Petrochemicals and petroleum refineries contribution to Nigeria’s value added tax basket has fallen to a five year low, according recent data published by the National Bureau of Statistics.
This segment of Nigeria’s oil and gas industry contributed 57 percent less, representing N4.70 billion to the VAT pool, full year 2018 from a high of N8.10 billion in 2014.
Africa’s biggest oil producer’s petrochemicals and petroleum refineries contribution to the VAT pool has been falling since 2015, from N7.10 billion to N5.20 billion in 2016 and N4.81 billion in 2017.
VAT is a function of value creation in any sector of the economy. A falling VAT means the sector is shrinking and creating less taxable value. Performance data of Nigeria’s refineries show they have been performing below installed capacity.
Despite being one of the largest producers of crude oil in Africa in the last four decades, Nigeria has consistently struggled to keep its refineries functioning optimally without success.
Ibe Kachukwu, Nigeria’s minister of state for petroleum resources had said “2019 is the target time. I target 2019. If I don’t achieve it, I will walk (resign). I put the date and I will achieve it” the minister had said.
But two months into 2019, none of the refineries work up to 30 percent of installed capacity. And Kachikwu had to retrace his steps in 2018 when he said “We are working hard to see the Nigerian National Petroleum Corporation (NNPC)’s four refineries coming up with 425,000 b/d in 2020.”
The Nigerian National Petroleum Corporation has four major refineries, two in Port Harcourt, Rivers State, which combine to form the Port Harcourt Refining Company (PHRC) with a combined installed capacity of 210,000 barrels per stream day (bpsd); the Kaduna Refining and Petrochemical Company Limited (KRPC) with an installed capacity of 110,000 bpsd; and the Warri Refining and Petrochemical Company Limited (WRPC) with an installed capacity of 125,000 bpsd.
Port Harcourt Refining Company, Warri Refinery and Petrochemical Company, and Kaduna Refining and Petrochemical Company recorded an operating deficit of N13.59 billion in January 2018, deteriorating further from the N11.09 billion deficit recorded in December 2017, data from NNPC showed.
Analysis from NNPC January 2018 financials showed modest gains of N36.7 million made by NNPCs upstream and gas processing subsidiaries such as the Nigerian Petroleum Development Company (NPDC), RETAIL and Nigerian Gas Processing Transportation Company Limited, were wiped off largely by its downstream subsidiary operations which recorded deficits north of N1.5 billion according to figures from the organisation’s operations and financial report for 2018 actuals.
STEPHEN ONYEKWELU
