Nigeria refineries incur N18bn operating deficit in three months ― Report

Despite their current inoperative state, Nigeria’s three refineries, Port Harcourt, Warri and Kaduna incurred an approximated N18billion operating deficits between August to October 2020.

Although there was no associated crude plus freight cost for the refineries since there was no production, the total operational expenses for the months under review is N20billion.

According to the Nigerian National Petroleum Corporation (NNPC) 2020 Monthly Financial and Operations report for August, September and October, the combined value of output by the three refineries (at Import Parity Price) for the months is put at N173million.

A breakdown of the total operating deficits for the three months showed that the refineries incurred N7.09billion, N5.40billion and N5.49billion respectively within the period with August having the highest number of deficits.

For the refineries combined value of output, N70million, N52million and N51million were recorded between August and October bringing the total sum to N173million.

NNPC in the report, states that the three refineries processed no crude while the combined yield efficiency is put at zero per cent owing largely to on-going rehabilitation works in the refineries.

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Meanwhile, the opening stock for Warri refinery in August was put at 44,653 metric tonnes, declined to 33,170mt in September and slightly increased to 33,396mt in October, 2020.

For Portharcourt, the opening stock was 19,014mt,16,009mt and 16,052mt respectively while Kaduna has the highest opening of 78,333mt for the months.

With a combined installed capacity of 445000bpd, the NNPC says it has been adopting a Merchant Plant Refineries Business Model since January 2017.

“The model takes cognizance of the Products Worth and Crude Costs,” it added.

The Corporation, however, seeks a $1 billion oil prepay for revamping the Port Harcourt refinery which has the highest plant capacity of 210000bpd.

According to Reuters, the oil firm intends to raise the fund in prepayment with trading firms while it is expected to be repaid over seven years through deliveries of Nigerian crude and products from the refinery once the revamping is complete.

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Nigeria refineries incur N18bn operating deficit in three months ― Report