By Moses Patience Chat
The Federal Government of Nigeria has directed the Nigerian National Petroleum Company Limited (NNPCL) and other regulators in the petroleum industry to sell crude oil to operators of modular refineries at the official dollar rate of N460 per $1.
This is because local refiners have been faced with a complete shutdown due to lack of feedstock.
This was revealed to journalist by market operators of modular refineries who also accused NNPC of deliberately complicating the process to create room for kickbacks.
According to the operators, for the past two months, local refiners have been paying for crude at the global benchmark price but settling in naira at the official exchange rate, a situation that creates another subsidy. Operators, however, sell refined products at market rates, boosting their bottom lines.
Modular refineries are crude oil processing facilities with capacities of up to 30,000 barrels per day (bpd), and are being built as part of plans to curb oil theft and promote peace in the country’s main oil-producing region.
For the past two years, they have been struggling to secure enough crude feedstock to keep their machines running as the Nigerian government prioritizes selling its share of oil from joint venture arrangements with local and foreign oil firms to have access to the greenback.
Some of the modular refineries have waited for more than a year to receive crude from NNPC and in the process, their plants are rotting away as they surmount one hurdle to another including a plethora of regulatory approvals they must get from the authorities.
However, this year, the Federal Government directed petroleum sector regulators as well as the NNPC to consider some of their demands. The NNPC Ltd is now selling crude to the refiners at the CBN official rate to help curtail the challenges they are faced with.