Experts seek immediate overhaul of refineries
• Record N388.63 Losses In Four Years
• Oil Marketers, Elite Gain From Rots
The poor state of the Nigerian refineries has, again, generated argument among economists and oil and gas experts, as Nigerian National Petroleum Corporation’s (NNPC) financial statement showed that over N388.63 losses have been recorded from 2015 to 2018 in the nation’s refinaries..
This is coming when the country’s total debt profile has risen to N24.387tn in the face of supposed subsidy on imported petrol, which stood at N10tn between 2006 and 2018.While the International Monetary Fund (IMF) last week called on the Federal Government to stop payment of subsidy, which in turn requires an urgent revamping of the refineries, the number of poor Nigerians has risen to 91 million, while unemployment figure settles at 20.9 million.
Experts said continued importation of refined petroleum product could continue to cripple economic growth, budget implementation, shortfall of foreign exchange, limit industrial development and deplete foreign reserves, while millions of job opportunities are lost.In 2015, losses made by the refineries stood at N82.09bn and in 2016 the losses totaled N78.95bn. While the refineries incurred N95.09bn losses in 2017, the figure rose by 39 per cent to settle at N132.5bn in 2018.
With a combined installed capacity of 445,000 barrels per day and daily supply of the nation’s crude oil, the refineries have, for many years, performed far below installed capacity. However, the country has expended about $20bn on Turn Around Maintenance. The refineries have not been working up to 15 per cent lately.
In 2018, Port Harcourt refinery, despite being idle almost throughout the year, posted the biggest loss of N59.96bn. Kaduna refinery recorded N31bn losses, while Warri refinery recorded a deficit of N41.71bn.Combined, a total of N13.58bn was lost in January; N8.05bn in February; N11.88bn in March; N20.08bn in May; N14.51bn in June; N10.45bn in July; N10.79bn in August; N6.97bn in September, N9.32bn in October, N9.58bn in November and N17.31bn in December.
Describing the seriousness of the prevailing development, Prof. Damilola Olawuyi, Director, Centre for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan, said the common citizens bear most of the negative fallout, when a major oil producing nation like Nigeria still relies heavily on importation of oil and gas.
“Importing refined oil means Nigerians will have to pay more to access petroleum products, which creates daily hardship for the Nigerian people. “Also, if the refineries were functioning to full capacity, they would create more jobs and economic opportunities for people,” he said.
Professor of Petroleum Economics and Policy Research, Omowumi Iledare, said corruption, tribalism, funding and sundry mundane factors were responsible for the perennially poor state of the refineries. Iledare sees no transparency and accountability in the manner government runs the refineries.
Prof Bank-Anthony Okoroafor, former Director General of West African Institute for Financial and Economic Management (WAIFEM) noted that the present position of the refineries has not been good due to adverse effects of subsidies, poor maintenance, general operation failures and inconsistent supply of feedstock.He insisted the development is at the detriment of the national earnings as the products are majorly imported from United States, North Western Europe and other sources.
For Director, Centre for Petroleum, Energy Economics and Law (CPEEL), Prof. Adeola Adenikinju, apart from the bureaucratic nature of the operations of the refineries; foundational downstream challenges were enough to keep the refineries as they are.Professor pof Economics and Public Poliy, University of Uyo, Akpan Ekpo insisted that the current state of the refineries is embarrassing, insisting that mismanagement and corruption were part of the key issues affecting the refineries.
Chairman of Tricontinental Group and former President of Nigerian-American Chamber of Commerce, Chief Olabintan Famutimi, believes the challenges facing the refineries were man-made and designed to benefit a few individuals, particularly people are benefiting from oil subsidy.
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