By Hamilton Nwosa(Head, The New Diplomat‘s Polling, Research and data desk)
The Nigerian National Petroleum Corporation (NNPC) has openly disclosed why it shut down four oil refineries across Nigeria.
The Group Managing Director of the NNPC, Mele Kyari, who made the disclosure during a TV media programme explained that the four oil refineries located respectively in Port Harcourt, Warri, and Kaduna were shut down because they weren’t working up to installed capacity.
The NNPC GMD who was a guest on Channels Television’s Politics Today further stated that after establishing the reality and fact that the refineries were not working up to their installed capacity, it was only natural and logical to shut them down completely.
He explained: “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.”
Recall that in recent times, there have been widespread concerns among citizens over Fuel Price Increase. However, while weighing in on the subject matter, the NNPC GMD said such concerns were unfounded.
He said: “The outburst is very understandable but I also believe very strongly that it is misplaced because Nigerians are not aware of the opportunities lost….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.”
Recall also that the decision of the federal government to remove subsidy saw the price of fuel rise from N48/litre to N60-61/litre triggering sharp rebuke from organised labour, opposition political actors and citizens generally.
But the NNPC GMD in thinks differently. He posits that subsidy removal was the right decision. He added: “It requires courage to make this decision, I can share this with you. Only a Buhari regime can make this decision.”
He said: “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”.