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Refineries Lose N231bn Under Buhari Amid Delayed Repairs

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  • Refineries Lose N231bn Under Buhari Amid Delayed Repairs

The nation’s refineries suffered huge losses in the first four years of President Muhammadu Buhari’s administration as they were left in a state of disrepair, ’FEMI ASU writes

Federal Government-owned refineries, located in Port Harcourt, Kaduna and Warri, lost over N231bn in the last four years as the proposed rehabilitation of the plants suffered a setback.

The Port Harcourt Refining Company has two refineries, while the Warri Refining and Petrochemical Company and the Kaduna Refining and Petrochemical Company have one each.

The refineries lost N34.57bn from June to December 2015; N8.64bn in 2016 (data for January to August showed); N47.19bn in 2017, and N132.51bn in 2018, according to the Nigerian National Petroleum Corporation.

When President Muhammadu Buhari assumed office on May 29, 2015, all the refineries were not processing crude oil, with Port Harcourt refinery sitting idle since January of that year while Warri and Kaduna stopped refining in February of the same year, according to available data from the NNPC.

In 2015, Port Harcourt, Kaduna and Warri refineries were idle for eight months, seven months and nine months, respectively, losing N10.05bn, N36.03bn and N21.39bn.

Warri refinery was idle for five months in 2016; KRPC did not refine crude for six months, and PHRC was only idle in September.

In 2017, Kaduna, Warri and Port Harcourt refineries were idle for six, five and two months, respectively, losing N32.61bn, N22.14bn and N11.51bn.

Kaduna refinery did not process crude oil for 11 months in 2018, while Port Harcourt and Warri were idle for seven and three months respectively, losing N31bn, N59.96bn and N41.71bn.

According to the latest data from the NNPC, Kaduna and Port Harcourt refineries remained idle in January this year.

The refineries have a combined installed capacity of 445,000 barrels per day but have continued to operate far below the installed capacity for many years.

The NNPC had planned to rehabilitate the refineries in order to attain a minimum of 90 per cent capacity utilisation, using third-party financiers and the original refinery builders to provide the requisite funding and technical support.

The corporation, its transaction advisers and an inter-ministerial team on refineries rehabilitation, were said to have reviewed expressions of interest from 28 potential financiers.

But after over one and half years, the negotiations with financiers stalled in December 2018 due to varying positions on key commercial terms.

The NNPC said it had abandoned the strategy of seeking offshore funding due to ‘onerous conditions’ demanded by the proposed financiers.

It said it had to resort to immediate direct funding from internal cash flows and debt financing from the financial markets for the rehabilitation project.

On March 21, 2019, the corporation announced the commencement of the first phase of the rehabilitation of the 210,000 bpd capacity Port Harcourt Refinery complex, comprising the 60,000 bpd old refinery built in 1965 and the 150,000bpd new refinery inaugurated in 1989.

It said the project would be executed by Milan-based Maire Tecnimont S.p.A, in collaboration with its Nigerian affiliate, Tecnimont Nigeria.

The Group Managing Director, NNPC, Dr Maikanti Baru, was quoted as saying that at the end of phase 1, the refinery complex should be able to reach 60 per cent capacity utilisation.

The national oil firm said the first phase of the rehabilitation contract, which would run for six months, would involve detailed integrity check and equipment inspection of the Port Harcourt refinery complex beginning from the end of March 2019.

The second phase of the rehabilitation project, which entails a comprehensive revamp of the complex,is aimed at restoring the refinery to a minimum of 90 per cent capacity utilisation.

In November last year, the then Minister of State for Petroleum Resources, Dr Ibe Kachikwu, said the plan to get the ailing refineries to work at almost full capacity would not materialise by 2019.

Earlier on May 4, 2017, the NNPC expressed the commitment to actualise the December 2019 target set by the Federal Government to end the importation of petroleum products into the country.

It said on January 23, 2018, that it was inching closer to arriving at the choice of financiers for the refineries, with the Group Managing Director, Dr Maikanti Baru, saying the agreements on the potential financiers for the refineries were being fine-tuned.

