Udeme Clement-Ogbuanu
20 October 2008
Lagos — With the imminent zero production of petroleum products in the country following the state of all the refineries, the Federal Government has decided to embark on massive importation of fuel to prevent scarcity and queues at the filling stations.
Stakeholders in the downstream sector of oil industry had expressed fears that the inactive state of the four refineries, following pipeline breaks and epileptic power supply, could pave the way for severe scarcity of products.
The Warri and Kaduna refineries had been shut down for about two years, after militants blew up their feeder pipeline, Chanomi Creek pipeline. But barely eight months after skeletal activities began at the refineries, following a repair work on the damaged pipeline, activities were again halted following the rupture of the feeder pipeline.
The Kaduna Refinery will be shut down on November 5 for the mandatory turn around maintenance (TAM) scheduled for November 15, 2008, while the Port Harcourt Refinery has been affected by the long running power problem.
However, the Group General Manager (Group Public Affairs) of the Nigerian National Petroleum Corpo-ration (NNPC), Dr. Levi Ajuonuma, told THISDAY yesterday that fears of a crippling scarcity were "erroneous" because the Federal Government has put a comprehensive plan in place to increase the level of importation of products to meet local consumption need.
"We have professional planners handling the issue of products in NNPC. The issue is very simple. Since the refineries are not producing at optimum at the moment, it means government must increase importation of petroleum products so that scarcity may not occur as speculated. When people speculate about scarcity, that is the time vandals would break the pipelines to divert products and people would begin to store fuel that could burn their houses," he said.
Last month, the nation's refining capacity had gone down to below 30 per cent because all the refineries were performing far below their installed capacities. At optimum capacity, all the refineries can refine 445,000 barrels per day of petroleum products.
The nation's petrol need is put at about 30 million litres per day and has been projected to hit 40 million in the next couple of years.
Prior to the vandalism of the feeder pipelines in February 2006, the Warri and Kaduna refineries were said to have operated at about 75 per cent of their installed capacity. But the nation, it was learnt, expended between $3 and $5 million daily on importation of petroleum products because the refineries were shut down.
However, the stakeholders in the downstream sector, while expressing fears about a looming scarcity, are calling on the Federal Government to hand over the entire operations of the nation's refineries to private investors who have the technical know-how and financial capacity to manage the plants, to run the business as commercial venture in order to maximise outputs.
The Zonal Secretary, National Union of Petroleum and Natural Gas (NUPENG), Tokunbo Korodo, told THISDAY in Lagos that since consumers often experience scarcity of products even when the plants are functional, the breakdown could lead to severe scarcity.
"With the situation right now, it means government would spend over $5 million on daily importation of petroleum products to meet domestic demands. It is embarrassing that Nigeria as one of major exporters of crude oil in the world does not have functional refineries, but depends totally on importation of petroleum products for domestic consumption. There is urgent need for government to allow private sector to run the plants because the situation at present shows that government is not competent to manage the refineries efficiently," he said.
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