The Minister of State, for Petroleum Resources, Timipre Sylva announced of the Federal Government’s plans to rehabilitate the country’s refineries. However experts in the petroleum downstream industry have said that the government lacks credibility to restructure the sector and bring the refineries to full operation.
The country has four refineries with 524,000 barrels per day capacity. However, the refineries, in the last 20 years, have had a poor operating record with average capacity utilization hovering between 15 and 25 percent per annum. As a result, 70-80 percent of the national petroleum products demand is met through imports. But operators in the petroleum industry have insisted that the Federal Government cannot make the country’s refineries efficient.
Speaking at the Nigeria International Petroleum Summit (NIPS) in Abuja, the Chairman of Integrated Oil and Gas company, Captain Emmanuel Iheanacho, said, “The downstream sector has not functioned the way it should. It is replete with a lot of challenges, which include questions about refineries. Refineries in the Nigerian context do not work.”
Calling for the deregulation of the downstream petroleum sector, he stated: “For market structure, the issue of deregulation is a front burner. The reason for market structure bears the cost and efficiency of how products are distributed. If you have a monopoly as it’s been experienced in Nigeria, you can be inefficient as you like and nobody is pressing operators to change operations and make it cheaper.”