But the NNPC announced in early February that it could not agree with the investors on the commercial terms of the transaction.

Between 1976 and 1989, the Federal Government, through the NNPC, built refineries in Port Harcourt, Warri and Kaduna, in addition to an existing refinery in Port Harcourt, which was built by Shell in 1965 (but later bought over by the NNPC).

But the state of the 445 million-bpd refineries has worsened over the years and no new refinery has been built by the government since 1989, making the country to rely heavily on imports to meet fuel demand.

“We just have to look for ways to ensure adequate internal refining. The advantage of internal refining is that we will have sufficient petroleum products. There is no reason why a litre of kerosene or diesel should cost above N200,” a petroleum expert, Mr Bala Zakka, told our correspondent.

He said the country had been relying on fuel imports for many years, adding that adequate domestic refining would help the country free itself from foreign currency pressure.

Kachikwu said last week, “If you look at the refineries, the first problem we had was that they were not functioning when I assumed office in 2015 and because of the huge apparent fuel scarcity, it was a major problem for me if I had to wait for vessels to arrive each time to meet the delivery timeline. These were the problems. So, I was focused on how to get them working, at least to start, no matter how little and all they gave me was one million litres a day.

“The pipelines that were supplying fuel had all been destroyed and they had entered into a contract before we came in, to supply product by vessels. The cost of those vessels supplied was more than the value of the crude oil that was being supplied. It did not make any financial sense. So, I cancelled that and challenged Nigerians who were in this entity to go and use their money to repair the pipelines.”

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.

Economy

India, Spain, the Netherlands, USA, Nigeria’s Major Export Markets -NBS

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Nigeria’s major export and import market in the fourth quarter of 2020 were India, Spain, the Netherlands, the United States and China, the National Bureau of Statistics has said.

It disclosed this in its just released Commodity Price Indices and Terms of Trade Q4 2020.

The bureau stated that the major commodities exported from Nigeria to the five nations were crude oil and natural gas.

The NBS said, “The major export and import market of Nigeria in Q4 2020 were India, Spain, the Netherlands, United States and China.

“The major export to these countries were crude petroleum and natural gas. The major imports from the countries were motor spirits, used vehicles, motorcycles and antibiotics.”

The bureau stated that the all-commodity group import index increased by 0.13 per cent between October and December 2020.

This was driven mainly by an increase in the prices of base metals and articles of base metals (one per cent), boilers, machinery and appliances; parts thereof (1.03 per cent), and products of the chemical and allied industries (0.75 per cent),” it stated.

The NBS, however, noted that the index was negatively affected by animal and vegetable fats and oils and other cleavage products.

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Economy

Onyeama: Qatar To Invest $5bn In Nigeria’s Economy

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The oil-rich state of Qatar is to invest a total of $5 billion in Nigeria’s economy, the Foreign Affairs Minister, Godfrey Onyeama, has disclosed.

Onyeama, who spoke Sunday at a send forth dinner in honour of Nigeria’s Ambassador-designate to the State of Qatar, who is also the outgoing Director of Protocol (DOP) at the State House, Ambassador Yakubu Ahmed, also stated that recent career ambassadorial appointments made by the gederal government was based on merit, experience and professionalism.

The minister further said there had been discussions with Qatar on partnership with Nigeria’s Sovereign Wealth Fund (SWF), for significant investments in the region of $5 billion in the Nigerian economy.

According to him, ‘‘Qatar is a weighty and strategic country and very strategic in that part of the world and we are putting our best feet forward to advance the interest of our country economically and in other areas.”

He recalled that President Muhammadu Buhari had visited the State of Qatar in 2016 and the Emir of Qatar, Tamim Bin Hammad Al-Thani, reciprocated with a State visit in 2019.

Onyeama also explained that only trusted hands with a track record of diligence, experience and professionalism in the Foreign Service were recently appointed career ambassadors by the federal government.

The minister said the appointment of Ahmed and other career ambassadors were predicated on posting dedicated and keen Foreign Service practitioners to serve as image makers of the country.

