Nigerian Refineries Working Above 65 Percent Capacity

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Emmanuel Ibe Kachikwu
Kachikwu

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The Nigerian National Petroleum Corporation says the refineries are now working at 65 percent installed capacity

By Anayo Ezugwu  |  Nov 2, 2015 @ 01:00 GMT  |

NIGERIANS received cheering news that some of the country’s refineries on Wednesday, October 14, are producing above 65 percent installed capacity. Ibe Kachikwu, group managing director, Nigerian National Petroleum Corporation, NNPC, said any refinery in the country performing below 65 percent of capacity would be shut down in December 2015.

Kachikwu, who stated this when he appeared before the Senate for screening as one of the ministerial nominees, said some of the refineries are working at 65 percent capacity, while others work at 25 percent as opposed to reports in the media that they were working above 70 percent. He said it was insufficient for a refinery to generate 65 percent today and no percentage the next day, stressing that anytime products was not produced by a refinery, the federal government loses money.

On recurring shortage of petroleum products, especially petrol and kerosene, Kachikwu said the situation would certainly continue unless the refineries performed efficiently. “Efficiency levels have to do with 25 to 26 percent. It is not enough to do 65 percent eventually and do absolutely zero the following day. We have actually started a policy of not providing crude to any sort of refinery that is not producing.

“Port Harcourt refinery is producing at over 60 percent and we wish to drive it to 80 by December. Warri Refinery has indicated that it will certainly soon begin stream; we will  begin to pump crude to Kaduna Refinery by Thursday, October 15 and also by the next few weeks, we will recognise if they will certainly produce over 65 percent. Any sort of refinery that does not make around 60 percent is not into manufacturing, and at the end of December, we will just allow those that execute ideally. Those that do not, we will certainly shut them down,” he said.

According to Kachikwu, huge work needed to be done on the refineries as they had not been well kept in the last 10 years. He said importation of oil products would certainly be stopped because continuous importation was costing the nation a great deal of earnings. “Kerosene is various ballgames. Only NNPC imports kerosene in this nation due to the fact that nobody could import and make money.

“Fifty percent of NNPC aids go to kerosene, so our refineries need to function so we could get kerosene and also gas. Importation is something we must promptly get out of, so we need to guarantee that our refineries function. We should construct and also have a critical reserve of at the very least two years.”

He noted that the country had to privatise the downstream sector of the oil industry because it would stimulate competition as well as develop the market. Kachikwu stated that NNPC was dealing with making gas available to Nigerians, adding that plans were underway to create cylinders and also make them readily available to all Nigerian by 2016 and build gas factories more close to the people.

Kachikwu’s revelation that the refineries had not been properly maintained in the last 10 called to question all the money spent on the turnaround maintenance since 1999. It is on record that the turnaround maintenance for the refineries were abandoned for decades, but since the democratic dispensation started in 1999, successive governments have tried to overhaul the refineries to make them more efficient without success because of their long years of abandonments, even as fuel needs increased daily.

Later on, the TAM assumed political overtones, as rehabilitation contracts were awarded to friends of the government, which did not improve the status of the refineries until the process was given up entirely in favour of products importation. Importation meant more jobs for the boys who metamorphosed into cartels, living large, due to the corruption associated with the management of the subsidy regime, at the expense of other Nigerians that have to queue for hours to get fuel products.

It was, therefore, with great expectations that at the twilight of former President Goodluck Jonathan’s administration, Nigerians received the news that all the refineries would undergo the required maintenance using local contractors, to reduce costs from using the original equipment manufacturers. And this seems to be yielding results.

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