The Naira’s instability on the parallel market has a new target – modular refineries. Modular refineries are facing a crisis that sees their output numbers drastically reduced as a result of forex problems in the country
A modular refinery is a type of refinery that has its parts shipped to another place in modules, unlike standard refineries that must be built from scratch. Nigeria has about 25 of these, and they face shutting down operations due to the inability to access dollars needed to fund operations.
Not all the refineries are currently in use, but the functional ones are under great pressure to continue operations due to the harsh financial reality that is the deteriorating forex crises in the country.
On Sunday, Brent traded for about 80$ per barrel and they have been trading in this range for some months now. The refineries have an estimated capacity of 200,000 barrels per day, and If all are fully operational would refine about $16million (or N25.14 billion using Thursday’s closing rate of N1,571/$).
At an annual rate, this would see the refineries produce about 73 million barrels and $5.84 billion worth of crude oil. This can be traced to the scarcity of dollars in the economy, leading to scarcity of crude for the refineries to work with, even as they demand the same crude oil in naira.
The refineries, speaking under the umbrella group Crude Oil Refinery Owners Association of Nigeria remarked that the Federal Government have not kept their bargain concerning the provision of feedstock to the local oil sellers.
