NOTE ON NNPCL
NNPCL’s commercial strategy shifted significantly from 2019 when Mele Kyari took over as GCEO of NNPCL, from his immediate past role as MD of Duke Oil (The Pre-PIA trading arm of the group). The group moved from the Oil Processing Agreement where thirteen (13) refineries offshore got Crude Oil feedstock in a swap deal in exchange for PMS, AGO, JET A1 through a crude intervention stock that was initially designed to supply feedstock to Nigeria’s moribund refineries or any commercial concern.
NNPCL as the parent of the four (4) moribund refineries has missed eight (8) deadlines since 2019, and has expended directly the sum of four billion US Dollars allocated by the federal executive council for turn around maintenance (TAM). In a bid to manage the opacity associated with the direct sale, direct purchase system designed where the intervention stock was given as collateral for vendor financing loans, and as direct swaps with international traders, for the supply of phantom daily consumption numbers that are not verifiable, the government designed a system that saw it allocate nearly 30% of its budget to under-recovery for maintaining of fixed peg (without paying any attention the quality specification as required by sections 317 (11) of the PIA). Then in 2023, it transferred the responsibility for reconciling the accounts on petrol subsidy after the exchange rate dropped significantly on the inability of the government to finance its balance of payment, to the books of the NNPCL Group. The bone of contention is the inability of the government to audit its actual daily consumption, as well as audit the value mismatch in the trade finance structured for the volume of white fuels imported from those swap deals. The following are a snapshot of events from recent memory:
- In July, the Group Chief Executive Officer of the NNPC, Mele Kyari, while appearing before the Senate, stated categorically that the refinery would come into operation in early August
- After the failure of the early August promise, the Chief Financial Officer of the NNPC, Umar Ajiya, said the Port Harcourt refinery will commence operations in September 2024
- Sometimes in December 2023, the nation’s oil company disclosed that the refinery has reached mechanical completion of its rehabilitation works
- Later in January 2024, Kyari said the refinery was being tested and would be ready by the end of January. In February, Shell supplied 475,000 barrels of crude oil. However, no production hitherto.
- In Mid-March, after he appeared before the Senate Ad-Hoc Committee investigating the various turn around maintenance projects of the country’s refineries, said the Port Harcourt Refinery would commence operations in two weeks, April.
- In April, independent marketers predicted that the refinery would commence operation by the end of July. NNPC’s Chief Corporate Communications Officer, Olufemi Soneye while commenting on it, said regulatory approvals from international bodies were only the impediment stalling the operational commencement of the refinery
- Mele Kyari while speaking at NAPE conference on Tuesday, November 12, said the NNPCL has stopped importing refined products. “Today, NNPC does not import any products, we are taking only from the domestic refineries,” he said.
- However, the NNPCL spokesperson, Olufemi Soneye, countered the claim and reports, in a statement on Thursday, saying the company hasn’t stopped importation of petroleum products
- Group Chief Executive (GCEO) of NNPCL, Mele Kyari, on October 24, 2024, said petrol smugglers hid under the subsidy loophole to make around N17 million per truck in neighboring countries
- NNPCL on Thursday, November 14th disclosed that it has, alongside its partners, revved up crude oil and gas production to 1.8 million bpd
Jide Johnson writes from Nigeria
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