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Nigerian refineries lose N104.3 billion in 13 months

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Nigeria’s refineries lost a total of N104.3 billion in 13 months while not processing any crude oil from the refineries during the period, according to the Nigerian National Petroleum Corporation’s latest report.

The plants continued to lose money on a monthly basis, according to a study of the revised consolidated refinery financial performance from February 2020 to February 2021.

The Nigerian National Petroleum Corporation (NNPC) is in charge of three refineries: Kaduna Refining and Petrochemical Company, Port Harcourt Refining Company, and Warri Refining and Petrochemical Company.

According to the corporation’s figures, the refineries’ monthly operational expenses exceeded their income for the whole 13-month period.

The refineries’ consolidated losses in February, March, April, May, June, July, and August 2020 were N9.36 billion, N10.3 billion, N9.69 billion, N9.55 billion, N10.23 billion, N9.1 billion, and N7.1 billion, respectively.

The facilities lost N7.04 billion, N5.49 billion, N5.99 billion, and N8.28 billion in September, October, November, and December 2020, respectively.

Their consolidated losses persisted in 2021, with losses of N5.37 billion and N6.88 billion in January and February of this year, respectively, according to the corporation’s most recent statement.

Reason for the surge in expenses

Because of ongoing refinery rehabilitation work, the three refineries processed no crude in February 2021, and their combined yield efficiency is 0.00%. However, the refineries are currently being revamped, which is expected to improve capacity utilization once completed, resulting in declining operational performance.

Since January 2017, the NNPC has been using a merchant plant refineries business model, according to the corporation. The model, it added, took into account the product value and crude expenses, noting that the aggregate value of output by the three refineries (at import parity price) for February 2021 was almost N0.10 billion.

It went on to say that because there was no output in February 2021, there was no related crude plus freight cost for the three refineries, but that operational expenditures were N6.98 billion.

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ENERGY

Power: Nigeria committed to electrifying 5 million households – Buhari

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President Muhammadu Buhari said the Nigerian Government is committed to electrifying 5 million households in Nigeria under the Energy Transition Plan.

President Buhari disclosed this at the 76th United Nations General Assembly in New York, highlighting Nigeria’s role as a Global Theme Champion for the Energy Transition.

“Nigeria’s commitment to a just transition is reflected in our ambitious Energy Compact, which includes the Government’s flagship project to electrify five million households and twenty million people using decentralized solar energy solutions,” Buhari told the UN General Assembly.

He added that it is a major first step towards closing Nigeria’s energy access deficit by 2030 and called for support from developed countries to unlock the finance needed to accelerate a just energy transition for all.

“Nigeria’s commitment is also reflected in the development of our Energy Transition Plan, which was developed with support of the UK COP26 Energy Transition Council.

“The focus of our discussions on transition must now involve how we help countries develop detailed energy transition plans and commitments to mobilize enough financing to empower countries to implement those plans,” President Buhari said.

He added that Nigeria’s electricity generation plan needs major financing that amounts to over US$ 400 billion over the next 30 years.

“This breaks down to US$ 155 billion net spend on generation capacity, US$ 135 billion on transmission and distribution infrastructure, US$ 75 billion on buildings, US$ 21 billion on industry and US$ 12 billion on transport.”

He highlighted the importance of Natural gas towards Nigeria’s electricity needs stating that it is “imperative that I flag a major risk to development that stems from the current narrative around the energy transition, particularly on the role of gas and the lack of financing.

“Nigeria’s Energy Transition Plan has laid out our roadmap to reach net-zero and highlights the scale of the effort required, which includes the development and integration of renewables into current grid infrastructure at tremendous scale and electrification of all sectors.

“This is challenging for any country, especially a developing country. On our development objectives, gas will have a key role to play here for some years before being phased out,” he said.

What you should know

Recall It was reported recently that the Nigerian electricity sector, classified with gas, steam and air conditioning supply recorded a 78.16% year-on-year real GDP growth in the second quarter of 2021, by far the highest growth rate record by any sector in the review period.

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ENERGY

NNPC set to declare first dividend to Nigerians

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The Nigerian National Petroleum Corporation (NNPC) has announced that it will declare its first dividend to Nigerians as it prepares to release its 2020 financial statements in the third quarter of this year.

This is coming at a time the Federal Government is planning to commercialize and privatize the operations of NNPC for better efficiency and to put it on a bigger global stage.

