerging market economies, and 5.5 percent for low-income developing countries. Countries’ ability to scale up spending has diverged.
“So, what have we learned? We’ve learned that fiscal policy is powerful and that sound public finances are crucial in order to enable that power to be used to the fullest,” stressed Gaspar.
Gaspar urged policy makers to balance the risks from large and growing public and private debt with the risks from premature withdrawal of fiscal support, which could slow the recovery.
“In the spring 2021, we emphasize differentiation across countries. Moreover, COVID-19 is fast evolving, as are the consequences from COVID-19. The fiscal policy must stay agile and flexible to respond to this fast-evolving situation.” Said Gaspar.
He also warned that the targeting of measures must be improved and tailored to countries’ administrative capacity so that fiscal support can be maintained for the duration of the crisis—considering an uncertain and uneven recovery
“Moreover, countries are very different in their structures, in their institutions, in their financial capacity and much else. Therefore, policies and policy advice have to be tailored to fit.” Said Gaspar
Gaspar concluded his remarks by emphasizing that global vaccination is urgently needed, and that global inoculation would pay for itself with stronger employment and economic activity, leading to increased tax revenues and sizable savings in fiscal support.
“A fair shot, a vaccination for everybody in the world may well be the highest return global investment ever. But the Fiscal Monitor also emphasizes the importance of giving a fair shot at life success for everyone. It documents that preexisting inequalities made COVID-19 worse and that COVID-19 in turn made inequalities worse. There is here a vicious cycle that threatens trust and social cohesion. Therefore, we recommend stronger redistributive policies and universal access to basic public services like health, education, and social security,” said Gaspar.
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