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DPR calls for privatisation of refineries

By Yemie Adeoye
THE Department of Petroleum Resources (DPR) came out with its position on the nation’s ailing refineries as it calls for its privatisation if the country is to move forward in the area of crude refining for local consumption.

The oil industry regulator said it was worried about current state of the refineries, which it described as “very poor” even after much efforts to revamp the refineries seems to have failed.

The Director of DPR, Mr. Billy Agha made this known at the first quarter briefing of the oil and gas industry presented in Lagos during the week.

Agha, who was apparently not satisfied with the state of the facilities, said Nigeria is still importing a larger percentage of its local fuel consumption, hence, the need for privatization of the refineries.

“Most of our products are still imported, because our refineries are still very epileptic,” he said.
Agha said that the existing refineries (Warri, Kaduna and Port Harcourt) performed poorly attaining 18.72 per cent of the combined installed capacity for the quarter at 26,255,000 billion barrels (bbls).

Giving the breakdown of performance, he said the Kaduna refinery is now working at 14.57 percent, while Warri refinery operates at 53.66 percent and Port Harcourt refineries, both old and new are presently down.

In view of this, Agha recommended a technical audit of the refineries, so that the particular operating capacity could be ascertained, while the remaining capacity are contracted to private investors.

“At the output of 18.72 per cent, we are not doing well, that is the truth, and that is why we are canvassing for a technical audit of the refineries to ensure its technical ability. And government should move forward in that direction to privatize the refineries.

I have always suggested that for us to move forward on the refineries, after the technical audit, other investors should come, in terms of percentage, if the audit gives a refinery about 40 per cent, my own suggestion is that the remaining 60 per cent should be given to the public and they become operators and bring the refinery to 100 per cent capacity utilization,” he explained.

According to the report, total crude received in the period under review was 7,302,455 bbls, while total crude of 5,447,290bbls was processed.

Agha attributed the reasons for the low performance of refineries to several factors such as: equipment failure, lack of haullage for some products and intermediates and lack of feedstock, and the shutdown of old Port Harcourt refinery, which is currently awaiting Turn Around Maintenance (TAM).

On integration of private refineries, Agha noted that the 26 licensed private refineries have failed to commence operations owing to the controversies surrounding oil industry reforms, particularly deregulation.
“One of the issues they raised was that, if we don’t deregulate, it will be very difficult for them to build refineries, because they have always been asking questions on whether they would be allowed to sell at deregulated price, and we havea assured them that they are free to sell at any price, (either export or deregulated price) and that is the problem that we are facing.

Because government subsides fuel and it also gives approval to people to import on their behalf, so they can come and buy from your refineries, you can sell to them at export price or sell to the public at deregulated price and go to the Petroleum Product Pricing Regulatory Agency (PPPRA) to collect your subsidy. That is one of the major problems, and we are trying as much as possible to convince them that it is possible and they should invest,” he said.

On the guarantee of crude, he said, “we have assured that they would get crude according to the capacity of their refineries. So long as they pay international price, because it would be easier for us, instead of exporting it to long distance and taking some risk.”

However, he noted that DPR is making some progress on some of the private refineries, disclosing that about eight refineries are upcoming. These, he listed to include, Resource petroleum refinery (100,000bpd), Sapele Petroleum refinery (120,000bpd), Anhonio oil (27,000bpd), Ologbo refinery (12,000bpd), Amaium refinery (100,000bpd), Gasoline refinery (100,000bpd), Rehobot  refinery (12,000bpd)and Amakpe refinery (12,000bpd), while Amakpe has gone reasonably far in construction process. and Amakpe refinery (12,000bpd), while Amakpe has gone reasonably far in construction process.

On financial basis, he noted that the department contributed about N166.081 billion to federation account in the period under review.

According to the breakdown, about N165,282,364,531.20 was realised from royalties, N530,482,200.47 from gas flared penalties, N52,208,651.97 from concession rentals and N216,146,811.31 was earned from miscelaneous oil revenue.

The monthly average production for the period was stated as 2,280,859bpd in January, 2,345,897 bpd in February and 2,412,911 bpd in March, while the average first quarter production 2010 was 2,346,556 bpd.

Technical Production Allowable for the first half of 2010 was 2,501,682 bopd compared to 2,605,618 Barrels per day for the same period in 2009.  Production Deferment has drastically reduced as a resulted of relative peace recorded in Niger Delta, owing to the amnesty programme of the federal government.

He said the deferment has continued to drop from 522,869bpd in January to  507,199bpd in February and 311,337bpd in March, while average deferment for the quarter was 447,135 bopd.


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