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PORT HARCOURT REFINERY – REOPENING DOES NOT DRIVE FUEL PRICES DOWN, SUBSIDY DOES
10 months ago
The PH refineries – one at 60,000 and the other at 150,000 capacity total at 210,000bpd. Reopening and commercializing both would be a step in the right direction for Nigeria’s refinery management.
Port Harcourt Refinery Reopens Without Subsidy
Cheap crude oil refining is a goal that Nigerians like to pursue with the belief that it will keep fuel prices in the country low. Nigeria has had to deal with the high cost of fuel after shutting down its refineries for repairs in 2019. However, with the reopening of the Port Harcourt refinery, hopes have become high for low fuel prices.
There is a problem with that, as the news by the Nigerian National Petroleum Corporation NNPC may have been fragmented. The fuel price will likely remain high as the refinery reopened does not have the large production capacity of the newest refinery, it is the old one of 1965. It operates at 60 per cent or 60 thousand capacity and produces 60,000 barrels per day.
More so, prices of fuel will less likely reduce as the reopened refinery will not process Petroleum Motor Spirit (PMS or Petrol) but diesel.
Fuel Subsidy in Nigeria
For Nigeria, it often boils down to subsidy. In his inaugural speech on Monday 29 May 2023, President Bola Tinubu said Nigeria’s fuel subsidies would be withdrawn. If the government does not subsidise fuel, the recent refinery reopening will have no positive effect on fuel prices.
Nigerians always hope for a subsidy. It is the most crucial cost factor across the value chain, however, it has a significant impact on the economy of Nigeria. It cuts essential funds designated for basic infrastructure like education, health, and defence. For the last 18 years, subsidies have taken USD 30 billion off the government spending.
Reopening the New Refinery in Port Harcourt
The new refinery of 150,000 barrels capacity which produces PMS is yet to reopen. The Rivers State government had said that the renovations of the refineries would be done in three phases. It was learnt that the possible reopening date will be in 2026. This could also be another false promise as with the previous promises of reopening the refineries in the last years.
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