NNPC to cut fuel imports
By Yakubu lawal Assist Energy Editor
FOLLOWING the successful rehabilitation of the nation's four refineries, the Nigerian National Petroleum Corporation (NNPC) has concluded plans to reduce the importation of fuel by the first quarter of next year.
The corporation, which imported about 62 cargoes of refined Premium Motor Spirit (PMS), otherwise known as petrol, for this last quarter of the year, will reduce the volume by one-third for the first three months of next year.
NNPC's Group Managing Director, Mr Funso Kupolokun, who made this disclosure at the weekend in Lagos, attributed the plan to the improved working conditions of the refineries.
"With the four refineries running, the impact is that we are going to reduce the imports for first quarter 2005," he said.
According to him, the Port Harcourt refinery is now operating at 60 per cent of its installed capacity of 210,00 barrels; that of Kaduna is also making 70 per cent of its 60,000 barrels through one of the Crude Distillate Units (CDU -1).
Kupolokun disclosed that heavy crude for the starting and operation of the second CDU-2 would arrive in the country before the end of January.
The NNPC chief stated that with the revamping of the vandalised pipeline at the Chanomi Creek, the Warri Refinery would ease distribution of petroleum products in Mosimi-Warri axis. He added that the situation in the Northern parts of the country would also be improved with steady supply of fuel.
His words: "With the reduction in import next quarter, if we still maintain operation at the refineries as we are now on stream, we will definitely replace the imports which we are now making."
Kupolokun stated further: "Don't forget, that we said (that) the maximum the refineries can make is 17 million litres per day. We still need to import 13 million litres per day. This will reduce our imports to the minimum."
He said that in Warri, the crude distillation unit was shut down due to vandalisation of the Chanomi Creek portion of the Escravos-Warri pipeline.
"I am pleased to inform that the rehabilitation of the pipelines has now been completed and it is currently undergoing testing and commissioning and indeed crude oil receipt into the refinery commenced on November 25, 2004," he said.
The NNPC boss added that the private sector players were expected to play a key role in the importation and production through the establishment of refineries.
According to him, between 1999 and 2003, $400 million has been spent on the rehabilitation of refineries and $254.4 million on the pipelines and depots.
According to Kupolokun, all of this will impact on NNPC working capital to the level that international oil price has come down.
"Today, crude is selling at $41 per barrel and NNPC is supposed to pay $41 per barrel on crude processed. So, crude is still high, product is at import parity, so it is down to the same level as the cost that we are having on imports," he said.
Kupolokun however lamented the inability of NNPC to charge market price for its products and hence the subsidy on fuel to the tune of about N350 million per day at the end of August this year.
"This not only resulted in cash flow problems for the corporation, but also affected its operations adversely," he said.
According to the NNPC boss, since the commencement of the deregulation policy, the crude oil market has been very bullish with prices reaching an all-time high of $55 per barrel in mid October 2004.
Kupolokun stated that the high global economic growth, particularly in China, USA, India and some countries in Europe and Asia, was partly responsible for the high price. The Iraqi conflict as well as the activities of speculators also contributed to the surge in prices.
The NNPC boss said that the corporation has awarded contracts for eight mega stations across the country to Julius Berger, adding that work has begun in Abeokuta, Akure, Gusau and Yola.
He added that contract had also been awarded for the rehabilitation of Ore depot which has remained inactive for the past six years. The contract is estimated at $41 million.
Other projects being planned to strengthen NNPC's operation in the down stream sector, according to him, include Atlas Cove tank expansion with two additional tanks, Mosimi tank rehabilitation (on-going) and Ibadan depot power supply situation among others.`
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