Financial Energy Review
by Jenifer Dike……,…………..
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari has disclosed that the nation’s four refineries which has been shutdown completely after full rehabilitation are done will operate at about 400 of the 445 barrel per day installed capacity.
According to him the target is that when the refineries come back to life, they’ll run over 90 percent capacity. Kyari said that government does not have the resources to completely fund the refineries, and will resort to private capital as a result.
“We’re also working with the private sector to establish condensate refineries.That is why we are going to install an operate and maintenance strategy which will free NNPC from direct responsibility of running these refineries. We’ll support the processes and ultimately, you’ll have a more efficient process of running” he said.
He said there are conversations already happening about installing a model that involves the government becoming minority shareholders in the refineries.
“Of course, it means that there will be more scrutiny of shareholders, and also becoming more efficient to operate,” he said.
Speaking on Channel Television’s Politics today, Kyari said that the inevitable shutdown was necessitated by difficulties in feeding them with crude oil via the pipelines that have been completely compromised by vandals.
“That means you’re not able to deliver crude oil to them to operate to the maximum of their capacity.
“Secondly, what you call rehabilitation is different from turnaround maintenance (TAM). TAM is a routine endeavour. When you talk about rehabilitation, that means you have colossal loss of capacity in the refineries.
” It means you’ve not done TAM properly, you’ve not replaced parts and when due and it has gotten to a point where you’re not able to operate the refineries in the full installed capacities. “Every refinery is expected to operate at 90% of installed capacity” he said.
“With all the TAM down, it was impossible to run any of these refineries at 90 percent capacity. Our estimate was that we could run at 60% capacity but if we do that, it’s simply value destruction. You take a $100 crude and bring out $70 product, it doesn’t make sense.
“We want to make them work and that’s why we’re doing full rehabilitation. Refineries are like aircraft. I’ve visited refineries that are over 100 years old that are still still functioning. Refineries don’t die like cars or other assets” NNPC boss explained.
