Nigeria’s three dormant refineries have cost the country about N8 billion after failing to meet operational capacity. The country’s failure to attain 90% self-sufficiency in oil refining could deny Ibe Kachikwu a second term as the country’s Minister of State for Petroleum Resources.
Understanding the Situation: Nigeria’s dormant refineries include the Warri Refining and Petrochemical Company, Kaduna Refining and Petrochemical Company, and Port Harcourt Refining Company.
These refineries to refine crude for eight consecutive months. As such, they failed to generate revenue for the Government.
How the refineries operated: According to the Nigerian National Petroleum Corporation (NNPC), Nigeria began to lose a lot of money starting from May 2018 to January 2019. Since January 2018, only the WRPC was able to make some profits in February (N129.91 million) and April 2018 (N575.16 million).
In its latest monthly financial and operations report, the NNPC disclosed that between January 2018 and January 2019 KRPC and the PHRC were only able to make some profits in April 2018. This is because all the refineries started losing money on a monthly basis beginning from May last year.
The PHRC recorded N2.11 billion loss in January 2019 and the refinery was idle from July 2018 to January this year because it could not refine a drop of crude in the seven months. While the report showed that the KRPC posted the highest loss of N3.74 billion for January 2019, as it stayed dormant and failed to refine any crude oil from February 2018 to January this year.
Meanwhile, the WRPC lost N2.51 billion in January 2019. Out of all the refineries, only the one in Warri was able to process some volumes of crude oil between January 2018 and January this year.
However, the WRPC recorded zero capacity utilisation in January, September, and October, in 2018 in relation to the period under review. In January 2019, the Warri refinery processed 104,459 metric tonnes of crude and posted a capacity utilisation of 19.76 percent.
What this means: The failure to ensure that these refineries continue operation and refine crude oil at expected capacity, means the President Buhari-led administration has failed in its promise to achieve 90 percent operational capacity target for refinery production in Nigeria.
Why this matters: The former Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had vowed to resign if Nigeria does not attain self-sufficiency in the refining of petroleum products by 2019. Although his tenure ended with President Buhari’s first term in May 2019, a lot of Nigerians expect him to return for a second term.
While it is uncertain at the moment whether he will be re-appointed when the President’s cabinet list is ready, one thing is sure- Kachikwu will be under the watchful eyes of Nigerians to see if he will willingly accept a reappointment or reject such on the account of his “failure” during his first tenure.
Note: President Buhari has not disclosed when he will be announcing his cabinet. It took him six months before he named Ministers for his first term in 2015. He has, however, hinted that the timeframe for his second term will be different.
