Nigeria spent N4.74tn on imported fuel in 2016

Nigeria spent a total of N4.74 trillion to import 20 million metric tonnes of fueI in 2016, representing approximately 30 per cent of the Central Bank of Nigeria’s (CBN’s) foreign exchange outlay in the same period, all due to low performance of its refineries.

A breakdown of the figure indicated that N3.4tn went for the actual cost of the products, while N1.34tn was spent on logistics.

The Minister of State for Petroleum Resources, Ibe Kachikwu, disclosing this at a news briefing in Abuja, on Thursday, stated that unless immediate solution was found, the country would not be able to sustain such a cost.

On why the country must end importation of refined petroleum products, the Minister said the domestic refining capacity of the refineries is 6 million litres, out of a total consumption of more than 35 million litres, amounting to less than 25 per cent average.

He further stated that given the statistics, it had become absolutely necessary that government moved in to end importation of products by improving on the four refineries as to get them up to 100 per cent production capacity.

But Kachikwu was quick in denying that the government had already given out any of the refineries to private investors as there was not yet any concession, though there is a plan to involve private sector in turning around the refineries, no financier had emerged yet.

Read also: Senate backs down on bill to affect fuel pricing after backlash from Nigerians

Giving more details, he disclosed that the Federal Government would require about $1.2bn to repair and bring the refineries in Port Harcourt, Warri and Kaduna up to 100 per cent production level.

In his words: “Internally, we have been able to determine the sort of amount that will be required to do this work in terms of what work is really required to be done.

“The total cumulative amount is in the $1.1bn and $1.2bn category between all the refineries. And that, of course, does not include the pipelines.

“You have got to address the pipelines and that is something else that is being done.”

According to him, adverts were sent out in order to increase the capacity utilisation of the facilities and that nowhere in those adverts was it stated that there would be a transfer of the assets to any eventual successful financier.

He, however, maintained that the tender process for financiers was truncated in May last year following concerns raised by the National Assembly and the Bureau of Public Enterprises.

The concerns, according to him, were thrashed out and an understanding was reached that the rehabilitation process would not adversely impact any future Federal Government’s privatisation initiative.

He noted that following the understanding that was reached by the parties, a presidential approval was granted the Nigerian National Petroleum Corporation in October to engage credible financiers to rehabilitate and improve the performance of the refineries.

He stated that three possible partners, Agip, Saudis and Qataris were initially identified for engagement.

The minister said the government also indicated that it would invite the original builders for the refineries to undertake the repairs.

On the modalitirs for private sector partnership on the refineries, he stated that a public tender was announced in April last year and bids were received and analysed, adding that winners for the Port Harcourt and Warri refineries had been identified.

He also said, “The NNPC is still fine turning all matters on the issue and discussions are still ongoing with the corporation’s board and the Ferderal Federal Executive Council to give final approval at by ye appropriate time”.

Leave a Reply

Your email address will not be published. Required fields are marked *