… May not amount much as Dangote refinery inches closer to reality
With only a paltry average 8 per cent capacity utilisation in the past 21 months, the Nigeria National Petroleum Corporation’s (NNPC) ambition to raise output of local refineries by 60 per cent appears illusory.
The Nigerian Extractive Industries Transparency Initiative, NEITI released a report on December 20 giving this data, also stating that the refineries did not process crude oil at all in seven out of the 21 months under review.
Also, NNPC’s November operations report released January 9, stated that the three refineries produced 178,107MT of finished petroleum products at a combined capacity utilization of 12.78%.
“The adverse performance was due to crude pipeline vandalism in the Niger Delta region coupled with on-going refineries revamp; however the three refineries continue to operate at minimal capacity, only PHRC processed crude during the month,” stated the NNPC report.
Experts say as 2018, when Dangote’s refinery is expected to come on stream draws closer, Nigeria’s refineries will not command high values even if government agrees to sell them.
“With 650,000 Dangote refinery capacity set to come on stream in 2018 and if all goes according to plans, Nigeria will literarily pay someone to take those refineries,” said a top industry source.
The examples of national assets such as Nigerian Telecommunications infrastructure and the Ajaokuta Steel Company provide fillip to this claim.
After years of holding on to the assets, the emergence of Global System for Mobile communication (GSM), a digital mobile telephony system, forced the government to sell off the infrastructure far lower than its value.
This year, Nigeria has budgeted N4billion to maintain the decrepit Ajaokuta Steel Company despite earning nothing from it.
Aliko Dangote, president of Dangote Group is building an oil refinery in Lagos at the cost of $12 billion, a fertilizer plant at the cost of $2 billion, and a subsea pipeline at the cost of $3 billion.
It is estimated that, upon completion, the refinery will produce 650,000 barrels per day and the gas plant will generate 12,000 megawatts of electricity.
Ikenna Ifedobi, economist and consultant of the American Petroleum Institute says the Dangote refinery will help “alleviate the national and regional shortages in petroleum products supply, while also canvassing for incentives that will grow modular refineries.
Maikanti Baru, NNPC group managing director during a visit by the Management of Media Trust Limited, on January 8, said NNPC will reduce petroleum products importation by boosting the capacity utilisation of local refineries to 60 per cent by the end of 2017.
“We are focusing on the process licensors to come and audit our processes and they have already started auditing most of our process units in the various refineries.
“We hope if we do all these systematically, we should achieve 60 per cent capacity utilisation this year or first quarter of 2018 and get to 80 per cent by the end of 2018,” Baru was reported as saying in a release sent by Ndu Ughamadu, group general manager, group public affairs division of the NNPC.
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