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Nigerian National Petroleum Corporation (NNPC) has revealed that Nigeria's refineries recorded a loss of N18.96 billion in two months despite having a combined installed capacity of 445,000 barrels per day.
The NNPC stated that the loss was recorded in the first two months of this year, with N9.60 billion lost in January and N9.36 billion lost in the second month of 2020, February as the refineries operated below their capacity.
These refineries are located in Port Harcourt, Kaduna and Warri, and managed by NNPC. The refineries have continued to cost Nigeria billions as they operate below capacity despite repairs by Africa's largest oil producer. This has forced Nigeria to depend on imported refined oil.
Another repair is said to be underway after NNPC secured funding for the rehabilitation of the ailing refineries in April. The Group Managing Director, NNPC, Mele Kyari, had stated that the corporation would adopt “a different model” of operation for the refineries after their repair is completed.
The adopted model will have some similarities with the model being used by the Nigeria LNG Limited (NLNG). The NLNG is operated or owned by different parties. The ownership is splitted by the Federal Government, represented by the NNPC (49 per cent), and three international oil companies; Shell (25.6 per cent), Total (15 per cent) and Eni (10.4 per cent).
Kyari revealed that the NNPC will no longer be involved in the operation of the refineries, as a different company would manage the plants on an operations and maintenance basis. Kyari plans to end fuel importation by 2023 after revamping the refineries.
Before now, negotiations with third-party financiers had broken down due to the inability to reach an agreement in December 2018. In President Muhammadu Buhari's first term, NNPC was aiming to restore the refineries back to 90 per cent capacity utilisation.
This was expected to be done with third-party financiers, while requisite funding and technical support will be provided by the original refinery builders.
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