High Subsidy Cost: Senate Demands Answers from NNPC Over Modular Refineries

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  • High Subsidy Cost: Senate Demands Answers from NNPC Over Modular Refineries

The high cost of subsidising refined petroleum products for Nigerians is hurting economic growth in spite of 43 approved modular refineries, the Senate lamented during Tuesday’s proceedings.

The upper chamber, therefore, mandated its petroleum committee to investigate the situation and invite the Ministry of Petroleum and the Nigerian National Petroleum Corporation to brief it on the status of Nigerian refineries.

The Senate also asked the committee to assess the position of things with the newly approved modular refineries.

Senator Rose Oko, PDP-Cross River, who moved the motion sponsored by 42 other senators, said while Nigeria’s crude production is 1.7 million barrels per day, its moribund refineries had little to nothing refining capacity.

According to her, 90 percent of Nigeria’s refined petroleum products are imported, therefore, the benefits that were supposed to accrue to the nation due to high oil prices were lost to logistics and other factors.

She also noted that none of the four refineries are functioning at 50 percent of their combined capacity of 445,000 barrels per day despite huge maintenance fee and allocation by the federal government.

She pointed to a publication on the Department of Petroleum Resources website stating that a total of 633,000 barrels per day refining capacity had been lost in recent months due to the expiration of licenses.

Senator Ifeanyi Ubah, who is a known player in the industry, said other stakeholders should be invited as well.

He said the current policy of importing refined petroleum products while trying to up domestic refining capacity is chasing investors.

He said, “There is a reason many people are scared of investing in modular refinery. They are afraid that the Federal Government would continue to import fuel and that would affect their business.

“The Nigerian government should, as a matter of urgency, go to our reserve and take $1bn and use it to guarantee the investment of those who have invested heavily in modular refineries.

“If we release $10bn to 1,000 companies with proven capacity to manage modular refineries, the nation would have more than enough fuel supply and refined petroleum products importation would be a thing of the past.”

About the Author

Samed Olukoya
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 long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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