By Modupe Gbadeyanka
The Nigerian National Petroleum Corporation (NNPC) is already in the final stages of discussions with two consortiums of oil investors willing to pump their money into the nation’s moribund refineries in a bid to make them functional again.
According to Reuters, the investors comprises both local and foreign and they would work to fix the three oil facilities located in Warri in Delta State, Port Harcourt in Rivers State and Kaduna in Kaduna State.
The Nigerian government had made efforts in the past to revamp the three refineries, but they breakdown almost immediately after repairs.
The first consortium in talks with the NNPC consists of world’s largest oil trader, Vitol; Italy’s Saipem; US-based General Electric and Nigerian companies, Sahara Group and MRS Oil Nigeria Plc.
The second consortium comprises global commodities trader Trafigura, Italian oil major Eni, Spanish refiner Cepsa and Nigeria’s Oando.
While the first group will handle the Warri and Kaduna refineries, the second group will take care of the Port Harcourt refinery, which consists of two refining plants.
Relying on banking and trading sources for reporting, Reuters said the groups would be paid via the offtake of refined products rather than cash, putting the onus on them to revive the refineries and keep them running smoothly to ensure their investments earn a return.
The move, it explained, is aimed at helping Nigeria, Africa’s biggest crude producer, save billions of Dollars on fuel imports.
President Muhammadu Buhari had pledged to fix the refineries when elected in 2015 but little progress has been made so far.
Nigeria’s refineries operate far below their combined capacity of 445,000 barrels per day (bpd) due to years of neglect, as well as theft from pipelines and sabotage.
This forces the country to import nearly all the fuel it consumes, a hefty burden because of price caps on gasoline. The government said it spent $5.8 billion on imports since late 2017.
Private firms largely stopped importing petrol after the government scrapped subsidy payments to help them sell at the capped price, leaving NNPC to import 90 percent or more of Nigeria’s needs.
At the moment, there is acute shortage of the commodity in the country for the past three months with no end in sight.
Oil minister, Mr Emmanuele Ibe Kachikwu previously said the government would raise $1.2 billion to upgrade its refineries and would end reliance on imports by 2019.
Mr Kachikwu said this month Nigeria planned to announce the names of private investors in its refineries in coming month.
Nigeria’s gasoline consumption is now roughly 40 million liters per day in the nation of almost 200 million people.
Meanwhile, Vitol, Trafigura, Cepsa, Oando, Saipem, Sahara and Eni declined to comment. General Electric was unable to immediately respond to a request for comment. MRS did not respond to requests for comment.
NNPC did not immediately provide a comment.
Further details on the deals being discussed, including the cost of repairs, were not immediately clear.
Adedapo Adesanya