Fuel imports guzzled $36.3bn in 5yrs – CBN Amount enough to build 4 new refineries
Nigeria spent the sum of $36.3 billion, about N11 trillion, on fuel import between 2013 and 2017, the Central Bank of Nigeria (CBN) said yesterday.
The amount is part of the $119.4bn the country spent on the total importation of products from other countries within the period. The fuel import represents 30.4 percent of the total sum.
This is even as a House of Representatives adhoc panel headed by Garba Datti Muhammad (APC, Kaduna), demanded Nigeria’s top oil company to present the details of a proposed $1.8bn for the Turn Around Maintenance (TAM) of Nigeria’s four refineries in Port Harcourt (2 refineries) Warri and Kaduna.
The panel also demanded details of all previous TAM, including the amount spent as well as the achievements recorded.
At an investigative hearing by the panel, which was mandated by the House to probe the status of Nigeria’s refineries and the periodic maintenance, CBN said the total sum for the importation led to “serious pressure” on the country’s external reserves as well as resulted in the depreciation of Nigeria’s currency.
CBN’s Director of Research, Ganiyu Amao, who spoke on behalf of the apex bank’s chief, Godwin Emefiele, said they had taken several measures that helped in curtailing excessive and unnecessary outflow of foreign exchange and ensuring the stabilization of the naira.
Daily Trust found out that in comparative terms, the sum of $36.371 billion can provide for Nigeria four refineries capable of processing Nigerian and African crude mix, Arab Light as well as some American crude grades of up to 650, 000 barrels crude, at a cost of $9 billion each.
At the same time the amount converted in local currency (N11trn) was higher than federal budgets of 2014 and 2015, which were N4.69trn and N4.5trn respectively, both of which totalled N9.19trn.
Africa’s richest man, Aliko Dangote, is currently building 650,000 barrels of crude per day (bpd) refinery estimated to cost roughly $9 billion.
When completed it will be the largest single train refinery in the world. The refinery is about one and half times the capacity of all four Nigerian refineries.
Further analysis shows that if such amount had been invested in building local refineries, each of them just like that of Dangote group, could produce up to 59 million litres of premium motor spirit (petrol), 20 million litres of aviation fuel/ kerosene and 29 million litres of diesel per day which is more than sufficient for the local demand.
According official records, the total demand for petroleum products in Nigeria is around 30/35 million litres of PMS per day.
Daily Trust analysis therefore showed that Nigeria could have been producing over 200 million litres petrol which is more than the current requirements.
Meanwhile, Chinese company Pak-China group yesterday initiated work on a $6 billion oil refinery including the construction of the crude oil pipeline from port city to Lahore, Pakistan. The mega refinery will have the capacity to refine 250, 000-300,000 barrels per day.
A Lecturer at the Federal University of Petroleum Resources, Effurun Prof. Ogbarode N. Ogbon, in a presentation on the economic viability and competitiveness of modular refinery in Nigeria recently noted that Nigeria would need around 75 modular refineries of about 10,000 barrels per stream day capacity by 2020 if fuel scarcity will disappear completely.
Daily Trust research from sampling experts and engineering companies’ proposals on modular refinery construction showed that an average state-ofthe-art modular refinery capable of processing up to 10,000 barrels per day crude could cost up $20 million depending on a number of factors.
Had the $36.371 billion spent on importation been properly channeled, it could have financed the entire investment required to build more than three times the 75 modular refineries Prof. Ogbon prescribed for the country.
Half of $36.371 billion can deliver for Nigeria more than 225 state-of-the-art 10,000 barrels per day crude modular refineries at unit cost of $20 million and at total cost of $12.4 billion. More than $20 billion will still be left for other critical development projects for the country.
According to the Minister of Petroleum Resources, Ibe Kachikwu, the total cumulative amount needed to repair and bring the three refineries to full capacity is in the region of $1.1 and $1.2 billion excluding the cost of pipeline.
Going by this, the $36.371 billion spent on importation is enough to fix all Nigeria’s refineries for the next 30 years assuming an average of $1.2 billion is spent every year on repairs of the plants.
“It greatly exerts serious pressure on our external reserves and depreciates the value of our local currency,” the CBN director said at the presentation yesterday.
He said domestic consumption of fuel rose from 4.5 million metric tons to 23.9m metric tons in 2013 but that it dropped to 2.6m metric tons in 2016.
He added that the apex bank promotes policies that mandate International Oil companies (IOCs) to refine at least half of the crude that they produce and lift for local consumption.
The Chief Operating Officer (COO) of the Nigeria National Petroleum Corporation (NNPC), Anibor Kragha, told the lawmakers that the corporation would not want further TAM on the refineries but a total rehabilitation.
He said available records showed that billions of naira had been spent on such maintenance to no avail.
The panel’s chairman, Datti, queried the NNPC for its failure to furnish the committee with the relevant information requested on the subject matter, saying the House would not tolerate such.
He said the panel’s request from the NNPC to provide information on the installed capacity of all the refineries, volume of crude supplied to them, level of output among others, was not respected. The corporation was given 24 hours to comply.
He said other stakeholders had made unsuccessful attempts to frustrate the investigation by not providing documents, adding that “Only a few organisations and individuals have complied with the committee’s request for documents and memoranda as many are bent on frustrating the investigation.