A Review of the Nigerian Energy Industry

Warri, Kaduna, Port Harcourt refineries attain 60% capacity utilisation – NNPC

Andrew-Yakubu-NNPC-GMDYemie Adeoye 17 July 2014, Sweetcrude, Lagos – The Nigerian National Petroleum Corporation, NNPC, has retooled the nation’s four refineries in Warri, Kaduna and Port Harcourt, resulting in a rise in their capacity utilisation to 60 per cent of their nameplate capacity.

This was disclosed recently by the Group Managing Director, GMD, of the Corporation, Engr. Andrew Yakubu, at a capacity building workshop it organised for journalists in Uyo, Akwa Ibom State.

In a keynote address at the workshop, where he also presented the scorecard of his management to mark his second year in office as GMD, Engr. Yakubu explained that in spite of the setback experienced in the plan to get the original builders of the refineries to undertake their scheduled turn-around maintenance, NNPC has deployed in-house expertise to fix critical units of the refineries which has increased their capacity utilisation. 

“The recent improved performance of our refineries, including the re-streaming of the secondary units, especially the Fluid Catalytic Cracking Units (FCCU,) is contributing to a substantial reduction of petroleum products into the country”, he declared.

He lamented that the refineries still faced constraint in capacity utilization due to crude oil supply challenges as a result of pipeline vandalism.

Speaking further on the turn-around maintenance, the GMD explained that NNPC was still working with the companies recommended by the original builders to outline the scope of work even as negotiations were ongoing to ensure that the nation got value for every kobo to be expended on the project.

On the directive by the Senate that NNPC should refund the sum of $262m to the Federation Account being the sum the Corporation could expended on holding strategic reserves and maintenance of pipelines and which the Senate Committee on Finance that probed the allegation of non-remittance of $49.8bn said NNPC could not satisfactorily defend, Engr. Yakubu said he would continue to engage with the National Assembly over the issue until it is resolved.

He explained that the controversy over those expenditures arose from the burden heaped on NNPC as a petroleum products supplier of last resort without adequate provision for funding from the Petroleum Support Fund as the extra expenditures on holding offshore strategic reserves to guard against supply shocks in case of emergency are not captured in the Petroleum Products Pricing Regulatory Agency, PPPRA, template.

“What we are simply saying is that if we have to do this job, then this is the real and true situation of doing it. Let us know if I should be punished for being the supplier of last resort because if we decide to withdraw the strategic storage, we cannot withstand energy crisis in this country. The senate in their wisdom looked at it and said if the cost of holding the strategic storage is not captured in the PPPRA template it cannot be paid for; but the question is, if we don’t do it and if I did not do it last year, I don’t think I will be here talking to you.

“The same senate will also summon me and ask me why there are no petroleum products. The only person who can function as a supplier of last resort without holding strategic reserve is a magician. It is left for them to judge, I cannot judge myself and if we state it clearly that we incurred this much and it is verifiable because it is there, we will then continue to engage and explain to make this fact clear”, he explained.

Engr. Yakubu also disclosed that following the recent lifting of the ban on bunkering on Nigerian waters by the Department of Petroleum Resources, the Corporation has concluded plans to go into the business of bunkering to boost its profitability in line with the NNPC Transformation objective.

Throwing more light on the plan, the Group Executive Director, Commercial & Investment, Prof Atahiru Yusuf, explained that NNPC may kick off its bunkering business by October as it was currently in the process of securing registration with relevant agencies having developed a business model for it.

The GED further explained that contrary to the general impression that bunkering was an illegal activity, it was actually a legal business which involves fueling of ships and other marine vessels in the high sea and that the business came to acquire the toga of illegality as a result of the long ban of the business on the Nigerian waters which precipitated the illegal version which had dominated the terrain.

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