Nigeria's foremost Online Energy News Platform

Hands off refineries, ICRC, Dangote tells FG

Infrastructure Concession Regulatory Commission, ICRC, and Dangote Group, yesterday, advised the Federal Government to hands off the running of the country’s refineries and instead concession the facilities, allowing private sector participation.

Privatise Nigeria’s oil industry? Easier said than done

Speaking at the just concluded Nigeria International Petroleum Summit, NIPS, in Abuja, yesterday, Director-General of the ICRC, Mr. Chidi Izuwah, said the future of the petroleum industry in Nigeria, to ensure the country reaped true value from the industry, was the private sector.

According to him, the role of government is to create the enabling environment to attract investors into the sector, the way it was done for the telecommunications industry.

He said: “Government has to play a role and break the back of government dominance in the downstream sector and bring in the private sector. This is the only way to go. When you bring in the private sector, you must change the incentive structure.

“The NNPC refineries, we should concession them to the private sector. The investments would come. When you concession, they would rehabilitate, make further investments and recoup their money.”

Also speaking, Executive Director, Dangote Refinery and Petrochemicals Company Limited, Mr. Edwin Devakumar, said the Federal Government should allow private sector investors to manage the refineries, while cautioning government against outright sale of the refineries.

Devakumar, who was represented by consultant to the company, Mr. Babajide Soyode, said the refineries are goldmine and are located strategically in major markets in the country.

He said: “NNPC refineries are goldmine; they are sitting in the best markets in the country—Port Harcourt, Warri and Kaduna. Dangote is going to occupy the fourth market, Lagos.

“Why can’t NNPC reactivate or upgrade its refineries? They are not old. Upgrading, as any engineer would tell you, is standard in our industry. All these collocation and others are nonsense. Follow the industry’s standard, upgrade what you have.

“We are talking of NNPC being efficient; those refineries were built at an average of $1 million — Warri for N357 million, when you compare it with 1978, Kaduna was N377 million. That is roughly between $1 million and $1.3 million now.

“If you have been subsidising, you don’t accrue enough to maintain the refineries, not to talk of upgrading or expanding, then it is shameful that NNPC would be looking for $1 million to pay consultants for study. It’s a shame for Nigeria.”

Also speaking, Chief Operating Officer, Refineries of NNPC, Mr. Anibor Kragha, noted that the fundamental issues impacting the ability or the inability of NNPC, refineries to deliver on their mandate had been primarily lack of funds and infrastructure to deliver the products.

According to him, the refineries in Nigeria are not that old on the global scale, if compared across board.

“When you don’t have funding, you can’t maintain your assets. The last turnaround maintenance of the Port Harcourt refinery was in 2000, that of Warri, 2004, while that of Kaduna was 2008,” Kragha maintained.

He disclosed that efforts to get private investors to revamp the refineries had been stalled because the corporation and the proposed investors were not able to agree on the commercial terms.

Kragha noted that this made the NNPC to consider undertaking a revamp of the refineries one after the other, involving the original manufacturer of the refineries.