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Thursday, July 11, 2024

The Long Wait For Nigeria’s Oil Refineries Continues

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Nigerians have once again been given false hope about the return of the Port Harcourt refinery to full operational capacity.

In December 2023, the Minister of State for Petroleum Resources, Heineken Lokpobiri, announced the “mechanical completion” of repairs and promised the refinery would resume operations by the end of the year.
At full capacity, the PHRC can refine 60,000 barrels per day which is approximately over 10 million liters of Premium Motor Spirit popularly called petrol. This number of litres can add to the daily consumption demands of the Nigerian people and help to reduce the burden caused by the importation of refined products and perhaps reduce the crippling price of petroleum products.

Chief Corporate Communications Officer, Nigerian National Petroleum Company Limited (NNPCL) Olufemi Soneye, gave a statement detailing completed works, equipment installation, and mechanical completion of the Port Harcourt Refinery. This may indeed have partly explained the ‘Mechanical Completion’.
However, it appears this was premature and misleading, as the refinery is still not able to process crude oil into refined products.

This disappointing development is just the latest chapter in the sad saga of Nigeria’s oil refineries. All four state-owned refineries, which have a combined capacity of 445,000 barrels per day, have been practically dormant for years.

Repeated efforts and billions of dollars invested in repairs and rehabilitation have failed to bring them back to full operational status.
The impact on Nigeria has been immense. The lack of domestic refining capacity forces Nigeria to import the bulk of its fuel needs.

This is a massive drain on scarce foreign exchange reserves. It also leaves consumers at the mercy of global oil price volatility and dependent on foreign suppliers. Subsidies on petrol prices cost the government billions of dollars annually.

The sorry state of the refineries causes Nigeria an estimated loss of thousands of potential jobs, economic opportunities, energy security and national pride. The Port Harcourt refinery alone, if running at full tilt, could meet about 50 percent of Nigeria’s petrol needs. That would be a huge boon to the economy.

So why does Nigeria consistently fail to fix its refineries? The reasons are complex, but boil down to poor management, corruption, sabotage and a lack of political will for reform.
For decades, the refineries have been cash cows for corrupt officials, who benefitted more from importing fuel than refining it at home.

Maintenance budgets were diverted and skilled workers retrenched. An unstable policy environment and political interference compounded the rot.
The rehabilitation of the Port Harcourt refinery under the Buhari administration was meant to signal a new dawn.

Source: Leadership

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