The huddles in NNPC’s new model to revive refineries

04 May 2016, Lagos — When the federal government recently unveiled plans to enter into a Joint Venture (JV) arrangement with investors to fund, rehabilitate and jointly operate Nigerian refineries, views of Nigerians became divided. Some view the development as proactive while others see it as another way of privatising the plants by the Buhari-led administration. Our reporter analyse the view points.

*NNPC refinery, PH.

*NNPC refinery in Port Harcourt

The Nigerian National Petroleum Corporation (NNPC) recently said the Turn Around Maintenance (TAM) for the Nigeria’s four refineries gulped about $22 million, saving taxpayers $1.57 billion from the $1.6 billion earlier voted for the projects.

The NNPC said $10 million, about 48 per cent of the total expenditure, was spent on the two refineries in Port Harcourt. The $22 million expenditure was a huge reduction from the $216 million, which the Sani Abacha-led regime spent for the same purpose.

The federal government is said to have spent over $2.036 billion on the TAM of the country’s refineries in the last 13 years.

The administration of former president Olusegun Obasanjo had set aside $369 million for the TAM of the nation’s four refineries, while the Abdulsalami Abubakar and Sani Abacha regimes spent $92 million and $216 million, respectively for the same purpose. In 2007, the NNPC claimed it awarded the contract for a comprehensive TAM on all the refineries to a Nigerian firm.

The sum of $1.6 billion was voted for TAM of the four refineries across the country by the end of 2014. The 150,000 bpd Port Harcourt refinery was built in 1989. TAM operations were carried out in 1991, 1994 and 2000.

The Kalu Idika Kalu Committee had, in May 2013 during a visit to the Port Harcourt Refinery, discovered its four boilers were not operative. Two out of the four power plants were dysfunctional.

Besides, the committee found that there was evidence of poor maintenance with serious corrosion of major key units, just as morale of the workers was low and management was dysfunctional with little or no financial authority.

The inoperative state of the refineries, for a long time, threw the nation into crisis, making the importation of oil into the country became an all-comers affair and fraudulent.

In his argument, the president of the Nigeria Labour Congress (NLC), Comrade Ayuba Wabba, at this year’s May Day celebration in Abuja, urged the federal government to effectively fight corruption in the nation’s oil and gas sector.

He said if corruption is arrested in the sector, the huge amount used in importing refined petroleum products could go into other productive ventures in the economy.

No doubt, it is regrettable that maintenance of the nation’s refineries by previous governments were carried out at high costs. Yet, despite the questionable amounts spent on the maintenance, the refineries have remained unproductive, leaving Nigerians to wonder whether the assets were actually rehabilitated or used as avenues of siphoning resources.
  • Daily Trust
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