NEITI Canvasses Sale Of Refineries To Cut Inefficiency

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To save the from further waste, the Nigeria Extractive Industries Transparency Initiative (NEITI) in Abuja on Wednesday canvassed the sale of the country’s refineries.

The call by NEITI’s Executive Secretary, Mrs. Zainab Ahmed, made at the investigative hearing on the missing oil money, is in sync with government thinking, with the Petroleum Resources Minister, Diezani Alison-Madueke, having dropped hints of plans to sell the refineries before the end of the first quarter, 2014.

“We would like to see major infrastructural entities such as refineries moving out of government hands into the private sector,” Alison-Madueke had said in an interview with Bloomberg TV Africa in London late last year.

Nigeria, even though is Africa’s top crude exporter relies on fuel imports to meet more than 70 percent of its needs, and in a dubious arrangement exchanges 60,000 barrels a day of crude for products with shady firms like Trafigura Beheer BV and Societe Ivoirienne de Raffinage’s refinery in Ivory Coast.

Speaking at the ongoing hearing was at the instance of the House of Representatives Committee on Petroleum Resources (Upstream), NEITI’s scribe noted that the refineries have been operating far below their capacities and that their operations and overhead costs remained same irrespective of the volume of production.

She said that the 445,000 barrels per day allocation to the refineries should be reviewed to their actual refining capacity, adding: “As the refineries get older, their performance deteriorates due to the poor maintenance culture in place.”

She also said that because of the inability of the NNPC to utilise its domestic crude allocations, it usually exported them, adding that NNPC had agreements with Societe  Ivoirenne De Raffinage (SIR) and Nigermed for processing some quantities of the crude oil offshore.

The Executive Secretary said that there was no cost efficiency in the transactions with the offshore processing organisations of SIR and Nigermed.

“When compared with the reported price of PMS (petrol), DPK (kerosene) and AGO (diesel) and the retained products proceeds paid to NNPC it is not economically beneficial,” Ahmed said.

She observed that NNPC alternative transactions which amounted to 22 billion dollars, was not disclosed in the corporation’s audited financial statements.

The Chairman of the committee, Rep. Muraina Ajibola (PDP-Oyo), said that CBN would be further invited to shed more light on the issues raised by NEITI.