Lagos — The Nigeria Natural Resource Charter, NNRC, has stated that Nigeria’s domestic refining capacity worsened between 2017 and 2019, stating that the facilities are serving as a major drain on the country’s finances.
The NNRC, in its 2019 Benchmark Exercise Report released few days ago, disclosed that average capacity utilization (ACU) of the refineries stood at 3.68 per cent in the first seven months of 2019, dropping sharply from average capacity utilization of 8.02 per cent in 2018.
It said, “Domestic refining capacity has deteriorated over the years. In some months, none of the refineries processed any crude oil. In 2018, ACU was 8.02%, with 0% capacity utilization (CU) recorded in some months. ACU for the first seven months of 2019 stood at 3.68%.
“In summary, domestic refining capacity worsened between 2017 and 2019. Achieving self-sufficiency in the domestic supply of refined petroleum cannot be overemphasised. This is crucial to saving scarce government revenue, which can then be channelled to other productive sectors of the economy, in addition to saving millions of dollars in keeping imported petroleum products at affordable levels through subsidies.
“That refinery CU has worsened rather than improved within the period under review suggests that the specific objectives outlined in policy documents were wrongly conceived to begin with or may have been abandoned.”
The report further faulted the Federal Government’s policy on modular refineries, noting that the expectations of oil-producing communities were not reflected in the drafting of the policy.
It said, “In the period under review, the government did not make significant progress in ensuring that affected communities have reasonable expectations of resource projects. One example is the promise by the Federal Government on the construction of modular refineries in communities, and the processes of awarding licences to members of communities.
“Research interviews reveal that the expectation of communities is drastically different from the realities of the project policy. Communities expect that each cluster will have at least one such modular refinery facility to be supported by the government.
“In fact, the Federal Government said through the Vice-President that, through the new modular refineries’ initiative, oil-producing communities will be made to acquire stakes in refineries that are set up in their localities. The federal and state governments will have some stake, as well as private investors.
“This promise of direct ownership and benefits has not been quite realistic and is not supported by available information and practical guidelines. Based on this erroneous expectation, former illegal artisanal refiners have banded into cooperatives, waiting to be engaged by the Federal Government.”