Nigeria’s refineries, which have been operating below installed capacities for many years, made a record loss of N20.08 billion in May, the highest in at least three years. The plants are the Warri Refining and Petrochemical Company, the Port Harcourt Refining Company and the Kaduna Refining and Petrochemical Company.
The refineries, which lost a total of N80.21 billion from July 2017 to March 2018, posted a profit of N928.81 million in April, according to official accounts.
The NNPC, in its latest financial and operations report of the Nigerian National Petroleum Corporation, said Port Harcourt refinery lost N8.69 billion, while Warri posted a loss of N7.16 billion.
Kaduna refinery, which was idle in May, recorded a deficit of N4.22billionn, the data showed. Total crude processed by the WRPC and the PHRC in May was 378,634 metric tonnes, translating to a combined yield efficiency of 91.42 per cent as against the 58.73 per cent in April.
The NNPC further disclosed that the three refineries produced 214,328MT of finished petroleum products and 131,810MT of intermediate products out of the 378,634MT of crude processed at a combined capacity utilization of 20.12 per cent, compared to the seven per cent achieved in April. It attributed the increase in operational performance to the ongoing revamping of the refineries, which it said would further enhance capacity utilization once completed.
Meanwhile, the global oil community appears to be in a celebration mood as the threat of sanctions on Iran by the United States has spiked Brent Crude to nearly $90 per barrel, the highest since 2014.The rise in oil price signifies increased revenue for oil producing countries but, regrettably, Nigeria may not benefit from this largesse.
Oil price has been on an upward swing since 2017, hitting $71 per barrel in January this year and currently hovering around $85 per barrel. Nigeria’s 2018 budget benchmark is put at $51 per barrel while production was put at 1.97 million barrels per day (bpd).
But, while countries with higher refining capacity may reap the gains of increased oil prices, same could not be said of Nigeria as the country is heavily dependent on imported petroleum products due to the poor state of the country’s refineries.
With such level of dependence of imported petroleum products, the gain that ought to have accrued to Nigeria is subsequently ploughed back into the payment of subsidies or what government has recently termed under recovery.
For Nigeria, a spike in oil prices would naturally translate to higher landing cost for refined products because once refiners buy crude oil at higher price, the cost of refining would equally rise, thereby eroding the gain for countries with low refining capacity.