Nigeria govt lacks capacity to manage four refineries ~Finmin
* See more investment due to deregulation
* Dangote Refineries to sell fuel at international price
* Govt refineries two old
Nigeria’s finance and budget minister, Zainab Ahmed on Monday said despite huge resources being committed on the Turn Around Maintenance (TAM) of the state-owned four petroleum refineries, the government lack the capacity to operate them efficiently.
Ahmed, who spoke on NTA morning show noted that the four refineries are old and while the Nigerian National Petroleum Corporation (NNPC) is working to revamp them, Nigeria also needs to encourage private sector investment in the industry.
“Those refineries are old and even if we turn them around, we will not be able to operate them at optimal capacity, so while the NNPC is trying to rehabilitate them, we also need to encourage the private sector refineries to come on stream and even state governments that have the capacity.”
According to the minister, the government has opened up the sector for private sector investment and expect that with the coming on stream next year of the 650,000 capacity Dangote refineries, “fuel will be available in different parts of the country and not just relying on the government refineries.”
She, however, stated that the coming on stream of Dangote Refineries will not result in lower pump price of the commodity as the Africa’s richest plants was located within a free trade zone.
“The Dangote refinery is sitting within an Export Processing Zone so they are insulated from that. When we buy fuel from Dangote, we will be buying fuel at the international market price. The only savings that we will be making is the savings of freight which is shipping.
“But we will still have landing cost; labour cost and the marketers will still have to put a margin. These refineries being those that are supposed to have come to operate can now come in because they are assured that when they produce, they can sell at market rate and recover their investments and make some reasonable profits,” Ahmed said.
The minister, however, noted that the deregulation of the downstream sector was good for the economy as it would encourage more investments in refineries and availability of fuel across the country.
“It will mean more refineries will open, they will employ people and fuel will be available in different parts of the country and not just relying on the government refineries.
“What we are doing is enabling the petroleum sector to actually grow. There have been a number of refineries that have been licensed for several years. None of them was willing to start refining under the regime that we had were fuel was controlled.
Nigeria announced fresh hike in fuel prices earlier in the month in a bid to reflect the prevailing crude oil prices in the global market.