By Jeph Ajobaju, Chief Copy Editor
Nigeria’s four refineries lost a total N104.3 billion in 13 months without processing a single drop of crude oil, the Nigerian National Petroleum Corporation (NNPC) states in its latest report.
Yet the Federal Executive Council (FEC) on August 4 approved contracts worth $1.5 billion to rehabilitate two of them – $897.67 million for Warri Refinery and $586.9 million for Kaduna Refinery.
NNPC Group Managing Director, Melee Kyari, disclosed in June that contracts had earlier been awarded for the other two refineries in Port Harcourt.
The PUNCH reports that a total N81.41 billion was spent on the four refineries between January and August last year even though they never refined a drop of crude oil.
Billions of dollars had previously been spent to rehabilitate them without success.
Tax payers bear the brunt of Abuja’s inability to make the refineries functional. Petrol currently sells for between N163 and N 165 per litre, with the NNPC mulling an increment, saying the pump price is short of landing cost of N232 per litre.
The NNPC is in charge of the four refineries, which continue to lose money on a monthly basis, according to a study of the revised consolidated refinery financial performance from February 2020 to February 2021.
Nairametrics reports that figures from the NNPC show that the monthly operational expenses of the refineries exceeded their income for the whole 13 months.
Their total losses in 2020 are
· February (N9.36 billion)
· March (N10.3 billion)
· April (N9.69 billion)
· May (N9.55 billion)
· June (N10.23 billion)
· July (N9.1 billion)
· August (N7.1 billion)
· September (N7.04 billion)
· October (N5.49 billion)
· November (N5.99 billion)
· December (N8.28 billion)
Their consolidated losses in 2021 are
· January (N5.37 billion)
· February N6.88 billion)
These figures are the most recent from the NNPC.
Reason for the losses
The refineries processed no crude in February 2021, but they are currently being revamped and expected to improve capacity utilisation once completed, per Nairametrics.
The NNPC disclosed that since January 2017, it has been using a merchant plant refineries business model which takes into account product value and crude expenses.
Aggregate value of output by the refineries (at import parity price) for February 2021 was almost N0.10 billion.
Because there was no output in February 2021, there was no related crude plus freight cost for the refineries, but operational expenditures amounted to N6.98 billion, according to NNPC figures.