Ibe Kachikwu, Minister of State for Petroleum, a fortnight ago, at the Offshore Technology Conference, Houston, Texas, United States of America (USA), came up with a firm assurance of fixing the nation’s four refineries, even though some petroleum industry experts have already written them off, describing the refineries as draining pipes of the Nigerian economy.
The Federal Government’s new move, according to Kachikwu, would be for the refineries – Port Harcourt Refining Company (PHRC), Warri Refining and Petrochemicals Company (WRPC), and Kaduna Refining and Petrochemicals Company (KRPC) – to be managed by new but sizeable willing investors.
But a recent report revealed that the Federal Government, in the last 15 years, had spent over N2.64 trillion on the turnaround maintenance of the four state-owned refineries without any improvement.
Warri alone gulped $60 million in recent times without any tangible results. NNPC, recently, revealed its readiness to spend another $500 million this year, still on the maintenance of the four refineries, which have only a combined capacity of 445,000 barrels per day (bpd).
It would be recalled that PHRC 1 was constructed by Shell-BP in 1965 at a cost of £12 million. It had a capacity of 38,000 barrels per day (bpd) and upgraded from 38,000 to 60,000 bpd and was taken over by the Federal Government in 1971.
The Federal Government in 1974 engaged a Texas based petroleum consultancy firm for a feasibility study on how to increase supply.
In November 1975, the contract for the construction of WRPC was awarded to Snamprogetti SPA of Italy for 100,000bpd at the cost of US$478 million. It was for a 30-month period and was commissioned in September 1978.
The KRPC contract was awardedto Chiyoda Engineering and Construction Company of Japan at a cost of US$525 million in 1976 for 100,000bpd (refining in two streams of 50,000 for fuels and50,000 bpd for lubes) with a completion period of 36 months and was commissioned in 1980.
Nigeria’s lack of refineries due to poor maintenance means that the country – which is Africa’s biggest oil producer– has to export about 90 per cent of its crude oil and import back petroleum products at international prices.
According to some industry experts, the importation of petroleum has continuously exposed the masses to untold hardship as steady hike in the pump price of fuel by the government has become a common phenomenon.
The marketers are not left out as they also face the challenges of accessing foreign exchange. In fact, majority of them no longer import petroleum as they could not meet up with the challenges. And that was the reason NNPC now resorted to importing 90 per cent of petroleum consumed in the country.
Speaking in an interview with our correspondent recently in
Lagos, a public servant, Mr. Luke Okoro, described the state of the refineries as unacceptable, adding that it was more regrettable when one realized that hundreds of workers were being paid without doing anything.
Okoro said: “The country is wasting huge scarce forex in fuel importation. Therefore, rather than export fuel as an oil producing nation , we are importing fuel. What a shame. This development has it’s root in corruption. Yes, corruption. What does it take to run a refinery? Why can’t NNPC run an efficient refinery if not corruption. Is it a rocket science as the case is?
“Leadership and lack of patriotism by those in charge, government must hold them accountable for the huge financial wastage they have visited the nation with. They should be probed,” he stressed.
According to him, the federal government should privatise the refineries as the government staff had shown incompetence in the running of these refineries.
At present, he said, the refining sub-sector is not creating jobs, adding “In fact, the jobs are thinning out as lube plants, plastic firms and petrochemical companies and others, which should source their raw materials from these refineries are shutting down and laying off workers. The economy is losing so much investments, jobs and exports and capital inflows. A privatised set up
will arrest this wastage.”
It would be recalled that former President Olusegun Obasanjo had embarked on the privatisation of the refineries in 2007, but it was later upturned by the late Musa Yar’Adua because the latter felt certain interest in the north and south were sidelined in the scheme of things.
Anibor Kragha, NNPC refining Chief Operating Officer, on December 22, 2016, disclosed the corporation’s 2017 plan for holistic approach to rehabilitate the refineries and thereafter perform TAM as at when due.
Ben Onunwor, a professional mechanical engineer, who had worked in NNPC’s refineries in Warri, Port Harcourt and Kaduna for 14 years before his voluntary retirement in 2000, pointed out that Kragha was still thinking in the old state. He emphasized that even if a complete new refinery was constructed and handed to them, it would be a matter of time to return it to a comatose state.
Onunwor said: “The NNPC facilities are so important to our survival in the present economic recession that everything should be done to assist in getting it right. The government under President Buhari has demonstrated unbelievable capability and commitment to combat corruption. If a strategy is developed to hinder refinery management personnel from operating secret contracting companies the bad days would soon pass us.
On his part, a Nigerian, China-based business man, Mr. Festus Mbisiogu, wondered why Nigerian government will continue to maintain refineries built over some decades ago instead of embarking on complete routine intervention.
“The truth is that what we have been carrying out on the refineries built in the 60s 70s and 80s is mere servicing. How can you continue to service a facility that is operating on obsolete components? Why do servicing when you can embark on complete routine intervention? Is it hard for Nigeria to build new refineries?” He argued.
Mr. Mbisiogu who is also the CEO of Blue
Diamond, a hospitality industry in Dubai, United Arab Emirate (UAE) attributed the sorry state of the nation’s refineries to what he described as public corruption.
Explaining further, he said: “There are people who are profiting with our refineries being in state of disrepair. We should also not rule out pipeline vandalization. These l think are major issues responsible for the sorry state of these refineries.”
On the other hand, he stressed the need for the federal government to go for new technologies in refining, which according to him, is what other African countries like South Africa have done.
“If the government fails to go for new technologies we will keep spending money and not getting the results. So every year, we keep pumping in money in maintaining dead facilities and this is large chunk of money that government could have channelled into other social infrastructure.
“We are also enriching other nations because we export crude to them, but only buy petrol. What they do with other minerals contained in the crude does not bother us.
“The other implication is that we will keep facing fuel crisis because it will be difficult to meet demand especially when NNPC faces import constraints.
“Also a drop in global oil price will affect us drastically as we will spend more in producing a litre as compared to the prevailing local price. What this means is that government will continue to subsidise fuel prices and in doing so, other critical areas of our national life that need attention will suffer. Government will all continue losing money to illegal refineries that are springing up everywhere,” he added.
But the question is: Why can’t Nigeria build modern refineries that have the capacity to handle our local crude production? It could be recalled that 15 firms were granted licenses to operate private refineries. None of these, perhaps except the one that Dangote is building in Lagos has seen the light of the day. Imagine when 15 other refineries operating at full capacity added to the one government owns. We will not be talking of importing fuel. Government should as a matter of fact compel the individuals to honour their agreement or let the licenses be revoked and given to other people.
All efforts speak with the Group General Manager Public Relations, NNPC, Mr. Ndu Ughamadu, proved abortive as he was unable to respond to the questions forwarded to him .