He said: ‘‘Ambassador Yakubu Ahmed is a dedicated professional with a penchant for rigour and detail. He is very capable and one of the best in the Ministry of Foreign Affairs. He is personable, affable, extremely friendly, dispassionate and objective.

‘‘He is going to head a very important mission, a very important country, reckoned to be one of the richest countries in the world, per capita, and there’s a lot we will be doing with the State of Qatar.”

Also speaking, the Deputy Chief of Staff, Adeola Rahman Ipaye, described the honoree as a ‘‘perfect gentleman, very even-natured and always well turned out’’.

Ipaye said he had no doubt that the newly appointed ambassador would serve the country well in Qatar, adding that: ‘‘We are further encouraged that when he completes this assignment, he would return to serve Nigeria in a higher capacity.’’

In his remarks, the Permanent Secretary, State House, Tijjani Umar, while congratulating the outgoing DOP on his appointment, lauded Ahmed for excellent service to the State House and the nation.

‘‘He served this institution and the nation with the deepest sense of responsibility and it is very important that we establish a tradition where the system appreciates those who have served it well and those who will continue to serve it well,’’ he said.

Umar urged the new envoy to keep very fond memories of his time at the Presidential Villa, assuring him of the prayers and goodwill of all the staff.

Responding, Ahmed thanked President Buhari for the great honour and privilege of making him his principal representative in Doha, Qatar.

The Ambassador-designate pledged to deplore his energy and skill to the promotion of the existing cordial relationship between Nigeria and Qatar, particularly in the areas of economic, political, cultural and consular affairs as well as other key areas.

Ahmed, who joined Nigeria’s Foreign Service in 1993, said during his years in public service he had learnt that ‘‘patriotism, selfless service, diligence, determination and perseverance will always result in the achievement of the desired objective’’.

According to him, these virtues would be his ‘‘watchword’’ in the pursuit of Nigeria’s foreign policy objectives and the attainment of national interests.

The Ambassador-designate singled out for appreciation the Chief of Staff to the President, Prof. Ibrahim Gambari, and the state Chief of Protocol, Ambassador Lawal Kazaure, saying he had learnt a lot working under their mentorship.

He expressed gratitude to the Minister of Foreign Affairs and the Permanent Secretary, State House for giving him the opportunity of a memorable work experience in the State House.

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Economy

France, Nigeria to Build New Partnership

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France is currently aiming at building a new partnership with Nigeria, with the dispatching of its Minister in charge of Foreign Trade and Attractiveness, Franck Riester, to Nigeria.

Riester, who was expected at the time of filing this report on Monday, is scheduled to visit Nigeria from 12-14 April, 2021.

A statement from the French Embassy in Nigeria said: “Franck Riester is visiting Nigeria from 12 to 14 April, a visit that follows up on the priorities set by French President Emmanuel Macron during his official visit to Nigeria in July 2018 and his desire to build a new partnership between Africa and France.

“As the largest economy in Africa and the economic engine of West Africa, Nigeria is indeed a major partner for France, the first in sub-Saharan Africa with bilateral trade amounting to a total of 4.5 billion USD in 2019 (2.3 billion USD in 2020, due to the Covid-19 pandemic).”

It disclosed that the minister will have several official meetings in Abuja and Lagos, in order to underline the importance of the bilateral economic relationship and to prepare the summit on the financing of African economies in Paris on 18 May.

It revealed that the objective of the mission is also to further strengthen the links between the French and Nigerian private sectors, and “in this regard, the minister will have in-depth discussions with the main Nigerian economic actors to strengthen bilateral cooperation and investments, both in Nigeria and in France, particularly in the logistics sector”.

It said while in the country, the minister would meet with young Nigerian entrepreneurs in the cultural and creative industries sector, to discuss the major role of their country in African creativity and the development of the African entrepreneurial ecosystem, with the support of France.

It further said: “The minister will also open the ‘Choose Africa’ conference, a €3.5 billion initiative by President Emmanuel Macron dedicated to supporting the development of start-ups and SMEs in Africa to enable the continent to benefit fully from the opportunities of the digital revolution.”

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