Page 4 - AfrOil Week 27 2022

AfrOil COMMENTARY AfrOil

The curious case of Nigerian

refining: Waiting for Dangote

State refineries are taking the blame for Nigerian fuel shortages and high prices, but after

acquiring a 20% stake in the new Dangote facility, NNPC may soon breathe a sigh of relief

THE group managing director of Nigerian protecting these assets. The National Assembly
National Petroleum Co. Ltd (NNPC Ltd), Mele in its wisdom also included [a] trust fund for the
WHAT: Kyari, told his country’s House of Representa- communities in the Petroleum Industry Act so
NNPC’s head says the tives (HoR) last week that issues with fuel prices that they become part and parcel of the system,”
country’s out-of-service and availability should be blamed on state refin- he said.
refineries are to blame eries being out of operation. “Many of [the underground refiners] are
for the current situation In doing so, the official effectively levelled completely armed and the community mem-
rather than theft, though the blame at his own company, which failed to bers cannot even report them. They are helpless
he also faulted illegal carry out turnaround maintenance (TAM) on because if they report them, they will come after
refiners. the plants for several decades, leading them to them,” he added.
require major overhaul work. Meanwhile, he suggested that more oil
WHY: Kyari also noted that more than 200 illegal should be produced and made available while
Nigeria has long battled refineries across the country had exacerbated also allowing oil marketers to import products.
with subsidies and is now
dealing with supply chal- the situation. “There’s need to engage the [Central Bank of
lenges that maintain the NNPC operates four refining facilities on Nigeria] to create more dollars. Once we do
burden on state coffers. behalf of the state, with a combined capacity of this, dollars will be allocated for the import of
445,000 barrels per day (bpd). All of them have automotive gas oil [AGO or diesel]. This will
WHAT NEXT: been out of commission since 2019, leaving also dampen the effects of going to buy dollar in
NNPC has paid the first 100% of Nigeria’s active capacity in the hands the open market. So, you can have cheaper dol-
instalment of a deal to of independent companies that operate small, lar and definitely it will affect the price,” he said
acquire a stake in a new modular facilities that currently have a name- These comments do not line up with reports
650,000 bpd refinery, plate capacity of 16,000 bpd. in May that quoted modular refiners as saying
which is seen as the The state-owned company has signed off on that they were unable to operate properly, owing
saviour of Nigerian oil work to rehabilitate the two refineries that make to issues acquiring sufficient crude supplies
and product markets. up the 210,000 bpd Port Harcourt Refining from NNPC while the company continued to
Complex (PHRC), with the 125,000 bpd Warri sell its crude on international markets.
Refining and Petrochemical Co. and 110,000 Appearing during the same gathering was
bpd Kaduna Refining and Petrochemical Co., Farouk Ahmed, CEO of the Nigerian Mid-
which are also due to undergo major repair work stream and Downstream Petroleum Regulatory
thereafter. Authority (NMDPRA), who also advocated for
But these billion-dollar projects have come the resurrection of Nigeria’s refining capabilities.
under intense scrutiny, with politicians casting While he noted that Nigeria, like other coun-
aspersions about the Port Harcourt tender pro- tries, was at the mercy of global fuel and prod-
cess as well as questioning investment in reha- uct markets for pricing, he suggested that greater
bilitating facilities that have a history of poor foreign exchange be made available to “genuine
performance. importers at CBN’s official rate”, the government
Against this backdrop, NNPC has hedged its work to encourage the establishment of more
bets, making the first instalment of a $2.76bn local refineries and LPG processing facilities to
deal to acquire a 20% stake in what will be the meet domestic demands and raise LPG supplies
country’s largest refinery. from local producers.

Blame game Dangote payment
In fairness to Kyari, his comments were made CBN, along with NNPC and just about every
in defence of local communities that have come other Nigerian stakeholder, is pinning its hopes
under fire, either for siding with groups that and investments on the 650,000 bpd Dangote
have engaged with illegal refiners or for not Refinery, which expected to reach full capacity
reporting such activity. in 2023.
“Community members are not the thieves. Construction work at the refinery is com-
Absolutely not. Everything we are doing is to plete, and testing is ongoing ahead of the com-
incorporate the communities into the process of mencement of refining operations.

P4 www. NEWSBASE .com Week 27 06•July•2022