The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Dr. Emmanuel Ibe Kachikwu announced yesterday in Kaduna that there are plans by the Federal government to build new refineries to ensure steady supply of petroleum products at the site of existing refineries in the country while setting up four new crude swap contracts to replace those cancelled last month.
The Nigeria National Petroleum Corporation (NNPC) cancelled the 2015 deals with Nigerian companies Sahara Group, Aiteo Group and NNPC’s trading arm Duke Oil because they were “skewed in favour of the companies”, it said at the time.
Though there is a change to the new contract winners, it’s unclear whether these will be more transparent.
But cash-strapped NNPC has no choice but to continue with some form of swap arrangement. The only other form of gasoline input comes from a fraud-ridden import subsidy scheme and revamping its refining system, neglected for years, has already met crude supply obstacles.
The country has four refineries – two in Port-Harcourt, Rivers State; one in Warri, Delta State and the fourth one in Kaduna.
Kachikwu made the disclosure while speaking with newsmen after an inspection tour of the Kaduna Refining and Petrochemical Company (KPRC).
All the refineries are old, he said, adding that building new ones to support them would ensure they have back-ups in times of challenges while ensuring constant supply of products.
“Most of our refineries are close to 30-40 years old, we need to begin to look at building new refineries in the same land space where they can share facilities so that you will have something to lean on when these old ones are beginning to kick out. It is as simple at dealing with an old dilapidated car if you don’t maintain it, it breaks down.”
He said three out of the six units in the Kaduna refinery are down and there’s a need to turn around the refinery adding that without the refineries working, Nigeria cannot get out of problems of fuel supply.
He said a lot needs to be done as the NNPC is committed to the 90 days time frame.
On security of the pipelines he said the corporation is working with security agencies to enhance the Warri to Kaduna point which he said has been tested for integrity. “So, on a short term basis we have been able to deal with that. Medium term basis we are going to work with the security agencies to ensure that the sort of destruction you find on pipelines, not just from Warri to Kaduna but the whole country, becomes a thing of the past,” he stressed.
He said the cancellation of the crude oil swap has made transactions in the oil sector more transparent.
“The issue of insufficiency has nothing to do with cancelling or non-cancelling of crude swaps. The essence of crude swap cancellation is that straight away you are saving over 200 million plus dollars by virtue of doing that. You have transparency in the deal per month and you have transparency embedded in those processes,” he stated.
The NNPC GMD added that with the new policy, the corporation can concentrate more on what are important to the oil industry.
“I can assure you that there are structures put in place. You will get product the way you need it, we are working on that. Even though we have cancelled swap you are going to have replacement swap contract lined along very efficient and very transparent processes. That will save us a lot of money,” he stated.