Nigeria losses about $31.5 million revenue daily to its ailing state owned oil refineries, a new report has disclosed.
The study commissioned by the Nigeria Natural Resource Charter (NNRC) and titled “Reducing losses from refinery operations”, reviewed the operations of Nigeria’s traditional refineries located in Kaduna, Warri and PortHarcourt, from a cost perspective, efficiency and value for money.
Presenting it’s findings at a media and Civil Society Organisations (CSOs) workshop in Lagos on Thursday, oil sector expert, Michael Faniran, revealed that despite the huge losses, about N276.87billion was said to have been spent as operational cost of the refineries between 2015 and 2018, making it one of the highest in the world.
The report found that while the Nigerian National Petroleum Corporation (NNPC) reportedly spent about $396.33 million between 2013 and 2017 on Turn Around Maintenance (TAM) of the three refineries, the nation spent $36billion within the same period on product importation.
e360 learnt that the combined capacity utilisation of the three refineries dropped to 6.1 percent at the end of September 2017, despite the $369.33 said to have been expended in TAM.
According to the report, the combined effect of the poor state of the refineries have resulted to huge revenue losses, depleted foreign reserve and low economic growth, with the refineries contributing 10percent to Nigeria’s GDP.
While recommending that the federal government divest up to75 percent of its shareholding in the three refineries which have the capacity to refine 445,000 barrels of oil per day, to competent investors under a transparent and fair bidding process, the report noted that the $36 billion spent on petroleum products importion within the period of review, could have built the country four new refineries with similar capacity as the Dangote 650,000 barrels per day refinery being built in Lagos.
Emphasising the urgent need for reforms in the sector, such as passage of the various segments of the Petroleum Industry Bill (PIB), in order for the country to fully harness it’s natural resource benefits, the report found Nigeria to be among the least in the league of oil rich countries with low petroleum sector contributions to the economy.
It disclosed that while the Petroleum sectors in Kuwait, Saudi Arabia and the UAE contributes 50percent, 42percent and 30percent respectively, to their countries GDP, Nigeria’s petroleum sector contributes less than 10percent to the country’s GDP.
Meanwhile, speaking recently, Group Managing Director of the NNPC, Mr Mele Kyari, during a meeting with the Executive Vice President of AFREXIMBANK, Mr. Amr Kamel, in Abuja, said the Corporation has a number of financing needs and was open and willing to partner reputable financial institutions to finance its critical projects, especially refineries rehabilitation and downstream infrastructure.
About the NNRC
The NNRC implements the Natural Resource Charter (NRC) in Nigeria, which is a set of principles intended for use by governments, societies, and the international community to determine how best to manage natural resource wealth for the benefit of current and future generations of citizens.