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DISASTER AS UNEMPLOYMENT LEAPS BY 30%  TO 20.9m

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NNPC REFINERY WOES 2019

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The Nigerian Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has not unpredictably, stated that Nigeria’s continuous subsidy of petrol consumption means the Nigerian National Petroleum Corporation (NNPC) will...

NIGERIA OPEC STAND FIRM

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Nigeria and other member countries of the Organisation of Petroleum Exporting Countries (OPEC) as well as their non-OPEC allies led by the Russian Federation have said they are committed to...

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NIGERIA REFINING THE VISION Nigeria is the only OPEC member country that imports gasoline (PMS) and holds the dubious distinction of being the largest importer in the world. The Nigerian...

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CBN PUMP UP THE T-BILLS The Central Bank of Nigeria (CBN) plans to raise a total of N1.809 trillion from the debt market, in the first quarter of 2019.This is...

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The Nigeria Solid Mineral and Mining Sector has in effect made the great leap forward which will now allow investors to take advantage of the vast mineral potential Nigeria possess....

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Wednesday, 24 April 2019 18:05

KACHIKWU COMES CLEAN RECANTS ON REFINERIES

Written by

The Nigerian Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has not unpredictably stated that Nigeria’s continuous subsidy of petrol consumption means the Nigerian National Petroleum Corporation (NNPC) will remain unprofitable. He further reneged on his unrealistic committment to have the nation's refineries working at template capacity by the end of 2019. This effectively means that Nigeria will still face the burden of importing refined products despite the best efforts of the current Administration. The Minister speaking on – Hard Copy, a Nigerian take on BBC's 'Hard Talk' stated that with huge petrol under-recovery in the books of the NNPC, it would be difficult for the corporation to record any profit. According to the Minister, 'Under Recovery', the term employed to describe the difference between the actual cost of the fuel and its sale price which equates to a loss of about NGN40 per litre ($0.11/Ltr). The Minister openly admitted in what can only be described as a total and stark admission of failure when stating

“I think that if there is one area where I feel sad, it is certainly the refineries because there is a huge gulf between my expectations and the pronouncements that I had made in terms of where I’d like to be and what we have been able to achieve."

“The reality is that today, we are still below – probably 15 per cent utilisation of those refineries because they need to be maintained and worked. Completely refurbished, the last Turn Around Maintenance (TEM) was close to 10 years ago and they had question marks.”

The Minister had gone on record a number of times confidently assuring the Nigerian people that he would get the Refineries up and working again. Questioned on whether the refineries would be fixed in 2019, he said: “There is absolutely no way in 2019, given the fact that up till now, no contractual terms have been reached by the NNPC and potential investors that they are going to have refineries all ready to get to 90 per cent capacity nameplate in 2019 and for us to exit complete importation of petroleum products.”

He suggested: “I think all you can achieve now is hopefully find a financing model; hopefully continue to do what we are doing which is to encourage and work with Dangote to move full blast and quicken the pace of delivery. Begin to work on modular refineries to try and support in a very minimal way.”

Kachikwu, maintained that finding private sector financing was the best sources of funds to fix the refineries, “because public sector money doesn’t exist in terms of refineries.”

The elections have come and gone and with them the more outlandish rhetoric and implausible claims. It seems to me that the only possible purpose forthe interviews can be to signal a radical change in the direction of government policy. It has long been suspected that once the elections were over, the Government would sell the Refineries and gradually move towards deregulation of petrol pricing. The subsidy weighs heavily on government finances and has no legislative basis. Under the PIGB there seems to be a place for a subsidy of some sort but it is clear from a strictly financial perspective the subsidy will have to be addressed.

Needless to say the Minister who vowed on the BBC Hard Talk program to Stephen Sackur that he would resign if he had not fixed the Refineries in 2019 has shown little intent to follow through with his promise.

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