Nigeria’s four refineries down, imports all petrol consume locally, says NNPC
* Plans to fix moribund refineries
* Awaiting completion of Dangote refinery
* Huge potentials in African market
* To encourage more private sector investment
By Oludare Mayowa
Nigeria’s government has admitted for the first time that all the refined petroleum products being consumed in the country are imported as the four state-run local refineries are down and out of use.
The group chief executive of the Nigerian National Petroleum Corporation (NNPC) Mele Kyari told a conference in Abuja that efforts are on to fix all the four refineries.
“Today, unfortunately, all our four refineries are down. We are importing every petroleum product that we consume in this country.
Nigeria in March deregulated the downstream sector of the petroleum industry in the wake of the coronavirus pandemic and its disruption of the global supply chain which caused the crude oil prices to declined sharply.
However, the government has since readjusted the prices of petrol upward as the global crude oil prices seen some level of recovery after the OPEC+ efforts to cut output.
Pump prices of petrol consume locally are determined by variables of import tariff and other charges, ranging from port demurrage, storage cost and customs duty.
These components are responsible for the seemingly high domestic cost of petrol consumed in the country, asides the global crude oil prices, which changes fluctuate with time and circumstances.
With the four refineries out of operations, Nigeria is compelled to resort to the importation of petroleum products and invariable pay for all the charges associated with importations of products.
Before the four refineries were down, Nigeria has always imported the built of the refined petroleum product since the local capacity was far below demand for the product.
However, the NNPC boss said the government is working on ensuring that “we are able to fix our refineries and also have new initiatives, like having the condensate refinery, which I am also happy to announce that the Seplat group is cooperating with NNPC to create a splitter plant in short term.”
Besides the fixing of the local refineries owned by the government, many people are looking forward to the completion of the 650,000 barrel per day capacity refinery being built by Africa’s richest man, Aliko Dangote in the Lagos area.
It was expected that the completion of the private driven initiative will eliminate the additional costs inputted into the pump price of petrol consumed locally and ease pressure on pricing.
Kyari at the conference also said; “There are other private initiatives. As we know, there are several licenses granted by the Federal Government for people to construct refineries, but they can’t do this because of the clear issue around the market structure.
“But thankfully, we have transited out of the regulated petroleum market into a deregulated market, which means that companies can now predict what will be the refinery price of petroleum and they can now have the basis of investment; banks can see visibility around the recovery of cost and margin and ultimately we will see more activities coming up.
“As we know, Nigeria as the net importer of petroleum products; that simply means that with all the resources that we have, we still import petroleum products. Beyond that, it is a continent that is projected to have a significant increase in consumption of petroleum in the coming years even up till 2040.
“The projections about 2.3MB/d by 2040 are still a very conservative estimate. We have one of the most active population, growth rate and projections showing that by 2049 we would likely be the most populous continent in the world.
“This means Africa is a continent of opportunity, and Nigeria will contribute about 25 percent of the total population of Africa by 2040; and in terms of growth, it will constitute about 20 percent. We are in a country with vast opportunities where you cannot exclude petroleum and its related resources.
“What we can do to get this to work for us is first, make the operating environment competitive – this is one of the targets so far of the Minister and the government of today, first to bring down the cost of production and then pay attention to gas.”
The summary of the NNPC statement is that if Nigeria could get its act together, it should be able to dominate supply of refined products to the rest of Africa and earns more revenue that it does presently on exporting crude oil.
It would be cheaper for African countries to import the product from Nigeria, especially countries within the west coast, and this will help boost economic activities within the region, create employment and increase collaborations among the countries.#GFD