As PH refinery misses Sept. 1 target despite $1.5b repair
Former Vice President, Atiku Abubakar, has demanded the immediate listing of the Nigerian National Petroleum Corporation Limited (NNPCL) on the stock exchange in line with the Petroleum Industry Act.
He made the demand in reaction to the decision of the NNPCL to hand over the Warri and Kaduna refineries to private operators who are expected to manage and operate them.
Despite $1.5 billion spent on the Port Harcourt refinery under the management of NNPCL, the facility has again failed to commence operations after about seven postponements. This is coming about four years after approval of a $1.5 billion contract to Italian Marie Technimont for the renovation and modernisation of the refinery.
Atiku said: “The NNPCL is supposed to have been listed on the stock exchange in line with the Petroleum Industry Act (PIA). This would make the company more profitable and enhance transparency and corporate governance.
“The NNPCL claims to be private, but this is only a ruse to fool the feeble-minded because it remains the ‘ATM’ (cash cow) of the Federal Government. Anything short of listing the NNPCL on the stock exchange is a cosmetic development.”
He alleged that NNPCL provides a cover of political protection to the President Bola Tinubu government’s policy inconsistency on the payment of subsidy, raising questions about the independence that the PIA requires of the NNPCL as a private business concern.
The Peoples Democratic Party (PDP) presidential candidate since 2015 said previous arrangements and concessions had not worked because of a lack of transparency in the contract award process as well as the failure of the government to attract investors.
According to him, for such a deal to succeed at all, the Bureau of Public Enterprises (BPE) and a credible technical partner like Standard and Poor’s must be part of the process.
Atiku added, “Former President Olusegun Obasanjo revealed recently that even Shell, one of the world’s wealthiest oil companies, rejected the offer to operate Nigeria’s refineries.”
This is because the NNPCL has, for years, been a cesspool of endemic corruption.
“This is why over $20 billion that has been spent on the refineries in the last 20 years has led to nowhere. It is also curious that a government that is still paying petrol subsidy is trying to make its refineries profitable. Which businessman will invest in a refinery that has been programmed to operate at a loss?”
He questioned the feasibility of NNPCL’s latest plan, even as he pointed out that such arrangements in the past had not been profitable.
“The ‘manage and operate’ approach has not always worked. The Manitoba Hydro International, which was handed the Transmission Company of Nigeria (TCN) led nowhere. Similarly, Global Steel Limited, which was handed the Ajaokuta Steel Company (ASC), was not able to make the facility profitable.
“The contract was questionably revoked by the Umaru Yar’Adua administration, and Nigeria ended up paying Global Steel a compensation of nearly $500 million while Ajaokuta remains comatose 17 years later,” the Waziri Adamawa said, and advised the NNPCL not to make the contract process opaque like it did with OVH last year, which was not only dubious but has still failed to boost the NNPCL’s petrol sufficiency as evidenced by the months-long fuel scarcity.
CHIEF Financial Officer (CFO) at NNPCL, Umar Ajiya, had on August 20, 2024, announced September 1, 2024, as a new date for the commercial commencement of the Port Harcourt refinery.
According to him, petroleum products will be ready for testing before it is usually supplied to the domestic market in September 2024.
Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, said on May 29, 2024, that the refinery would start petrol production by the end of Q3 2024.
A report by the Nigerian Extractive Industries Transparency Initiative (NEITI) puts the average capacity utilisation of Nigeria’s four refineries at 8.55 per cent in 21 months. In the period, there was no production for seven months.
Publicity Secretary of the Crude Oil Refiners Association of Nigeria (CORAN), Eche Idoko, expressed concerns that the Federal Government expended $1.5 billion to rehabilitate the Port Harcourt refinery, “yet the facility has yet to start production” despite six postponements.
