Why We Shut Down Four Oil Refineries

The Nigerian National Petroleum Corporation (NNPC) has revealed why it shut down four oil refineries across the country.

According to the Group Managing Director of the NNPC, Mele Kyari, the four oil refineries in Port Harcourt, Warri, and Kaduna were shut down because they were functioning below capacity.

Kyari who was a guest on Channels Television’s Politics Today on Wednesday stated that having ascertained that the refineries were underperforming, it became necessary to stop them from operating altogether.

“All the four refineries in three locations are shut down and it was a deliberate decision for two reasons. One is that the delivery of crude oil to these refineries is completely challenged because the pipeline network has been completely compromised by vandals and all kinds of people that will not allow us to operate these pipelines.

“That means you are not able to deliver crude oil to these refineries effectively to their maximum capacity. Secondly, what you call rehabilitation is different from the turn around maintenance. Turnaround is routine which every refinery does but when you talk about rehabilitation, it is that colossal loss of capacity in the refinery and it means you haven’t done the turnaround maintenance properly.

“Typically, every refinery is expected to operate at 90 per cent of its installed capacity. With the best of effort, with all the turnaround maintenance that has taken place, it is impossible to run any of the refineries before the shutdown at that level. Our estimate was to run it at 60 per cent of capacity but if you do that, all you are doing is value destruction. You will take $100 crude into the refinery and bring out $70 product. It doesn’t make sense.”

Outburst Over Fuel Price Increase Understandable But Misplaced

Mr Kyari also weighed in on the recent increase in fuel price, dismissing the criticism that followed the recent hike.

“The outburst is very understandable but I also believe very strongly that it is misplaced because Nigerians are not aware of the opportunities lost,” he said during an interview on Channels Television’s Politics Today on Wednesday.

According to Kyari, the issue of subsidy has been a big issue in the country for many years but the government can no longer afford it because of the economic issues facing the country.

“And not only that, every corruption that you are aware of in the downstream industry is one way or the other connected to fuel subsidy,” the NNPC boss added.

Kyari is the latest government official to defend the decision to fully halt subsidy, a decision that saw the price of fuel surge from N48/litre to N60-61/litre drawing criticism from organised labour, the opposition and many Nigerians.

But the NNPC boss insists it is the right decision.

“It requires courage to make this decision, I can share this with you. Only a Buhari regime can make this decision,” he said, insisting the move would pay off in the long run.

According to the NNPC boss, contrary to what most people believe, subsidy is something that is beneficial only to the rich, not the average man.

“The subsidy in itself, is by every means an elitist thing and I can share this with you. It is only the elite that will have three, four, five cars in their houses, fill their tanks and also feel comfortable doing this.

“The ordinary man is not the beneficiary. First, he loses in infrastructure, hospitals are not built, schools are not built and ultimately, the brunt of the corruption in the downstream sector will be transferred to the ordinary man. So, overall, you lose everything.

“It is very understandable for people to get angry that prices have gone up. Just like the prices of every commodity, when it goes up, there can be difficulties and challenges that people will naturally face but once prices go up, the other natural thing that must happen is that your income needs to increase so that you are able to procure the things that are now delivered at higher prices.

“You can’t do this anywhere in the world if there is no productivity.

“And there will be no productivity except there is growth in infrastructural development, industries are able to work, therefore, there is a connection between production and consumption. What subsidy does is to remove that connection.

“When people get angry, this is coming from people who, practically are not aware of this situation and they are not aware of the loss that they have and most importantly they are being engineered into making those statements, and we understand this perfectly.

“We are the national oil company, it’s our role to ensure energy security. But you can’t do this until you are able to deliver cost. And that cost is lost daily as prices of crude oil goes up and you are unable to do many things”.