New
that two of country’s refineries have resumed
production, with the third scheduled to resume production
in the next few days, might have raised hopes of a speedy
resolution of the fuel crisis, but one major issue of concern
is how much is the refineries constant shut down, repairs
and maintenance costing the nation and when would the
refineries be fixed once and for all.
In spite of recent claims by the NNPC that the resumption
of the refineries would help reduce the impact of the fuel
crisis and help reduce importation, Minister of State for
Petroleum Resources, Mr. Ibe Kachikwu, had a few days
ago pointed to the contrary.
Particularly, Kachikwu, had in March, stated that at that
point in time, importing Premium Motor Spirit, PMS, also
known as petrol, is cheaper than producing the product in
the country’s refineries.
Kachikwu had told newsmen that even if the current set of
refineries were working on a 100 per cent basis, they would
only be able to account for 20 million litres of PMS per day,
about 50 per cent of the country’s total consumption. This
means that the country would still resort to importation to
meet up with the shortfall.
He stated that until the upgrade and total refurbishment of
the refineries are concluded, as well as ensuring that the
pipelines are fixed, it would be uneconomic and very
expensive to refine PMS locally.
He maintained that local refining of PMS would make much
more economic sense if all the refineries undergo full set of
repairs and Turn-Around Maintenance, TAM, and when new
refineries are set up in the country through the co-locative
initiative.
He said: “Most modern refineries are configured in such a
way that your stock of PMS outage is a lot higher, 70 to 80
per cent. So when we do import the product, we actually
save money; we get it less expensive than when we do it
here.
“But having said that, the reality is that until we have
alternatives in terms of co-locative refineries which we are
looking at; until we finish the total refurbishment to improve
and upgrade the refineries, it does not make sense to use it
with some of the deficiencies.
“This is because distribution is key. If you have product in
Kaduna for example, pumping into the north becomes easy
as opposed to moving, as we do whenever we have a crisis
– trucks all the way from Lagos and Oghara, out to the
north.”
In addition, almost on a yearly basis, billions of naira are
spent on the repairs or Turnaround Maintenance (TAM) of
the country’s refineries, yet, the refineries hardly operate for
up to 90 days in a year. Whenever the refineries resume
production after a lengthy repair work, they hardly operate
for up to 30 days before they are shut down again; and this
cycle continues, year in, year out.
Specifically, a few weeks ago, Minister of State for
Petroleum Resources, Mr. Ibe Kachikwu, disclosed that the
country requires $500 million, about N100 billion to fix all
the refineries. This was irrespective of the fact that almost
similar amount was spent on fixing the refineries at the
twilight of the Goodluck Jonathan’s administration.
In 2012, the then Acting Director of Warri Refining and
Petrochemicals Company, WRPC, Engr. Samuel Babatunde,
disclosed that the Federal Government had budgeted N94.2
billion for the Turn Around Maintenance, TAM, of the Warri
refinery, while almost similar amount ($463 million) was
budgeted for TAM of the Port Harcourt refinery.
In 2013, $1.6 billion was budgeted for TAM for the four
refineries, with the former Minister of Petroleum Resources,
Mrs. Diezani Alison-Madueke, stating that over 75 per cent
of the spare parts maintenance on the Port Harcourt
Refinery had already arrived the country, while the original
builder of the refinery had been paid $32 million for the
TAM.
She had stated that the TAM for the Port Harcourt refinery
would cost $147 million while modernisation of the refinery
would cost $406 million.
In the early days of 2015, the NNPC contracted local
engineers to fix the f
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