A Review of the Nigerian Energy Industry

‘Kaduna Refinery not a drain-pipe on Nigeria’s resources’

30 January 2012, Sweetcrude, ABUJA – The Nigerian National Petroleum Corporation (NNPC) has denied allegations that the Kaduna Refinery is a drain-pipe on the nation’s resources.

Members of the Nigeria’s Senate Committee on Petroelum (Downstream), who were on a visit to the refinery recently, expressed sadness over its poor state, and displeasure that over N700 billion annual projected revenue was lost through the refinery, and another N12 billion for the remuneration of staff who were largely idle as the refinery was not functioning.

But, the NNPC’s Group General Manager, Public Affairs Division, Dr. Levi Ajuonuma, said in a statement, Sunday, in Abuja that though the refinery have not been operating at full capacity, it was erroneous to portray the 32-year old plant as a drain-pipe.

According to him, the biggest problem to the plant “is crude oil supply which has become unreliable due to rampant pipeline breaks which on many occasions necessitated the shutdown of the refinery.”

Ajuonuma maintained that minus pipeline vandals, the Kaduna Refinery and Petrochemical Company (KRPC) could run at 60 to 70 per cent capacity utilisation on a sustained basis, adding that due to incessant pipeline vandalism the desired production level had remained unsustainable.

“Yes, KRPC has a lot of challenges owing primarily to the neglect of the past. However, in the last several years, the plant has operated steadily at 60 per cent throughput translating to a daily production of 1.5 million litres of PMS, 1.4 million litres of AGO and 0.65 million litres of kerosene, in addition to other products,” he said.

On insinuations that a huge part of the plant had been converted to a container-making factory, Ajuonuma noted that it was misleading information on the structural composition of the refinery.

He said, “This is totally misleading. The fact is that Kaduna Refinery is the only plant among the nation’s refineries fitted with a tin and drum manufacturing section designed to package petroleum products for distribution to the rural areas.

“In addition, the plant produces drums for packaging lubricating oil for marketing companies like Oando, AP and Total Nigeria Plc. The point needs to be made, however, that this tin and drum plant has been there right from inception of KRPC in 1980.”

While reacting to the issue of crude importation for the refinery, Ajuonuma stated that it was not a strange development which he said was only applicable to KRPC alone, of all the nation’s rtefineries.

“There is really nothing strange about that and this only applies to Kaduna Refinery. By design the plant is configured to receive both local light crude and heavy crude which is usually imported from Venezuela, Russia, Iran and some other countries under a swap arrangement to help KRPC in the production of lubricants and asphalts which cannot be achieved using our local crude,” he said.

The NNPC spokesman also informed that the Kaduna refinery has the capacity to receive 60,000 barrels of local crude and 50,000 barrels of heavy crude imported and pumped through the Warri Escravos crude pipeline, at the same time dismissing reports that KRPC collects crude oil from PPMC without proper costing.

According to him, “The business model KRPC operates with is such that it receives crude oil from PPMC, refines it and hands over the products to PPMC for marketing while the refinery is funded based on cost recovery.

“It is however important to point out that every barrel of crude oil received and processed is accounted for and we all know that the PPMC at various times has provided detail accounts of how the imported crude to the refinery is handled,” he said.

Ajuonuma also appealed to the National Assembly to collaborate with the corporation in its bid to increase local refining capacity by introducing apt legislation that will deter the incidence of pipeline vandalism, adding that no refinery will work if the pipelines are not secured.

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