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Federal government decides on massive importation of petroleum products
to forestall scarcity that could be triggered by the shut down of
refineries for repairs
These may not be the best of times for Nigerian refineries. The Kaduna refinery has been shut down, barely six months after it resumed production. Before then, both Kaduna and Warri refineries had suffered inactivity for two years, following the blow-up of Chanomi Creek pipeline, which is a feeder pipeline to the two refineries.
This time around, the closure of the Kaduna refinery is due to the turn-around maintenance, TAM, project, slated for November 15, 2008. It is expected to last for 45 days, at a cost of $60 million. For the Port Harcourt refinery, it has been affected by the long running power problem. It is undergoing repairs in its fluid catalytic cracking unit, FCCU. This is the hub of the refinery and without its functioning, the whole refinery will not work. The routine repairs of the Kaduna, Warri and the two Port Harcourt refineries have been scheduled to be completed before the end of the first quarter of 2009.
Consequently, the refining capacity would be below expectation. Last month, the nation’s refining capacity had fallen below 30 percent. At full capacity, all the refineries can refine 445,000 barrels of petroleum products daily. But Nigeria’s petrol need is said to be about 30 million litres per day, and has been projected to hit 40 million litres in a few years’ time.
The two Port Harcourt refineries produce 215,000 barrels of crude oil daily, while Warri and Kaduna refineries produce 135,000 and 110,000 barrels daily respectively.
The Warri refinery was built in 1978, while Kaduna and Port Harcourt refineries were built in 1980 and 1988, respectively. Their turn-around maintenance is expected to be carried out every two years. But the last TAM was done in 1999. Before the February 2006 vandalism of the feeder pipelines, the Warri and Kaduna refineries were operating at about 75 percent of their installed capacity. During that period, Nigeria was spending between $3 million and $5 million daily on importation of petroleum products.
With almost no production of petroleum products in the country, the federal government has decided to import, to forestall scarcity. Levy Ajuonuma, group general manager, public affairs of the Nigerian National Petroleum Corporation, NNPC, said that fears of any scarcity were erroneous, because the federal government has put in place a comprehensive plan to increase the level of importation of products, so as to meet local consumption need.
“We have professional planners handling the issue of products in NNPC. The issue is very simple. Since the refineries are not producing at optimum at the moment, it means government must increase importation of petroleum products, so that scarcity may not occur as speculated,” he said, adding, “When people speculate about scarcity, that is the time vandals would break the pipelines to divert products and people would begin to store fuel that could burn their houses.”
The warning by the NNPC spokesman may not be unconnected with the past occurrences when Nigerians suffered untold hardship as a result of fuel scarcity, because the refineries had no crude to refine. It also may not be unconnected with product tripping, a sharp practice associated with some marketers. It has been reported that some oil marketers received product allocations from the NNPC at reduced prices, took them offshore after which they were returned as imported products.
Babatunde Ogun, president, Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, said that the federal government has no reason to import fuel given the status of Nigeria as an oil producing country. “It does not make sense that we have oil and yet import the same product from abroad. It tells us of the need to have more refineries, especially private ones, because the earlier it is for us to stop importation, the better for this country,” he said.
Ogun also said that to guard against further importation of petroleum products, the major oil companies should be given a mandate to construct refineries within a time frame or be made to face sanctions. He is not alone in this standpoint.
Tokumbo Korodo, zonal secretary National Union of Petroleum and Natural Gas Workers, NUPENG, said that it is expedient for the private sector to manage the nation’s refineries so that the issue of importation of petroleum products would be a thing of the past.
“There is an urgent need for the government to allow private sector to run the plants because the situation at present shows that government is not competent to manage the refineries efficiently,” he said, adding, “with the situation right now, it means government would spend over $5 million on daily importation of petroleum products to meet domestic demands. It is embarrassing that Nigeria as one of the major exporters of crude oil in the world, does not have functional refineries, but depends totally on importation of petroleum products for domestic consumption.”
Before now, the Department of Petroleum Resources, DPR, had given licences to over 18 private organisations to build refineries but withdrew them later, citing non-compliance with the laid down conditions. Besides, the NNPC also said it would build more refineries to complement the existing ones. While receiving the officials of the ministry of energy from the Republic of Uganda, Abubakar Yar’Adua, group managing director of NNPC, said that the government would build additional refineries in the country.
“Nigeria will be the hub of petroleum products supply in West Africa and, indeed, the entire African continent. Additional refineries in the country therefore, will go a long way to satisfy domestic consumption and generate more revenue for the country,” he said.
PetrolWorld 291008 Newswatch
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