NNPC Explains Delay In Take-Off Of Private Refineries

The Nigerian National Petroleum Corporation (NNPC) provided insights into the reason why some completed private refineries are yet to commence production.
Chief Operating Officer (COO), Refineries, NNPC, Mustapha Yakubu, gave the insights as a panelist at the ongoing 2021 Nigerian Oil and Gas (NOG) conference in Abuja.
The panel dwelled on the topic: “What strategies in the mid and downstream sectors will take Nigeria closer to energy self-sufficiency?”
According to Yakubu, the investors are yet to conclude an arrangement with the corporation on the procurement of feedstock for the refineries.
He disclosed that ordinarily, crude oil is sold in foreign currency but owing to the volatility of foreign exchange, NNPC has arranged to sell crude to private refineries in local currency (Naira).
“Today, they have a challenge. Some of them constructed refineries today, they cannot start because we are discussing how to allocate crude to them.
“We are asking them to pay in foreign exchange. You know what is happening to foreign exchange today: volatility. So, we have to find a common ground so there is a discussion in that regard to allow them pay in local currency” he said.
The COO noted that NNPC was collaborating with the private investors in order to encourage them.
He said the partnership has become necessary because it is possible for the investors to build refineries without have feedstock: crude or condensate to refine.
“Whatever they do, they have to work within certain regulations. Refineries are not bakeries. I can go to Wuse Market and buy flours. But for those refineries, you need feedstock whether crude or condensate.
“This crude belongs to the government so there is a need for collaboration. We need to support them. Because you can build a refinery and there is no crude. What happens? The partners will be running after them.
“Government needs to make money from this crude oil. A lot of sectors need money. The health sector needs money. There should be that assurance if I give you crude you have to pay for it and you need to also deliver the balance”, Yakubu said.
Also speaking during the occasion, Chairman, Major Oil Marketers of Nigeria (MOMAN), Adetunji Oyebanji, said that the private investors were reluctant to replicate the establishment of Compressed Natural Gas (CNG) across the country because of the high cost of the equipment.