The Nigerian National Petroleum Corporations (NNPC) spent about $42 billion (N15.21trn) on fuel importation between 2013 and 2018. This amount could be put into various uses to increase local refining capacity and ensure a sustainable supply of refined products in Nigeria.
For instance, this amount is capable of building about 14 refineries with average capacities of 100,000 barrels of crude oil per day at an estimated cost of $3 billion if well managed, or three of the type of Dangote Refinery, which is 650,000 barrels per day and is estimated to cost between $12 and $14 billion.
Industry operators say about $6 billion of the amount could have been used to upgrade the existing refineries, pipeline and depots infrastructure and they would have been up and running.
According to Bureau of Public Enterprises (BPE), $36.4 billion was spent on importation of petroleum products between 2013 and 2017. While the National Office of Statistics (NBS) says $6 billion (N2.289trn) was spent in 2018. The figures from the two agencies when put together come to $42 billion.
Alex Okoh, director-general, BPE, stated last week that the NNPC had not provided sufficient refining in the country as products were imported on a continuous basis.
Babajide Soyode, former general manager of Warri Refinery and Petrochemical Company, however, said about $6 billion of the above amount would have been enough for the rehabilitation or upgrade of the four refineries, pipelines and depots and the country would have been self-sufficient in terms of refined products, and possibly even export to the West African sub-region.
With this level of foreign exchange, Soyode said the naira would have stabilised if it was not spent on importations and subsidy, and urged the government to remove subsidy and allow the private sector to run the refineries so that they could be more profitable.
Ibe Kachikwu, former minister of state for petroleum resources, had said Nigeria allocated an average of $28 billion of her foreign exchange earnings yearly to import about 92 percent of petrol consumed locally.
On average, the country consumes 66 million litres of petrol daily, Kachikwu stated, and also noting that 40 percent of the $28 billion import spend is used to finance its logistics.
Over the past four years, Nigeria had spent billions of money on subsidy for petrol and kerosene, and all that the country has spent could have financed a lot of investments in the downstream infrastructure.
The Federal Government in March 2019, kick started the rehabilitation of Port Harcourt Refineries with the aim of achieving 90 percent local refining capacity.
The first refinery in Port Harcourt was commissioned in 1965 to process 60,000 barrels of oil per stream day (bpsd) as well as the new plant commissioned in 1989, which has a capacity of 150,000bpsd.
Both refineries possess a combined capacity of 210,000 barrels per stream day, making it the biggest oil refining company in Nigeria. The rehabilitation would be in two phases with both the ENI and the original builders participating in the process.
Culled from BusinessDay