Kyari gives reasons Port Harcourt, Warri, Kaduna refineries were shutdown
MELE Kyari, the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation, (NNPC) says the Corporation shut down the country’s four major refineries in Port Harcourt, Warri and Kaduna because of the challenges of delivery of crude oil due to activities of vandals.
Featuring on Channels Television’s Politics Today programme, Kyari stated that it was a deliberate decision that the refineries were shut down.
“First, all the four refineries in three locations are shut down and it was a deliberate decision for two reasons,” he said.
“One is that delivery of crude oil to these refineries is completely challenged because the pipeline network has been completely compromised by vandals and all kinds of people that will not allow us to operate these pipelines.”
The national oil firm’s July report showed that a total of N41.98 billion had been spent on pipeline repairs and management cost within the first half of 2020.
“Products theft and vandalism have continued to destroy value and put NNPC at the disadvantaged competitive position,” a section of the report stated.
The NNPC GMD explained that the refineries were not producing at an optimum level due to their age which he said called for rehabilitation activities currently ongoing and the shut down of the refineries.
“That means you are not able to deliver crude oil to these refineries effectively to their maximum capacity. Secondly, what you call rehabilitation is different from the turn around maintenance,” he said.
“Turnaround is routine which every refinery does but when you talk about rehabilitation, it is that colossal loss of capacity in the refinery and it means you haven’t done the turnaround maintenance properly.”
Between 1976 and 1989, the Federal Government, through the NNPC, had built three refineries in Port Harcourt, Warri and Kaduna. The Port Harcourt refinery was built by Shell and BP in 1965 before it was bought over by the NNPC.
“Typically, every refinery is expected to operate at 90 per cent of its installed capacity. With the best of effort, with all the turnaround maintenance that has taken place, it is impossible to run any of the refineries before the shutdown at that level.
“Our estimate was to run it at 60 per cent of capacity but if you do that, all you are doing is value destruction. You will take $100 crude into the refinery and bring out $70 product. It doesn’t make sense,” he said.
The nation’s major refineries which are subsidiaries of the NNPC captured in the 2018 audit include Kaduna Refining and Petrochemicals, KRPC, Warri Refining & Petrochemicals Company, WRPC, and Port Harcourt Refining Company, PHRC, Limited.
The records show that the three refineries reported a combined loss of N154.4 billion with Kaduna refinery posting zero revenue for the 2018 financial year, despite the huge investments by the NNPC to revamp the refineries.