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Refinery rehab: NNPC seeks private sector financiers

If anybody cares to conduct a public opinion on the state of the nation’s four refineries located in Port Harcourt, Warri and Kaduna respectively, it will be obvious that so much money would be needed to put them back to maximum production.

For years back, what one kept hearing from public outcry was that: “our refineries are in parlous state”; “in comatose state”; “they are epileptic”, and such derogatory phrases.

What is breath – choking to the general public including the international business community is what is the hidden ailment of these refineries that has defiled removal or outright treatment over the years.

It baffles one too that NNPC carries out periodical Turn Around Maintenance (TAM) or rehabilitation of these facilities, yet, it seems there is always a spanner thrown into the wheels of the refineries which allows them to slide into “epileptic, “comatose” state and what have you.

Some keen observers or industry analysts opined that it is not that the management 0f Nigerian National Petroleum Corporation, NNPC lacks the expertise to carry out result – oriented surgical operation of the refineries to bring them back on full stream, but there seems to be some elements of sabotage inherent in the system.

This is why Nigeria has remained a proverbial Esau and Jacob. A great provider of raw goods but does not enjoy the enormous advantage. Rather, it is Jacob, the visionary planner who takes advantage of Esau’s raw products. So, it is with Nigeria that produces crude oil but sells it off to other countries as buyers that utilize the last drop for profits.

However, it’s worthy to feel and appreciate the concern of the present NNPC management with regards to its determination to prove to Nigerians that the present Corporation is not synonymous to the inherent failure in the course of managing the critical sector of the country’s economy.

In the NNPC in-house bulletin of November 2018 Edition, the Group Managing Director (GMD), Dr. Maikanti Baru, came up with an idea that could turn around the fortune of the refineries.

The idea is involvement of private sector financiers to invest their funds for a holistic rehabilitation and upgrading of the ailing facilities.

The Group General manager (GGM), crude oil marketing Division (COMID), Mallam Mele Kyari, made this known at the 5th Triennial conference of the Port- Harcourt Refining company (PHRC) branch of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), as he appealed to the staff of the PHRC to support the arrangement by the NNPC Management to source for the required funds.

“As we know today, funding is a big challenge for our industry. What this means is that we must find a noble way of getting funds to finance the rehabilitation and upgrading of the refineries so that we can operate them at optimal Levels. That is why management wants to bring in investors who are ready to put their money into these projects. And we also want to get the right set of people to support the project technically”, he said.

He said the corporate strategic plan was for NNPC to control a sizeable share of the refining market with private sector players also having enough room to play too.

Speaking further on the corporate strategic plan for the refining sector, Kyari reaffirmed that apart from encouraging private sector initiatives, NNPC was also looking at accommodating new private greenfield refineries within existing refinery complexes; revamping and expanding pipelines, storage and product distribution infrastructure; and construction of knock – off condensate refineries within existing gas plants.

He explained further that the resort to private sector financing was in the interest of staff as that was the only way of getting the refineries to operate at optimal levels and guarantee job sustainability.

Mr. Kyari called on PHRC staff to consider the potential benefits of the alternative financing which includes: better working condition; new refinery management models and development of critical skills and competences in refining and support it.

Earlier, the managing Director of PHRC who was represented by the Executive Director, Operations, Engr. Abiodun Owolabi, called on the members of PENGASSAN to continue to conduct themselves in a manner that promotes industrial peace.

It would be recalled that in August 20, 2015, the current Minister of state petroleum Resources, Dr. Emmanuel Ibe Kachikwu, had called for deregulation of the oil and gas sector so as to encourage domestic private sector participation and inflow of foreign investments.

The Minister who was then GMD NNPC made this call at a conference in Lagos titled, “Energy Crises and sustainable Development” which was organised by the Nigerian Association of Energy correspondents, where he believed that deregulation would also provide a fair deal for Nigerians from abundant petroleum resources, through fair product for consumers, full cost recovery and reasonable margin for operators.

Kachikwu stated that “implementation of the policy will entrench efficiency in product usage among investors, hence, ending products shortage. The corporation is fully committed to reforming existing refineries to boost domestic petroleum products supply”, pointing out that the refineries had been re- streamed but were yet to attain optimal capacity in production.

The position of the present NNPC management to source support for refineries rehabilitation financing model through private financiers has a good defense in an analysis contained in PHRC News 4th quarter, 2014, titled, ‘’OPEC countries, refining capacities, and the challenges for Nigeria”.

He explained that Nigeria has the highest number of people in terms of head count population among the members of the Organisation of Petroleum Exporting Countries (OPEC) but is also ranked 8th in refining capacity of member countries. Nigeria therefore needs more refineries and improved refining capacity more than any other OPEC country.

The highest refining capacity of 2,107million barrels per day among the OPEC countries is possessed by the Kingdom of Saudi Arabia with a population of only 29.20 million people. It is closely followed by Iran which has a refining capacity of 1,681M barrels with a population of 76.53 million.

Nigeria which has almost double of those populations only has a refining capacity of 445,000 barrels per day. It is only recently that the country can boast of about 2million barrels of crude in a day.

Nigeria has issued various licenses to private concerns in its bid to increase its refining capacity and eliminate importation of finished products to meet the local demands for refined products in the country. It is however, regrettable that none of these licenses has been actualised.

Here in Nigeria, the four refineries are not operating at full capacity and the country is bedeviled by massive importation of finished products leading to payment of subsidy running into trillions of Naira.