Refineries Not For Sale – NNPC

Dr. Emmanuel Ibe Kachikwu, GMD, NNPC

Hopes for the Federal Government divesting its interest in the nation’s refineries, as being expected were dashed, yesterday, as the Nigerian National Petroleum Corporation, NNPC, said the facilities are not for sale. Rather than selling the refineries as being expected, the Group Managing Director of the NNPC, Dr. Ibe Kachikwu, said joint venture partners with established track records of success in refining would be invited to support the running of the refineries to make them more efficient.

Kachikwu made the disclosure during an official tour of the Okrika Jetty and the Port Harcourt Refining Company Limited, PHRC, in Rivers State, yesterday.

Vanguard report continues:

The NNPC boss also disclosed of plans by the corporation to unbundle the Pipelines and Products Marketing Company Ltd, PPMC, into three companies

Refining operations

Recall that for decades, the Federal Government has been constantly urged to privatize the four state-owned refineries with combined capacity of 445,000 barrels per day to make them more efficient and profitable.

The refineries were bugged down by lack of proper Turn Around Maintenance, TAM, which left them almost comatose for decades, leading to huge wage bills on petroleum products importation.

Ironically, colossal sums were wasted by successive governments on TAM, which did not make much difference in the refineries operations. For instance, the late Gen. Sani Abacha, was said to have awarded a major contract of US$215 million in 1997 for the Kaduna Refinery, while the Abdulsalami Abubakar administration in 1998 set aside about US$92 million for the refineries.

During his tenure, former President Olusegun Obasanjo, between 1999 and 2003, also awarded contracts estimated at between US$254 million and $400.4 million for the rehabilitation of the refineries and pipelines while in 2007, another $54 million went into the TAM for Kaduna refinery alone.

Again, former President Goodluck Jonathan commenced a US$1.6 billion phased TAM, scheduled to begin in January 2013 and ending October 2014, but which commenced in October 2014 and now rescheduled to end in March 2016.

Attempts by Obasanjo to privatise two of the refineries in the past also failed, as the decision was revoked by his successor, late President Umar Musa Yar’Adua.

Obasanjo in a recent television interview recalled that the two refineries in Port Harcourt were sold to business mogul, Aliko Dangote, leading a consortium of investors in a US$750 million deal.

However, the late Yar’Adua cancelled the sale due to “pressure” and refunded the money to the Dangote consortium.

Managing Director, PHRC, Dr. Bafred Audu Enjugu, disclosed that the ongoing phased rehabilitation of the refinery cost a little less than US$10 million, adding that the job was holistically carried out by indigenous engineers without any foreign support.

Although Kachikwu did not give details about the joint venture arrangement, he noted that the ongoing phased rehabilitation of all the state owned refineries would be given an accelerated vigour with the aim of reducing petroleum products importation.

He added that at full capacity, all the refineries could supply only 20 million litres of premium motor spirit otherwise known as petrol on a daily basis.

PPMC and pipelines operations

With regard to unbundling the PPMC, Kachikwu also said the marketing subsidiary of the NNPC was being split into three to ensure lean, efficient and profitable operations.

He said the split would be along the lines of: a pipelines company that would focus primarily on the maintenance of the over 5000 kilometers pipelines of the Corporation; a storage company that would maintain all the over 23 depots, and; a products marketing company that would market and sell petroleum products.

He added that efforts are in top gear to fix all the crude and petroleum products pipelines in the country.

He disclosed that the military will also be enlisted in the protection of the pipelines, with the Nigerian Air Force to providing aerial survey, the Nigerian Army Engineering Corps fixing damages, while the Police and the Nigerian Navy will provide marine surveillance for the network of pipelines.

He said the move will ensure that the right sets of skills are rightly positioned and the numbers of leakages in terms of pipeline breaks and products losses are reduced to the barest minimum.

On her part, the Managing Director, PPMC, Mrs. Esther Nnamdi-Ogbue, assured that the company would think outside the box to provide solutions to all the challenges confronting it.