Nigeria refineries may end up like NITEL , Analyst say


port-harcourt-refineryThe Managing Director, SEPLAT Petroleum Development Company Limited, Mr. Steven Avuru, has said that the refineries in the country will end up like NITEL if the Federal Government does not sell them on time.

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At a meeting between the Department of Petroleum Resources and marginal field operators recently in Lagos, Avuru stated that apart from being unable to sell NITEL, the government had problems liquidating the moribund national carrier.

A similar fate, he argued, might befall the nation’s four refineries if the government did not sell them to private investors as soon as possible.

He said, “NNPC refineries will end up like NITEL if the government refuses to sell them. Nobody has been able to sell NITEL and to even liquidate it has been problematic. That is what will happen to the four refineries in the country if they are not sold.”

Nigeria has four refineries with a combined capacity of 445,000 barrels per day. Two of the refineries are located in Port Harcourt, one in the Niger Delta town of Warri, and one in Kaduna, but the refineries operate well below their installed capacities owing to decades of mismanagement and corruption in the country.

Avuru decried the country’s incapacity to refine crude oil for local consumption as well as the attendant huge importation of refined petroleum products.

In view of this, he welcomed the proposed $8bn Dangote Refinery with the capacity to refine 400,000 barrels of crude a day, saying its success would drive more investors into refinery business in the country.

With its capacity, Avuru explained that the Dangote refinery would solely cater for the capacity of the government’s four refineries and wondered what would become of the refineries if the government did not relinquish them.

He said, “Dangote will build a 400,000 refinery. He will buy crude at international price and sell at international price. However, if it is successful, other investors will follow suit and build smaller refineries. In view of this, I believe that by 2020, half of our production will be refined locally. By that time, NNPC will be sleeping in their refineries.”

Similarly, the Manufacturers Association of Nigeria recently renewed its call for the privatisation of the nation’s refineries.

The manufacturers said this had become imperative because of the need to increase the supply of industrial fuel at a cheaper cost for manufacturing purposes.

According to them, scarcity and high cost of industrial fuel, such as gas, LPFO, LRS and AGO had made the manufacturing sector uncompetitive.

They lamented that irregular supply of industrial fuel arising from the epileptic operation of local refineries resulted in high cost of alternative power supply to industries and making cost of locally produced goods uncompetitive.

To give the manufacturing sector the fillip required for growth and improved economic contributions, the manufacturers asked the Federal Government to privatise the refineries.

The acting Director General, MAN, Mr. Rasheed Adegbenro, at the association’s 41st Annual General Meeting recently in Lagos, said, “Local supply of industrial fuel should be readily available and affordable because one of the key factors responsible for the lack of competitiveness in the manufacturing sector is scarcity and high cost of industrial fuel such as gas, LPFO, LRS and AGO.

“This can be achieved through the privatisation of all the government-owned refineries for optimum performance.”

Babatunde Akinsola
Babatunde Akinsola
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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