Moribund refineries: N84bn lost within 11 months

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    It has been discovered that the nation’s refineries made a total loss of N84bn from January to November last year, as they continued to operate far below their installed capacity.

    The Punch reports that the refineries are the Warri Refining and Petrochemical Company, Port Harcourt Refining Company, and the Kaduna Refinery and Petrochemical Company, with a total installed capacity of 445,000 barrels per day.

    Port Harcourt refinery recorded the biggest deficit of N35.58bn, followed by Kaduna (N28.21bn) and Warri (N20.4bn), according to the latest data obtained from the Nigerian National Petroleum Corporation.

    The KRPC did not process any crude oil from June to November last year; the WRPC was shut down in March, May, June and September, and the PHRC was idle in August and November.

    The three government-owned refineries lost a total of N16.67bn in the third quarter of this year, the NNPC data showed.

    The NNPC recorded a trading deficit of N6.79bn in November, which is higher than October’s deficit. The corporation said the drop in the performance was attributable to the increased cost in upstream activities, as well as the reduced revenue in the downstream value chain, occasioned by high crude oil inventory in refineries, due to unplanned operational shutdown of the KRPC and the PHRC, which led to increased loss from the refineries in November.

    It said that it had been adopting a Merchant Plant Refineries Business Model since January 2017.

    According to the NNPC, the model takes cognisance of the products’ worth and crude costs.

    It said, “The combined value of output by the three refineries (at import parity price) for the month of November 2017 amounted to N13.08bn, while the associated crude, in addition to freight costs and operational expenses were N15.21bn and N9.02bn, respectively.

    “This resulted in an operating deficit of N11.15bn by the refineries. Also, during the period under review, refineries’ combined capacity utilisation was 5.92 per cent.”

    The NNPC, in its quarterly publication for the fourth quarter of 2017, said it was working in tandem with the Ministry of Petroleum Resources and other stakeholders to implant a novel refining model and other strategies that would restore the refineries and expand existing capacities to record levels.

    The Chief Operating Officer in charge of the refineries and petrochemicals autonomous business unit, NNPC, Anibor Kragha, was quoted as saying that the original builders had actually started conducting studies to determine the cost of fixing the plants and returning them to minimum capacity utilisation of 90 per cent.

    He added that the Kaduna refinery was linked with Warri in more ways than one, because they shared a pipeline and get their crude primarily from Escravos.

    He said that Warri was the best performing refinery at the beginning of last year, but it had some significant power issues.

    Kragha noted, “They have gas turbine because of access to gas; so, they generate a lot of power. But the gas turbine has not been overhauled overtime; it started failing this year.

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