Nigeria’s four refineris recorded operational deficit of almost N10 billion in 2019, documents sourced at the Nigerian National Petroleum Corporation (NNPC) have revealed.
According to the documents, Warri Refinery recorded operational deficit of N2.67 billion in the period under review, while Kaduna Refinery and the two Port Harcourt refineries posted deficits of N4.18billion and N2.7billion respectively to bring the total deficit to N9.546billion.
The documents showed that since April 2019, the four refineries have not refined crude oil safe for the month of May when they collectively refined 430 barrels of crude oil, which is 0.09 per cent of their installed capacity.
According to the NNPC documents, since April 2019, the four refineries have not refined crude oil safe for the month of May when they collectively refined 430 barrels of crude oil, which is 0.09 per cent of their installed capacity.
Consequently, NNPC has resorted to Direct-Sales-Direct Purchase (swap deal) with some firms which are supplied crude oil by the national oil company in exchange for refined petroleum products.
The quantity of crude supplied to these companies usually falls short of the domestic requirement put at 455,000 barrels per day, which is the aggregate capacity of the four refineries. The effect of this is a shortfall in the supply of Petroleum Motor Spirit (popularly known as petrol) leaving
NNPC with no option but to look up to the major oil marketers to bridge the gap.
With the weakened state of the nation’s currency, the landing cost of PMS usually exceeds the government fixed pump price and this cost the government a huge sum of money in subsidy payment until it announced the full deregulation of the downstream petroleum sub-sector at the onset of the COVID-19 pandemic, which plummeted oil prices globally. According to available documents, Nigeria paid over N10 trillion in fuel subsidy or under recovery between 2007 and March 2020.
According to NNPC monthly reports, in January 2020, NNPC lifted 11,732,866 barrels of crude oil from the daily allocation for domestic utilisation, which translated to an average volume of 378,480 barrels of oil per day processed under the Direct Sales-Direct Purchase (DSDP) scheme. This fell short of the domestic requirement of 455,000 barrels by 76,500 barrels per day.
In February, the national oil company lifted 9,557,710 barrels of crude oil from the daily allocation for domestic utilization translating to an average volume of 329,576 barrels of oil per day processed under the DSDP scheme. This left a gap of 125,424 barrels per day.
NNPC lifted 9,489,602 barrels of crude oil from the daily allocation for domestic utilization in March. This translated to an average volume of 306,116 barrels of oil per day processed under the DSDP scheme. This left a gap of 125,424 barrels per day. The balance of 329,576 barrels was supplied by the major marketers.
In April, NNPC lifted 11,436,619 barrels of crude oil from the daily allocation for domestic utilization translating to an average volume of 381,221 barrels of oil per day processed under the DSDP scheme while no delivery was made to the domestic refineries for processing. This left a gap of 73,779 barrels per day.
According to the NNPC Refineries Performance Reports of 2012, the decline in the performance of the refineries commenced in the early 1990s after the military government directed the NNPC to close its accounts in commercial banks and transfer them to the CBN. With that, NNPC lost its autonomy and it could no longer embark on prompt maintenance of the refineries. In recent times, every succeeding NNPC GMD made turning around the refineries a cardinal goal.
