The Nigerian National Petroleum Corporation incurred a loss of N473.3bn in operating moribund refineries between January 2015 and February 2021.
This is according to a new report by SBM Intelligence, a geopolitical and socioeconomic research firm.
The report titled ‘Nigeria’s moribund refineries’ said Nigeria’s refineries had become a costly pastime, adding that the NNPC incurred a loss of N473.3bn operating the refineries in Warri, Port-Harcourt and Kaduna.
“Nigeria’s refineries are becoming an increasingly expensive pastime. Between January 2015 and February 2021, the NNPC posted a combined loss of N473.3bn while operating the three refineries: Warri, Port-Harcourt and Kaduna.
“In that time, only 6.73 percent of their capacity has been utilised on average. In fact, none of the three refineries has produced a drop of refined petrol since July 2019, racking up over N185bn in losses,” it added.
It further stated that the refineries had not been fully utilised over the years, it being unproductive since July 2019 despite the huge costs of maintaining them.
Recall that the government, despite this loss, approved, through the Federal Executive Council, $1.5bn (N606bn) to rehabilitate the Port-Harcourt refinery in March and $1.48bn was approved for the Kaduna and Warri refineries.
The report stated, “And yet, there’s no sign of the expenditure slowing down. In March, the Federal Executive Council approved the sum of $1.5bn for the rehabilitation of the Port-Harcourt refinery.
“The repair, which will be executed by Tecnimont SPA, an Italian company, will be done in three phases of 18, 24 and 44 months. Last week, a further $1.48bn was approved for the Kaduna and Warri refineries, this time to Saipem SPA, another Italian company.”
The firm further advised the government, saying Nigeria must count the cost, not only of spending scarce resources on refineries that had not reached more than 30 percent capacity in over six years but also of the income foregone from not privatising them.