Last week, the NNPC announced that it was planning to import crude oil from Niger Republic for its Kaduna Refinery. This news shocked a analysts considering that the country was an exporter of Crude and more importantly does not have the foreign exchange required to pay for imported crude.
It wasn’t immediately clear why the NNPC was taking this action, however further details have now been released explaining the reason for this move. Before we get to the summary of what we now know and don’t know, here is the Group General Manager, Public Affairs Division, Mr. Ndu Ughamadu, yesterday in Abuja, quoting his Group Managing Director, Dr. Maikanti Baru explaining the reason for this decision;
“Due to challenges with the aged refinery and crude oil pipelines that had been breached severally, the operations of the refinery has been epileptic.
“Therefore we are determined to resolve through various intervention methods including evaluation of alternative crude oil supply from Niger Republic through building pipelines of over 1,000 kilometers from Agadez to Kaduna. That efforts is being championed by the president,”
What we now know
1.Pipeline Vandalization – The NNPC claims pipeline Vandalization in the Niger Delta has affects the functionality of the refinery and as such will prefer to look for an alternative further up North.
- President Buhari appears to be fully behind this effort and fuels speculations of his fixation and selective governance.
This is still all talk as the refinery hasn’t even commenced full production and the pipelines are yet to be constructed. As such, it could actually take years before it comes on stream.
Some vested interests at the NNPC are determined to thwart any sale or privatization of the refineries and would rather have the government continue to spends billions Naira on turn around maintenance and other operations costs.
The government also seems to have given up on the Niger Delta unrest and is not afraid to go to extreme measures just to ensure that fuel prices remain low. It is understood that the president sees low fuel prices as his means to being re-elected.
What we don’t know
- Who will build this pipeline and how much will it cost?
Who will fund the pipeline construction and will it be in the 2017 Budget set to be submitted to the National Assembly?
What happens if the pipeline in the North is vandalized by Boko Haram or other terrorist groups up North?
What about Warri and Porthacourt Refineries? Are they going to get crude oil from Ghana if the Niger Delta crisis persists?