Nigeria’s refineries lost a total of N104.3 billion in 13 months while not processing any crude oil from the refineries during the period, according to the Nigerian National Petroleum Corporation’s latest report.
The plants continued to lose money on a monthly basis, according to a study of the revised consolidated refinery financial performance from February 2020 to February 2021.
The Nigerian National Petroleum Corporation (NNPC) is in charge of three refineries: Kaduna Refining and Petrochemical Company, Port Harcourt Refining Company, and Warri Refining and Petrochemical Company.
According to the corporation’s figures, the refineries’ monthly operational expenses exceeded their income for the whole 13-month period.
The refineries’ consolidated losses in February, March, April, May, June, July, and August 2020 were N9.36 billion, N10.3 billion, N9.69 billion, N9.55 billion, N10.23 billion, N9.1 billion, and N7.1 billion, respectively.
The facilities lost N7.04 billion, N5.49 billion, N5.99 billion, and N8.28 billion in September, October, November, and December 2020, respectively.
Their consolidated losses persisted in 2021, with losses of N5.37 billion and N6.88 billion in January and February of this year, respectively, according to the corporation’s most recent statement.
Reason for the surge in expenses
Because of ongoing refinery rehabilitation work, the three refineries processed no crude in February 2021, and their combined yield efficiency is 0.00%. However, the refineries are currently being revamped, which is expected to improve capacity utilization once completed, resulting in declining operational performance.
Since January 2017, the NNPC has been using a merchant plant refineries business model, according to the corporation. The model, it added, took into account the product value and crude expenses, noting that the aggregate value of output by the three refineries (at import parity price) for February 2021 was almost N0.10 billion.
It went on to say that because there was no output in February 2021, there was no related crude plus freight cost for the three refineries, but that operational expenditures were N6.98 billion.