A window to enhance Nigeria’s forex earnings

ABOUT 90 PER CENT OF THE consumed refined petroleum products in Nigeria are from outside the shores of the country, costing the nation about $7 billion annually, because the country’s four major refineries located in Port Harcourt (2), Warri and Kaduna, with an installed nameplate capacity of 445,000 barrels per day have, for years now, not worked properly to refine crude oil for citizens.

In 2019, the total capacity utilization of the refineries in Nigeria dropped to about 2.5 percent, which represented a sad and all-time decline in annual activity level, counting from 1998 when the NNPC began offering these output data.

In the same year, the Pipelines & Product Marketing Company (PPMC) gave a report indicating that 9,158,528mt of refined petroleum products (petrol, HHK, AGO & ATK) were imported while it could only evacuate 963,302mt of these refined products from the nation’s refineries, recapitulating an already established notion about the poor local production level of total refined products available for distribution.

Going by this track record performance of these refineries, Africa’s top oil producing nation has strived several times in the past to revitalize its long aged refineries, but those efforts seem to have bogged down mainly due to inadequate resources.

But now Nigeria has adopted a strategy to move things forward. Africa’s top oil producer is taking up mini-plants as an avenue to halt its reliance on fuel imports. The country has just built its first modular refinery in Imo State, SouthEast Nigeria, by independent producer Waltersmith Petroman Oil Ltd. President Muhammadu Buhari, last week, commissioned the first phase, a 5,000 barrels per day plant, and broke ground for the second phase that will raise the refinery capacity to 50,000 bpd.

The Waltersmith’s project is part of a broader initiative to establish tiny plants that will make up at least 10 percent of the nation’s fuel production within the next five years.

Waltersmith Petroman Oil Limited owns a 70 percent stake in the new facility, which is taking off with the production of kerosene, diesel and naphtha for now, leaving the government to handle the rest.

At the commissioning

President Muhammadu Buhari, via video conference, to mark the launch of the refinery had this to say:

“The plan to commence the expansion of the capacity of the refinery to 50,000 barrels a day to refine crude oil and condensate is an important aspect of the economic reform the country is undergoing, and I encourage all government agencies to help ensure Waltersmith has access to crude and condensate feedstock”.

Waltersmith Petroman has positive and promising plans, plans that make a perfect match with Nigeria’s crude oil production output and delivery. The company wants to expand its own output at the plant by ten folds in about three years’ time, to eventually produce more petrol.

Even Aliko Dangote, Africa’s richest person, is also taking this bull by its horns with his ongoing 650,000 barrels per day (bpd) plant in Lagos, South-West Nigeria, already nearing completion.

Despite these conscious efforts, Nigerians know and accept the reality staring them in the face still. Waltersmith Petroman’s facility alone can’t solve Nigeria’s dependence on importation. The 5,000 barrels per day (bpd) capacity only sums up to one percent or thereabout of the nation’s fuel imports, and even Dangote’s refinery isn’t expected to commence operation before late 2021 at the earliest.

So, it therefore is modest, to say that it is high time the 40 mini-refineries the government granted licenses to hit the ground running to guarantee the 80,000 barrels per day modular refining capacity stakeholders promised can come into play in five years’ time.