A Review of the Nigerian Energy Industry

Uncertainty dogs return of NNPC refineries

 …Massive petroleum imports to continue
Hector Igbikiowubo 30 September 2015, Sweetcrude, Lagos – The Nigerian National Petroleum Corporation, NNPC, has served notice that there is uncertainty over the restoration of its refineries in the short term, indicating that domestic fuel consumption would continue to be serviced by massive petroleum importation.

Dr. Emmanuel Ibe Kachikwu, the Group Managing Director of the corporation, disclosed this much while speaking at an interactive session with news media editors in Lagos, on Friday.

He disclosed that what has been recorded in terms of performance at the refineries are “sporadic 60 per cent installed capacity functionality, but this is not sustainable in the long run because we are dealing with obsolete equipment”.
The new NNPC helmsman said he had put in place an acid test for managers of the refineries to ensure that the facilities come back on stream within two months, adding however that there are indications that only the Port Harcourt refinery may scale the hurdle.
“We have some good news in the sense that the skill set at the refineries is second to none. I want to believe that the Port Harcourt refinery may survive the acid test we have put in place and will come on stream in December.
“My first thought when I came to grips with the reality on ground at the refineries was to sell them. But I can see that there is a lot of emotion attached to these facilities. Some have even said even if we intend to sell, we need to revive them so they don’t go out as scrap,” he disclosed.
On what would happen to the Warri and Kaduna refineries if they don’t pass the acid test, Dr. Kachikwu disclosed that they would be shut down and re-kit over an eight month period.
“The average operating profitability model around the world for a refinery is 92% installed capacity, 60% is not going to cut it,” he said.
Kachikwu disclosed that his preferred refinery operating model will be that of the Nigerian LNG Limited, NLNG, noting however that “what we are doing right now is look in to determine what is there, what is needed and how to go about it”.
The NNPC boss disclosed that the corporation currently imports close to 20 million litres of petroleum products per day and that this represents 75 per cent of the total domestic consumption.
“Locally, we produce between two and three million litres of petroleum products per day.”
He lamented NNPC’s loss of N200 billion at the Pipelines and Products Marketing Company, PPMC, each year, saying this represents the biggest leakage which has to be plugged.


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