NIGERIA – The Government of Nigeria has disclosed that it is in talks with a group of private investors to give up majority stakes in four petroleum refineries.
Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari revealed that the Nigerian Government wanted to implement an operating model in which the NNPC would be a minority shareholder in the assets.
He further noted that the government wanted the LNG model for the refineries, where the private investors would operate and manage the refineries.
Nigeria’s state run refineries which have a total refinery capacity of 400,000bpd (barrels of oil per day) have always been operating sub optimally despite the government spending huge sums of money in maintaining their operation.
In the latest financial report that was released by NNPC, these refineries processed almost no crude in 13 months to June this year, even though they had an operating cost of about $367 million.
It can also be recalled that in April, the NNPC said that it had shut down all its 4 refineries to secure funding for their refurbishment, and would no longer manage them when they reopened.
Kyari explained that the sale of majority stakes to private investors will bring more scrutiny on the operations of the refineries and this, according to him, will significantly contribute towards making the refineries more efficient to operate.
Kyari further revealed that the plants were deliberately shut down to allow for a robust diagnosis of the issues which have overtime made it impossible for the facilities to operate at optimal capacities.
He added that the shutdown also became inevitable due to difficulties in feeding them with crude oil via the pipelines that had been completely compromised by vandals.
He said that the corporation is moving rapidly to execute complete rehabilitation of the refineries under an exercise that would guarantee restoration of the facilities to at least 90 per cent capacity utilisation.
This plan according to Kyari, is expected to place Nigeria as one of the world’s biggest exporter of petroleum products within the next 3 years.
Kyari disclosed that the refineries, which have only worked sporadically for years due to severe underinvestment, would need serious repairs and refurbishment and not just the routine Turn Around Maintenance (TAM) in order to put them back to maximum operating capacity.