Federal Government must speed up it’d planned engagement with the Original Equipment Manufacturers of the Nigerian refineries as frequent loss posted by the Nigerian refineries puts intense pressure on Nigeria’s economy.
Nigeria’s petroleum sector arguably the nation’s main source of the economy had not performed to the expected standards on the concerns of the weak regulatory framework governing the sector.
Admittedly, Timipre Sylva, the Minister of State for Petroleum Resources has said the government has set a target of May 29 to pass the Petroleum Industry Governance Bill to put the sector in the right footing among its global competitive peers.
Sylva said the federal government is discussing with the original equipment manufacturers on the terms of operating, manage and maintain strategy on the back of below-par performance of Nigeria’s major refineries.
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He said this is part of the reforms the government is embarking on to ensure the petroleum sector performs optimally.
It would be noted that the country’s refineries under the management of the Nigerian National Petroleum Corporation made a cumulative loss of N123.25bn from January to October 2019, latest figures released on Wednesday showed.
An analysis of data in the October 2019 oil and gas report of the NNPC showed that all three entities recorded losses during the period under review.
Refineries under NNPC management include the Kaduna Refining and Petrochemical Company, Port Harcourt Refining Company and Warri Refining and Petrochemical Company.
Findings showed that while KRPC posted a loss of N49.3bn in the 10-month period, PHRC and WRPC lost N36.7bn and N37.24bn respectively during the same period.
It was further observed that the actual revenue made by the three facilities during the period was N68.82bn while their expenses were put at N192.1bn.
Of the three refineries, WRPC made the highest revenue of N59.1bn during the period, even as it posted the highest loss of N96.32bn. KRPC and PHRC made N6.23bn and N3.46bn as revenues in the 10-month period but lost N55.59bn and N40.16bn respectively.
For October 2019 alone, the facilities posted a cumulative loss of N11.72bn. Their individual losses in October were N5.24bn, N3.38bn and N3.1bn for KRPC, PHRC and WRPC respectively.
There had been various concerns over the abysmal performance of Nigeria’s refineries.
The Petroleum and Natural Gas Senior Staff Association, for instance, told our correspondent recently that it was high time the Federal Government channelled the funds spent on petrol subsidy to make the refineries work.
Hakeem Ali, an oil sector governance expert told BusinessDay that if the government could ensure it follows up closely with whomever it is contracting out the refineries to, then it’s planned engagement with the original equipment manufacturers would be a good idea.
“It is all about monitoring and putting up the right regulatory framework for them to operate while monitoring them closely. Let the corporation not adopt a lackadaisical approach to that. They must monitor closely and with focus on delivery.
Austin Onuoha, an oil sector analyst told BusinessDay that the government needs to speed up this process and restore people’s confidence again back to the sector as people and investors are not going to invest in a disorganised market structure but one with a better fiscal governance framework.
