NNPC’s plan to exit petroleum imports by 2019, a pipedream?
Maikanti Baru, group managing director of the Nigerian National Petroleum Corporation (NNPC) has said the country will exit petroleum products importation in 2019 severally that he may have even started to believe it.
At the recently concluded Offshore Technology Conference (OTC) in Houston, United States, Saidu Mohammed, the Chief Operating Officer, Gas & Power of NNPC who went to the event on Baru’s behalf, harped on plans to rehabilitee the refineries.
Mohammed said the corporation is embarking on a programme to revamp existing four (4) refineries at the cost of $5-$6billion to raise their capacity to 700,000 barrels a day within the next few years.
“We load out at least five to six million litres of PMS daily and about that same quantity of AGO daily from the three refineries. That is part of what is making the PMS market in Nigeria stable today. We believe that the set target of exiting PMS importation in 2019 is achievable,” said Mohammed.
It easy to miss the irony in the statement until you consider that Nigeria’s import statistics for petroleum products.
According to data released last week by the National Bureau of Statistics (NBS), Nigeria imported 4.05 billion litres of petrol (premium motor spirits), 1.31 billion litres of gas (automotive gas oil) and 41.06 million litres of kerosene (household kerosene) in the first three months of 2017.
This translates to N760.44 billion importing petrol, kerosene and gas of which N566.96 billion was spent on petrol import, N187.56 billion on gas and N5.92 billion on kerosene.
In March alone, Nigeria’s imports shot through the roof as volumes of premium motor spirits (PMS) and automotive gas oil (AGO) imported into the country at 1.63 billion and 504.59 million litres valued at N218.88 million and N70.28 million respectively.
This puts average daily importation of PMS at 54million litres, AGO at 16m litres and kerosene at 405,662. Now juxtapose this comment; “we load out at least five to six million litres of PMS daily and about that same quantity of AGO daily from the three refineries.” This would have been hilarious if it were not so serious.
Another inconsistence is seen in the fact that in the same breath that Baru’s representative said 2019 date to exit importation is achievable, he told journalists that the rehabilitation of the refineries have been hampered by lack of regular Turn Around Maintenance (TAM) over the years and it would take more years to get the refineries fully back to their nameplate capacities.
However a review of NNPC’s operational accounts will indicate that what has hampered the refineries is not lack of appropriation of funds for the maintenance of the refineries but misuse of the funds allocated.
Worse still refineries performing at less than 10 percent of their capacity speaks a need for serious overhaul of the strategy for engaging them.
Refiners in Asia and Europe have a cycle for maintenance of refineries and when they undertake this venture, oil prices rise marginally. NNPC has no such programme for its refineries.
Earlier this year, NNPC progressed talks with GE to retrofit the refineries and increase current production capacity. Even if this agreement succeeds, and a marginal improvement in refining capacity is achieved, the corporation is still challenged by militants’ activities. This threat complicates the process of transporting refined products through the pipelines.
Also, unscrupulous individuals in route of the pipelines break them open and steal refined products. Many of NNPC’s depots are rotting away because products cannot get to them through the pipelines, hence the dependence on private depots.
A successful refining operation demands integrity of operations, smooth process for conveying crude products and evacuation of the products, a market and a system that guarantees sustainability.
ISAAC ANYAOGU