May 12, (THEWILL)- After countless, yet unachieved, completion targets announced by the federal government and the Nigerian National Petroleum Company Limited (NNPCL) in the past years, 2025 has been announced as the new completion target. This has triggered concerns among Nigerians who have borne the brunt of the nation’s total reliance on imported refined petroleum products, while its four refineries remain dormant, yet consuming resources.
The Chairman, Senate Committee on Petroleum (Downstream), Ifeanyi Ubah, disclosed on Wednesday that two refineries, Port Harcourt and Warri, would be fully operational by the end of 2024, while Kaduna would be ready in 2025 (thus completing the cycle of maintenance that has lingered for many years).
Ubah said plans had been put in place to achieve the target, stressing that the Kaduna Refinery would also be operational before the end of 2025.
“My mandate is to ensure that the refineries in Nigeria are up and functional. By my involvement, before the end of this year, two refineries will be up and running. Also, before the end of next year, the Kaduna Refinery will come on stream,” he said.
THEWILL recalls that President Bola Tinubu had in July 2023 promised that the Port Harcourt Refinery would resume production in December of that year.
While Nigerians awaited the outcome of President Tinubu’s promise, the Senate on October 24, constituted an ad-hoc committee to investigate all contracts estimated at over N11.35 trillion awarded for the rehabilitation of the four moribund refineries in the country. Senator Uba was a member of the ad-hoc committee which has not submitted its report after the four-week deadline.
THEWILL further recalls that former President Muhammadu Buhari failed to meet the deadline for the rehabilitation of the Port Harcourt Refinery, which was set for the first quarter of 2023.
On January 9, 2023, former Minister of State for Petroleum, Timipre Sylva, revealed that the rehabilitation of the 60,000 bpd refinery was being completed and was going to be started by Q1 2023, a statement corroborated by NNPCL CEO, Mele Kyari. The refinery was initially scheduled to commence operations in December 2022.
“Our promise has been that the 60,000 bpd plant within the Port Harcourt Refinery would be rehabilitated by the end of Q4 2022. It is being completed and will be started by Q1 2023 as promised,” Sylva said while giving an update on the Port Harcourt refineries during the Ministry of Petroleum Resources 2022 scorecard in Abuja.
Of major concern has been the huge public funds committed to the rehabilitation of the old refinery, which is part of the larger Port Harcourt Refinery complex. Equally worrying is the Federal Government’s attitude of embracing opaqueness in its oil and gas business.
This followed the Federal Executive Council’s (FEC) approval of $1.5 billion (about N600 billion) in March 2021 for the rehabilitation of the Port Harcourt Refinery complex, comprising the old and the new refineries.
Sylva said the contract was awarded to an Italian company, Tecnimont SPA, who, according to him, are experts in refinery maintenance.
He further disclosed that the funding of the repairs would be from many components, including NNPCL, Internally Generated Revenue (IGR), budgetary provisions and Afreximbank TEXEM Advert.
“So we are happy to announce that the rehabilitation of productivity refinery will commence in three phases. The first phase is to be completed in 18 months, which will take the refinery to a production of 90 percent of its nameplate capacity.
“The second phase is to be completed in 24 months and all the final stages will be completed in 44 months and consultations are approved. And I believe that this is good news for Nigeria,” Sylva said, adding that a maintenance company would also be put in place to ensure an effective maintenance culture.
The minister assured that rehabilitation works on Kaduna and Warri refineries would also be carried out on or before May 2023.
This top-of-the-roof optimism ended in a crashed hope with Nigerians suffering and paying more for petrol, directly and indirectly. Besides, the government has not been held to account for the “unending refinery rehabilitation” which has gulped a huge chunk of public fund.
The approval of the $1.5 billion to rehabilitate the refineries was not received as good news. It was promptly greeted with mixed feelings as the country had in the past spent billions of dollars on refinery maintenance. Despite such expenditure, however, the facilities have not worked with many experts calling for their privatisation.
Notwithstanding their moribund state, the refineries spend billions of naira on salaries, wages and other benefits on workers despite producing no refined product in recent years. For instance, the Port Harcourt refinery reported no income in 2020 but incurred administrative expenses of N19.22 billion, according to its audited reports. The refinery employed 487 new staff members in 2020. Its directors received N99.75 million as emoluments in 2020, a 67 percent increase from N59.66 million in 2019.
The workers, among the highest paid in the country, earn their salaries, promotions, allowances and go on local and foreign training programmes while the facilities are idle.
Timipre Sylva had said that “the incoming government would continue from where this administration stopped in fixing the refineries because government is continuum”.
Commenting on the state of the refineries, an oil and gas expert, Engr Bala Zaka said, “No society succeeds on corruption, waste and pursuit of parochial interest.
“Government is now confused and they have resorted to taxing the people to run the country in the midst of abundant oil and gas deposit. Life thrives on laws and principles. China and Japan do not have prophets; they follow the principles of success and they achieve success.
“You saw how the last government talked elatedly about the refineries, energy transformation … the resources invested in fixing them? Where are the refineries today? What happened to them?”
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
