Refineries won't end crisis, say marketers

Refineries won’t end crisis, say marketers

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By Akinsuroju Olubunmi

Refineries won’t end crisis, say marketers.

Refineries won't end crisis, say marketers

Despite Nigeria’s four local refineries having a combined capacity of 450,000 barrels per day, oil marketers and energy experts doubt they can resolve the ongoing fuel crisis if the market remains unregulated. The refineries in Port Harcourt, Kaduna, and Warri have been non-operational since 2019, leading the Federal Government to rely on foreign refining, significantly impacting fuel supply and economic stability.


In 2021, the Federal Government allocated $1.5 billion to refurbish the Port Harcourt refinery, which has a capacity of 210,000 barrels per day. However, despite initial promises to restart operations by December 2022 and later by the end of the first quarter of 2023, the refinery remains inactive.


On Monday, Chief Ukadike Chinedu, the National Public Relations Officer of the Independent Marketers Association of Nigeria, announced that the Port Harcourt refinery might commence operations by the end of July after multiple delays.


Meanwhile, Mustafa Sugungun, the Managing Director of the Kaduna Refining and Petrochemicals Company, stated that the Kaduna refinery’s rehabilitation would be completed by the end of 2024. During an oversight visit by the Senate Adhoc Committee on Petroleum Downstream, Sugungun explained that the 110,000-barrel-per-day refinery would start producing at 60 percent capacity by the year’s end, with full production following.


Similarly, Desmond Inyamah, the acting Managing Director of the Warri Refining and Petrochemical Company, indicated that the Warri refinery would resume full operations by December 2023. This was confirmed during a visit by the House of Representatives ad-hoc committee inspecting the refinery’s maintenance progress. The Nigerian National Petroleum Corporation Limited’s Chief Corporate Communications Officer, Olufemi Soneye, also mentioned that mechanical completion of the Warri refinery was expected in the first quarter of this year.


Despite these efforts, oil marketers and experts, in interviews with Sunday PUNCH, expressed concerns that even if the refineries are fully operational soon, the fuel crisis may persist due to potential crude oil supply constraints. Dr. Billy Gilly-Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria, urged the Tinubu administration to ensure all four refineries are operational to alleviate the fuel crisis.


Dr. Gilly-Harry added, “It is hard to confirm any date for the Port Harcourt Refinery’s reoperation. I visited recently and saw promising progress, but NNPCL prefers not to announce any dates to avoid raising false hopes. While we were expecting the Warri refinery to start by the 29th of this month, and the Port Harcourt one soon after, the management now projects July for its reactivation.”


Regarding fuel prices and scarcity, he noted that merely operationalizing the refineries would not guarantee price reduction unless the Consumer Protection Council and other agencies enforce strict price regulations. “In a deregulated market, fuel prices depend on demand and supply costs. Effective regulation is crucial to prevent retail outlet owners from hiking prices unnecessarily once the refineries start. While we have internal regulatory mechanisms, the CPC must protect consumers,” he explained.


IPMAN Vice President, Hammed Fashola, echoed similar sentiments, stating that the full operation of the Port Harcourt refinery and the upcoming Dangote Refinery would significantly relieve the country if achieved. “The government is working towards this, and if the Port Harcourt refinery starts this year, and Warri next year, the main concern is the long-abandoned Kaduna refinery. The government needs to ensure it is still viable before investing more funds,” he said.


Energy expert and lawyer, Mr. Ayodele Oni, highlighted another challenge: the long-term sale agreements for Nigeria’s crude oil. “There are debates about whether we have enough crude due to agreements selling our future crude. Even with operational refineries, a crude shortage presents a major issue,” he said. Oni urged the government to increase investment in oil exploration and production to ensure a stable fuel supply.


Refinery, Fuel,

Refineries won’t end crisis, say marketers

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