This was disclosed by the Group Managing Director of NNPC, Mele Kyari, while delivering an address at the opening ceremony of the Nigeria Annual International Conference and Exhibition organised by the Society of Petroleum Engineers, on Monday in Lagos.

What the Group Managing Director of NNPC is saying

Kyari said, “Everything we are doing must align with the wider national interest. And therefore, NNPC, being the representatives of all of us and, is, of course, a very potential global player – this is our ambition and we are getting there.

“And I can tell you, within the next month or two maximum, we will publish our statement of accounts for 2020. And I can also confirm to you that for the first time in our history, we will declare dividend to the Nigerian people.”

Kyari said the state oil giant is expected to play a key role in the global transition to low carbon energy in the near future. He pointed out, “Our tremendous natural gas reserves have become our greatest enabler to smooth transition to low carbon energy. We are deepening natural gas utilisation under the national gas expansion plan to earn more carbon credits and create a net zero carbon environment in line with our drive to becoming an energy company of global excellence.’’

Details later…

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ENERGY

Oil marketers say petrol will sell for N230 per litre in March

Oil marketers have insisted that petrol will sell for as much as N230 per litre in March.

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Oil marketers, on Sunday, said that Premium Motor Spirit (PMS) otherwise known as petrol is to sell for as much as N230 per litre in March.

This is coming against the background of insistence by the Nigerian National Petroleum Corporation (NNPC) that it has no plans to increase the price of petrol in March.

There has been a reported reappearance of queues at filling stations in some parts of Lagos and Abuja as panic buying and petrol hoarding occurs in some filling stations.

According to a report by New Telegraph, the National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi, declared that the whole nation had crossed the bridge and that there was no hiding place for a hike in fuel price.

What the IPMAN top officials are saying

Osatuyi said, “I have just returned from a meeting in Abuja. What I have observed is that many stations have closed down and there are queues in many places in both Lagos and Abuja. Nigeria has crossed the bridge, there is no hiding place, the N1.2 trillion, which was hitherto annual spending on subsidy, will be borne by the market.

“As it is, the prices of crude oil have gone up to $67 per barrel and, with this, the price of PMS will be between N220 per litre and N230 per litre. I was told by someone that the Group Managing Director of NNPC told them that the official price is likely to be N206 per litre.

“As it is now, all the stations that have shut down their gates must have heard information before they took that action. I want us all to wait by tomorrow we will all see clearly what will happen. There have been annual spending of N1.2 trillion on fuel subsidy and now that the subsidy has said to be abolished, that money must come from somewhere.

’The money must be coming from somewhere. “NNPC is not an NGO (non-governmental organisation), there is no budgetary provision for subsidy again and instead of wasting it on subsidy, it should be deployed to other sectors,’’ he said.

On what can be done to cushion the negative effects of higher fuel price, Osatuyi said: “This plan to cushion the negative effects of higher fuel price should be the next important thing. The government can do the free conversion of vehicle from fuel to gas. This should be done to help Nigerians who will definitely be affected by this fuel price hike.”

On his part, the IPMAN National Public Relations Officer, Alhaji Suleiman Yakubu, condemned the panic buying and return of long queues at some filling stations within Abuja.

While assuring Nigerians that the normal supply of petroleum products would soon be restored with the commencement of loading at various depots, Yakubu said the increase in the global price of crude oil has affected the price of petrol.

He said, “We want to assure the buyers that government and marketers are doing everything possible to ensure that the products are available in every filling station within a few days starting from today (Sunday).’’

What you should know

  • The state oil giant, NNPC, had in a press statement on Sunday, assured Nigerians that despite the increase in the price of crude oil, it has no plans to increase the ex-depot price of petrol in the month of March. This is coming after it gave a similar assurance earlier in February, that it was not going to increase the price of the product in February.
  • NNPC explained that the decision was to allow ongoing engagements with organized labour and other stakeholders on an acceptable framework that will not expose the ordinary Nigerian to any hardship, to be concluded.
  • This uncertainty has led to hoarding of the product by depot owners and some retail marketers, which has led to the return of queues in some filling stations.
  • The Federal Government had in March 2020, announced the removal of fuel subsidy and full deregulation of the downstream sector of the oil industry, which will allow market forces to determine the price of the product.
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