The President of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Festus Osifo, has explained that the country’s refineries were shut down due to inefficiency rather than being completely non-functional.
Speaking on Channels Television’s Politics Today programme on Tuesday, Osifo said the facilities had been operating but could not produce at optimal levels.
He noted that while crude oil was supplied to the plants, the output did not match the value of the input, leaving the system to run at a loss.
“The refineries were shut down not because they were not working, but because the material balance was poor. For instance, if crude worth about $10 million was supplied, the refined products coming out were valued at about $9.5 million. That meant continuous losses,” he explained.
Osifo added that during a recent meeting with the new Group Chief Executive Officer of NNPC Limited, the management confirmed that the decision to suspend operations was taken to reassess strategy and improve efficiency.
He said: “You know, we visited the refinery. I’m an engineer of over 20 years, standing alright. I understand how mechanic works. I’ve worked in a private sector all my life, and I’ve practiced engineering all my life. So I know a system that is working and I know a system that doesn’t work.
“I listen to those that said it never worked, which is not correct, the refinery worked. There is a difference between a piece of equipment working and a piece of equipment working efficiently. You know, in engineering, these are two different things. So what happened was that the refineries were shut down not because the refineries were not working, but it was actually because what you were feeding into the refinery was crude oil, right? It wasn’t water. So when you feed crude from this end, that’s the input, then you are going to get the output from the other end.
“When they compare what they were feeding in and what they were getting, at the end of the day [it] was not commensurate. So not that it wasn’t functioning, but wasn’t functioning optimally. Because at the end, when you are feeding in, let’s assume you are feeding in crude that cost, let’s say, $10 million into the refinery, and at the end, you are getting a product that is worth, let’s say, about $9.5 million which means that you are running on a a loss. That was exactly what happened, not that the refineries were not working.”
Continuing, he said: “We paid a visit to the new GCEO of NNPC Limited, and we put that question to him, that why were the refineries shut down? Why were the refineries not working currently? And he told us that this was actually the reason that, not that the refineries were not working, but it was the material balance, the material you feed into the refinery, what you are getting out, it’s a bit reduced in terms of value. That was why they shut it down, in order to reexamine the strategy and all that.”
PENGASSAN President Osifo explains shutdown of NNPC refineries