Nigerian refineries may come on stream soon

Dec 29, 2003 01:00 AM

Strong indications, emerged in Lagos that the nation's refineries which have been out of production for a while now may soon come on stream as plans have already been concluded for the refineries to supply 18 mm litres of Premium Motor Spirit (PMS) for domestic consumption by April, 2004.
This translates to 75 % of national demand. The Nigerian National Petroleum Corporation (NNPC) also allayed fears over a possible hike in fuel prices by next month on account of the re-introduction of fuel tax supposedly suspended in October this year, after the deregulation of the downstream sector of the oil industry.

Managing Director of the corporation, Engineer Funsho Kupolokun, told in Lagos that by February, the Warri refinery should be back on stream, while the Port Harcourt and Kaduna refineries would also be back on stream between April and May, injecting 18 mm litres of PMS per day into the market.
Said he: "Government has invested heavily in the FCC units in Warri, Port Harcourt and Kaduna refineries. By February 2004, the Warri FCC unit should be on. By April, those of Port Harcourt and Kaduna should be up. By this time, we should be able to do 18 mm litres a day of PMS, out of the average requirement of between 25 to 29 mm litres. In essence, locally, we should be able to produce as much as 75 % of our requirement and that would be by April 2004."

On the cost of rehabilitating the refineries, the group managing director said government had invested $ 600 mm between 1999 and now in the supply and distribution scheme.
On immediate measures to check possible hiccups in the supply and distribution chain, he said the corporation had placed order for about 52 cargos of PMS and AGO a month ago, adding that the cargos had all started arriving. On the re-introduction of the N 1:50 fuel tax, Mr Kupolokun said it was like replacing A with B, adding that the fuel tax had always been there.

"Now, the toll gates is out of it. I think that is what I heard and I think you heard it. So, we are replacing A with B. This has always been there, it is just a question of moving from A to B. Proceeds from the toll gates as they were before now, weren't getting to the central pool. This thing was going anywhere but the central pool and, therefore, it is not for your own benefit and mine and the benefit of Nigerians. So, we are saying let's find another way of collecting it so that it can benefit us all. But there is nothing that is new under the sun, no additional tax," he said.
Asked if there would be an increase in prices of fuel, he said: "I am a member of the PPPRA and I don't know that the prices will go up. When we meet, we'll look at the fundamentals and if it supports price going up, it goes up, but if it doesn't, it won't go up.

"The fundamentals mean looking at C1F North West Europe, looking at what is absorbable here and relating it to other issues and so on. So, the decision might as well be let us stay where we are. It could even be let us go down," he pointed out.
Regarding the recent scarcity experienced in Lagos and environs, the group managing director pointed out that Lagos State consumes 40 % of the domestic fuel supply, adding that any hiccup in the supply and distribution chain in the metropolis would be misconstrued as a national one. He reiterated that the recent fuel supply and distribution hiccup experienced in Lagos was as a result of a problem in the fuel cargo import of marketers which was caused by poor weather condition.

He said: "There is tightness between what we can receive and what we can dispense from Apapa each day. 10,000 tons is what is receivable on a daily basis. But whether you like it or not, you must dispense between 8,400 and 8,500 tons into Lagos if you don't want problems. Therefore, there is a marginal difference. Really, what is wrong is that you should have capacity to stock, you should have strategic storage. That storage is available, but because of the tightness between import reception capability and what must be dispensed on a daily basis, you are not able to utilise the storage capacity you have on ground.”
"Everybody knew it, the marketers knew it all along, but they did not do anything about it because they did not want to commit to long term investment if cost would not be recovered."

On marketers' claim that the price ceiling has made it impossible for the deregulation exercise to work, the group managing director said the PPPRA was constituted to ensure there was equity in the conflicting interest of all stakeholders in the sector.
He said: "Marketers can say what they like out there, but when we get in the room to discuss the matter, we will look at all the issues, look at the fundamentals and at the end of the day we ensure there is equity and there is fairness to all the stakeholders. We do not want Nigerians, the consuming public, to pay a penny more than they are supposed to pay. At the same time, we want marketers to recover their cost and make a reasonable return on investment. This is where we stand, equity to the two sides, the end consumers and the marketers."

Source: Vanguard
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