$1.5bn Refinery Revamp: A Wild Goose Chase

$1.5bn Refinery Revamp: A Wild Goose Chase
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Not a few Nigerians have taken a swipe at the decision by the Federal government at last Wednesday’s Federal Executive Council (FEC) to expend a whooping sum of $1.5 billion, (about N600 billion) for the revamping of the Port Harcourt petrol chemical refinery.

Minister of State for Petroleum Resources, Chief Timipre Sylva, announced the approval in Abuja after the FEC meeting that the upgrading of the refinery will be done in three phases of 18, 24 and 44 months.

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A former Vice-President, Atiku Abubakar, has described the decision of the Federal Government to vote $1.5 billion for the repairs of the Port Harcourt refinery as ‘suspicious’.

The approval comes amid controversial price increasement in the petrol pump price that was later reversed.

Although, Nigeria has four refineries but currently imports virtually all its refined petroleum products.

The approval has expectedly been greeted with mixed feelings as the country has in the past spent billions of dollars on refinery turn-around maintenance.

Despite such expenditure, however, the refineries have not worked, with many experts calling for their privatisation.

In a statement recently, Alhaji Abubakar said the decision was unwise.

In a popular saying, it is a fact that one cannot persist in doing the same thing while anticipating a new outcome. Recall that the previous administration of the PDP was widely accused of broad based corruption due to the manner in which it managed the nation’s resources one of which ways was the insistence of allocating humongous sums on the routine Turn-Around-Maintenance (TAM) Nigeria’s moribund and non functional refineries which the APC had in time past often criticized, it was therefore with utmost consternation that Nigerians were greeted with the news of the move to revamp the Port Harcourt refinery which has been recording loses for far too long to have made any economic sense. 

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Due to the persistent decline in the country’s revenue level as a result of fall in crude oil sale, being the nucleus of Nigeria’s revenue source, coupled with the adverse effect of the COVID-19, that the economy is in dire straits is a fact well-known both to the nation and to our international partners. The latest report from the National Bureau of Statistics (NBS) has put the unemployment rating at an all time high of 33%, while inflation has hit another record high of 17%.

At this critical period, we must as a nation; be prudent with the use of whatever revenue we are able to generate, and even if we must borrow, we must do so with the utmost responsibility and discipline.

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To therefore budget the sum of $1.5 billion to renovate or revamp the Port Harcourt Refinery seems a misplaced priority and smacks of unsound judgment as to the unwise allocation of scarce resources at this critical juncture for a multiplicity of reasons.

The basic reason for the establishment of public enterprises is to provide quality and affordable amenities and services for the citizenry of a nation in order to enhance their overall quality of livelihood. This being the case, it does not add up to reason that our refineries from which losses have been reported year-on-year would be invested with such amount of money, and at such a time as this, indeed, it would amount to being penny wise and pound foolish. Some stakeholders and experts have even suggested in the past that it will make a lot more economic sense to privatise the refineries, which are obvious creating more burdens for Nigerians by draining her resources instead of serving its original purpose or making a profit, and in which case they can be run more effectively and efficiently.

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It will interest Nigerians to know that only last year, Shell Petroleum Development Company (SPDC) sold its Martinez Refinery in California, USA, which is just about the size of the Port Harcourt refinery for $1.2 billion. More so, that the Shell Refinery is at a much more functional state than the Port Harcourt Refinery.

Going by the position above, due diligence was obviously lacking in reaching the budget sum for the revamping contract, leading one to query the likelihood that the deal was not subjected to the process of a public tender and bidding before its cost was publicised. We are certainly not getting value for money, not by a long stretch.

We are averse to any move that would not engender economic progress given that we continue to fund inefficiency, and going too deep into the debt trap for unnecessarily overpriced projects.

Aljazirahnews


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