The management of the Nigerian National Petroleum Corporation (NNPC) has hinted that the country’s refineries in Kaduna, Port Harcourt, and Warri will commence full operation after rehabilitation in the second quarter of 2023.
The refineries, it said are currently undergoing total overhaul that is estimated to last for between two and three years.
NNPC group general manager, Group Public Affairs Division, Dr. Kennie Obateru, told LEADERSHIP that the refineries would be operating at a minimum of 90 per cent of their installed capacity when they come on stream after their repairs.
Obateru attributed the inability of the refineries to work at full capacity after previous turnaround maintenance (TAM) embarked upon by the corporation to the non-conduct of a thorough diagnosis of the refineries and bureaucratic constraints.
He said: “What has been happening, because we didn’t want a total shutdown of the refineries, we have just been doing turnaround maintenance but because the refineries are aged, there is actually need to do a total rehabilitation. So, it’s the total rehabilitation that we are undertaking now. We have started with Port Harcourt and what has been done with it is to actually identify what the issues are, do a thorough diagnosis.”
On the new format the refineries will take after the rehabilitation, he said: “The new plan, all things being equal, is to get partners to invest in those refineries and we will engage the Nigeria NLG structure so that NNPC will just be a shareholder. That way the usual bureaucracy and issues that have led to turnaround maintenance being missed in the past will no longer come to play. You know if independent investors are putting in their money they wouldn’t allow for the suspension of turnaround maintenance. We have tried it and it has worked; look at Indorama, the fertiliser plant that was given to them, they didn’t really do much, it’s just taking good business decision and the place is running and making profit, same for the NLG.
“So, that is the direction, but the plan for the rehabilitation, by the second quarter of 2023 we expect that all the NNPC refineries across the country will be running at a minimum of 90 per cent of their operating capacity. If you check refinery rehabilitation globally, it takes a minimum of two to three years’ period to complete. It is not something you rush,” he stated.
When reminded that the corporation had in the past fixed dates for the commence of operations of the refineries but failed to deliver, Obateru replied: “That is actually the problem, because we want to please or say we can deliver quickly, even when we know that that is not the best way to go, so we keep doing fixing instead of a total rehabilitation that the refineries need.
“We are doing it differently this time, let’s tell Nigerians the truth that it takes this long to have a total rehabilitation of those refineries and say when we know that the job will be completed and the expectation after they are completed,” he said.
Asked if Nigerians can be assured that refineries will be running in full capacity by the second quarter of 2023, Obateru said: “Yes, they will be running at a minimum of 90 per cent, most refineries all over the world operates at an optimum capacity of 90 per cent of their capacities, not many can do above that. So, we expect that we will be operating at least 90 per cent of their installed production capacity when they come on stream in 2023.”
On the prospect of the idea of greenfield refineries which the corporation had talked about in the past, Dr. Obateru said that “you know for those ones they were looking for partners and some of the challenges we had was about the subsidy issues, where by you produce and you are not sure you can recover your cost, but now if market forces will determine the pump price, we expect new players to come in.
“That is why, if you look at Dangote Refinery, you see that they went for an export licence so that they will be above to sell their product at global market price. We believe once the market is liberalized, investors will come on board.
“You know that currently we have between 18 to 20 licences issued to people to set up refineries but the market is not free, they cannot invest. How can I build a refinery and I will now have to be forced to sell the product at a fixed price. Even if the government says they will give you the money how easy is that?” Obateru asked.