A Review of the Nigerian Energy Industry

Refineries’ revival goes burst

Jamnagar oil refineryOSCARLINE ONWUEMENYI 16 August 2014, Sweetcrude, Abuja – Exactly two years ago, in July 2012, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke had, with much fanfare, inaugurated the National Refineries Special Task Force, and tasked members with the job of reviving the four comatose refineries in the country. The Task Force headed by Chief Kalu Idika Kalu was given 60 days to literally turn water into petroleum.
The Minister stressed that government was determined to revamp the existing refineries for maximum output towards meeting local demand for products.
Chairman of the Task Force, Dr. Idika Kalu Idika and his team jumped into the task rather too enthusiastically: “I am of the firm opinion that based on our proven and potential reserves in the medium term, Nigerians will like to see at least ten medium to large scale refineries, and smaller modular refineries that could be spread to all the zones of the federations,” he had stated.
He added, “We are fully aware of the nation’s expectations from this process. Our assurance to Nigerians is that we will put in our best in unraveling the issues that have bedevilled the functionality of the existing refineries. We shall also to the best of our abilities proffer ideas and solutions in line with our terms of reference to ensure that our country goes back to self-sufficiency in the supply of locally refined petroleum products.”
The task force, according to its terms of reference, was meant to conduct a thorough technical, financial and manpower review of all the refineries, audit the finances and determine the operating capacities as a basis for recommending the financial and technical framework that would raise the existing capacities to an acceptable rate, which by global standards is usually between 80 and 90 percent of installed capacity.
The terms of reference for the Special Task Force also included conducting a high level assessment of the Port Harcourt, Warri and Kaduna refineries, reviewing all past reports and assessing and producing a diagnostic report complete with a Change Journey Map.
The task force was also expected to review the operations of the three refineries with a view to improving their efficiency and commercial viability, as well as work with a world-class firm to audit the finances of the three refineries, and produce audited accounts over the past two years ending December 31, 2011.
Other functions included the design of a template for key Production/Management-Critical Performance Indicators to be tracked on a periodic basis for ministerial review, as well as to design an automated information work bench to monitor the performance of Port Harcourt, Warri and Kaduna refineries on an online basis.
The special task force was also expected to review all licenses issued for new refineries in Nigeria and assess their operational, technical, and financial readiness; seek new ideas and design financial models across the value chain for the building of adequate capacity for meeting local demand for petroleum products.
Also, it was expected to design a blueprint for public and private partnerships to build small, medium to large-scale Greenfield refineries across Nigeria, as well as design investment models and a road map to self-sufficiency in local production of petroleum products in Nigeria; and to produce a report complete with timelines and milestones within the next 60 working days.
Idika noted that beyond this, the task force is also “committed to the development of a framework that would not only turn around Nigeria’s dependence on importation, but would go further to present a platform for the export of products to the regional market and beyond.
“We will review existing licenses granted for establishment of private refineries in a bid to assess the readiness of the operators to utilise the licenses. We are also fully aware of the contribution of the petrochemicals subs-sector to the development of a robust production driven economy as well as provide jobs for our teeming youth population, and would work hard to resuscitate existing petrochemical industries to utilise the by-products of the refineries,” he had stated.
Given the expansive function of the task force and the critical importance of the sector to the economic development of the country, it is shocking to note that more than two years down the line, no word has been heard from the Ministry on the subject, nor has the recommendations of the special task force been released to the public.
Nigerians would have loved to see how the committee went about its onerous task of turning around the behemoth of waste and corruption in the nation’s chequered oil industry, and if it succeeded or failed in this singular task.
Given that nothing more was heard from the task force or its members since it was inaugurated two years ago, one can reasonably conclude that it did not perform its much-vaunted task to the admiration of, at least, the Minister. Of course, the tune from the Federal Government seemed to have changed since then – they are now more determined than ever to privatise the refineries. No more talk of revamping or reviving, or even ensuring accountability after many years of billions spent on turn-around maintenenace, for that matter.
The state of the nation’s refineries and the shortfall in local production and the gradual increase in importation of petroleum products over the years have been well publicised. The Federal Government is adamant that even if the importation of petroleum products appears to be a solution to cover the gap between local production and consumption, it should be a temporary one.
According to Alison-Madueke in 2012,”The best solution for the long term is to attain adequate local refining capacity to fully meet the requirements of domestic consumption. The present administration is determined to reverse the continued negative trend in the refineries’ performance.
“It is for this reason that we are reaching out to patriotic Nigerians with undisputed credibility from inside as well as outside the industry to brainstorm on and seek holistic solutions to re-align our refineries to global standards.”
To that extent, she said, the National Refineries Special Task Force will “review the current state of the refineries vis-à-vis the domestic requirements and refine further a roadmap to grow the nation’s refining capacity, both new and existing, to meet its domestic demand.”
The Minister further noted that, “It will be a very happy day for all Nigerians when we can at last feel like our refineries are working to name-plate capacity, or at least to 90 percent capacity utilisation, but beyond that, that we are meeting the greater percentage of our country’s refining needs.”
Nigerians are still waiting.
In this article

Join the Conversation