… Refineries still can’t produce enough

By Clara Nwachukwu with Agency Report

The Federal Government has issued additional import allocations for at least 300,000 tonnes of premium motor spirit, PMS, popularly called petrol for the remainder of the third quarter, oil traders said on Monday.

Nigeria’s daily estimated national demand is put at 40 million litres, where 1 metric tonne, MT = 1,341 litres. As such about 402.3million litres i.e. 300,000 x 1,341 will be imported against estimated demand of 1.2billion litres per month.

The development came as a surprise to Nigerians, who were expecting a reduction in the volume of fuel importation especially as the refineries are being brought back on stream.

The re-streaming of the refineries should in fact reduce the level of importation by at least 40 per cent, where the Port Harcourt Refining Company, PHRC 2, according to Department of Petroleum Resources, DPR data was already producing about 39 million litres as at July end. That is, 38,906m3 or 38,906 x 1000 = 38.906 million litres.

The allocations, which enable the companies that hold them to import fuel (petrol and kerosene) under the country’s subsidy regime, are in addition to the 1.5 million tonnes or 2.011 billion litres issued for the third quarter earlier this year to at least 37 importers.

Reuters reported that the Petroleum Products Pricing Regulatory Agency, PPPRA, issued the new allocations late last week, but traders said the amounts were only given to companies that had already fulfilled their previous allocations.

Some of the companies that received the initial allocations have struggled to import, traders said, due to delays to subsidy payments from the government.

“Funding is still an issue, but some of these companies have strong balance sheets,” one trader said.

PPPRA, NNPC defend importation

Although there is no official comment from the PPPRA regarding the addition volume importation, but a top manager in the Agency told Vanguard on the telephone that the move became necessary because of supply shortfall from the refineries.

The source who spoke in confidence said: “There is still a shortfall in supply; we’ve not yet attained sufficiency from the refineries.”

He admitted that daily consumption is not actually in the rage of the estimated 40 million litres, but hovers between 28 and 30 million litres a day, adding, “But we also need to put some volumes into strategic reserves for 60 days sufficiency.

“It is compulsory we do this because it is a security reserve, which is releases during a crisis situation.”

When noted that the reserves had not come to the rescue during nationwide scarcity, he retorted, “You don’t release it just because, there is scarcity situation that is not the kind of crisis we are talking about. The reserves are meant for situations more serious than just scarcity.”

Spokesman for the Nigerian National Petroleum Corporation, NNPC, owners of the refineries, Mr. Ohi Alegbe, who expressed surprise over the additional allocation, however, agreed on the supply shortfall.

According to him, “Even if all the four refineries are working at optimum capacity, the much they can produce is about 19 million litres. So we will still need to import the balance to meet daily national demand.”

Although he could not give specific output from the refineries, but he said that the Kaduna Refinery will be re-streamed this week, as it had already commenced text operations.

Reliance on import

Nigeria is almost entirely reliant on imports for its daily consumption of some 40 million litres of gasoline. Despite efforts to restart local refineries, the 125,000 barrel per day, bpd, Warri Refinery has remained closed due to issues with getting crude oil to the plant. Its management has been given additional 90 days to sort out the problem.

Industry sources said the others were struggling to produce at planned capacity.

Additionally, President Muhammadu Buhari last month officially cancelled deals for offshore processing and crude oil swaps for refined products, both of which were intended to help the country get the fuels it needs.