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Refineries operated at 10% capacity in August, recorded N31.7bn loss

By on October 20, 2015

Despite earlier claims of robust performance by the management of Nigeria’s three refineries in Port Harcourt, Warri and Kaduna, the refineries actually recorded average capacity utilisation of 10.04 per cent, according to the monthly financial and operations report of the Nigerian National Petroleum Corporation (NNPC) for January to August 2015, which was obtained exclusively by THISDAY.
The report corroborated the statement by the Group Managing Director of the state-run oil firm, Dr. Ibe Kachikwu, in recent weeks that contrary to claims by past management shortly after President Muhammadu Buhari assumed office, the refineries were operating at sub-optimal levels.
The Managing Director of the Kaduna Refining and Petrochemical Company Limited (KPRC), Mr. Saidu Muhammed, had told THISDAY that the 110,000 barrels per day capacity plant was processing about 60,000 barrels of crude per day following the rehabilitation of two of the company’s production lines.
Muhammed added that the company was on phased rehabilitation, with a target to hit 60 per cent of its local refining capacity, which is about two million litres daily.
“We are doing a lot at the moment to make sure that we achieve 80 per cent of refining capacity,” he said, stressing that the production level would hit 90 per cent by the second quarter of 2016.
But the NNPC report indicates that during the eight-month period under review, the three refineries operated at a total loss of N31.682 billion, with Kaduna refinery accounting for the highest loss of N26.183 billion, while Warri and Port Harcourt refineries made losses of N8.496 billion and N8.057 billion respectively.
While Kaduna refinery recorded losses throughout the eight-month period, Warri and Port Harcourt refineries recorded profits in some months within the period under review.
The Kaduna refinery operated at a loss of N5.111 billion in January; N2.673 billion in February; N2.260 billion in March; N3.045 billion in April; N2.595 billion in May; N2.662 billion in June; N3.847 billion in July and N3.990 billion in August.
But Warri refinery recorded profits of N4.668 billion and N79 million in the months of January and July, respectively, but recorded losses in February (N1.390 billion), March (N1.338 billion), April (N1.753 billion), May (N1.288 billion), June (N1.532 billion) and August (N1.195 billion).
Port Harcourt refinery also recorded profits of N705 million in March, N557 million in July and N5.045 billion in August. The refinery, however, operated at a loss of N1.497 billion in January, N1.705 billion in February, N1.437 billion in April, N1.713 billion in May and N1.705 billion in June.
The NNPC report blamed “combined factors of low crude oil supply due to vandalised pipelines, plant preservation cost to maintain plant integrity and rehabilitation/turn around maintenance work” for the deficit months prior to August.
Also within the eight-month period, 439 million barrels of crude oil and condensates were lifted by all parties in the country, with the federal government accounting for 166 million barrels, while the international oil companies (IOCs), Nigerian independents and Nigerian Petroleum Development Company (NPDC) lifted 261.5 million barrels, the report showed.
Also included in the total figures by all the parties was 11,280,081 barrels lifted under the Modified Carry Agreement (MCA) with the IOCs for the repayment of debt arising from government’s inability to meet its cash call obligations in the joint venture operations.
Crude oil lifted on behalf of the federal government for the eight-month period was on account of the NNPC and the Federal Inland Revenue Service (FIRS).
In July for instance, 63.7 million barrels was lifted by all the parties and of this volume, 25.2 million barrels was lifted on behalf of the federal government.
The 25.2 million barrels comprised 17.4 million barrels lifted on account of the NNPC and 7.8 million barrels lifted on account of FIRS.
However, the 17.4 million barrels was broken down to 15.4 million barrels and 1.9 million barrels for the domestic and export markets respectively.
“At an average oil price of $51.97 per barrel and exchange rate of N195, domestic crude oil lifted by the NNPC was valued at $805,220,701 or the naira equivalent of N157,782,872,917 for the period.
“Remaining crude oil lifted for export was valued at $108,916,802.23 at an average price of $56.76 per barrel. The total value of crude oil lifted on the account of NNPC in July was thus $914,136, 873,” the report added.

 

[ThisDay]