Nigerian National Petroleum Corporation (NNPC) is close to drawing the curtain on discussions, regarding the overhaul of its decrepit oil refineries with two consortiums that consist of both global and local players in the oil industry.
NNPC has been in talks with the two groups for a while, as the state oil firm is working towards reducing the country’s spending on fuel importation.
Confirming this in its report, Reuters explained that refined products off-take would be used to pay the groups in place of cash to serve as a guarantee that they see to the revival of the refineries, according to banking sources.
Refurbishing Warri refinery in southern Delta state and the refinery in northern Kaduna state is the first consortium that includes world’s largest oil trader, Vitol, Italy’s Saipem, U.S. firm General Electric and Nigerian traders Sahara Group and MRS Oil Nigeria Plc and would , while the responsibility to carry out the repairs of two refining plants at Port Harcourt was assigned to the second consortium that includes global commodities trader Trafigura, Italian oil major Eni, Spanish refiner Cepsa and Nigeria’s Oando.
Africa biggest crude producer’s refineries have been plagued with years of neglect, sabotage, vandalism and theft from pipelines, affecting their combined capacity to produce 445,000 barrels per day (bpd).
This has led to the massive importation of the fuel it consumes, as there is the need to meet the oil-dependent nation’s gasoline consumption that is currently estimated to be roughly 40 million litres per day.
Removal of fuel subsidy payments in 2016 ushered in a regime of partial deregulation in the downstream sector of the Nigeria’s oil and gas industry, which aided fuel sell at the capped price.
However scrapping the subsidy that removed a burden of not less than N15.4 billion monthly from the government caused a large decline in Private firms’ importation of gasoline in Nigeria, which influence the country’s fuel importation to at least 90 percent of the its needs.
Importation of fuel is quite costly for the country it has spent $5.8 billion on imports since late 2017; credit to the price caps on gasoline.
Revamping its refineries would help save billions of dollars on fuel imports, as the amount can be used for other developmental agendas for Africa’s biggest economy.