On The $1.4bn Refineries Revamp

On The $1.4bn Refineries Revamp
ndic advert

Just recently, the Federal Executive Council, FEC, approved contracts for the rehabilitation of Warri and Kaduna refineries at a cost of $1.4 billion.

While the Warri Refinery will gulp $897 million, $586 million has been earmarked for the Kaduna Refinery. The Minister of State for Petroleum, Timipre Sylva, told State House correspondents after the FEC’s meeting chaired by Vice-President Yemi Osinbajo Wednesday, August 4.

https://aljazirahnews.com/wp-content/uploads/2021/06/cbn-keep-the-naira-clean.gif

According to Mr. Sylva, the rehabilitation of the refineries will be carried out in three phases.

The FEC also approved the $2.76 billion acquisition of a 20% minority stake by the NNPC in Dangote Petroleum and Petrochemical Refinery.

With Nigeria’s four refineries – including two in Port Harcourt – which are all struggling to function amid huge reliance on the import of petroleum products.

Only in March, the FEC approved the sum of $1,5billion of the Port Harcourt Refinery.

The repair, which will be executed by Tecnimont SPA, an Italian company, will be done in three phases of 18, 24 and 44 months.

Recently, Mr. Mele Kyari, the NNPC Group Managing Director, and officials of Tecnimont SPA attended a kick off meeting on the rehabilitation of Port Harcourt Refinery Company (PHRC).

Also Read:  NNPC Spent N5.92bn On 3 Moribund Refineries

The rehabilitation, according to the government, is expected to turn around the refineries and set them to meet national oil demands accordingly.

In June, the Managing Director of NNPC, the national oil company, Mr Mele Kyari, said the rehabilitation of the refineries, in conjunction with private efforts such as the Dangote Refinery, will transform Nigeria into a “hub of petroleum products and supply”.

“It’s going to change the dynamics of petroleum supply globally in the sense that the flow is coming from Europe today and it is going to be reversed to some other direction”, he said.

“We will be the supplier for West Africa legitimately and also many other parts of the world”.

By these interventions, it is expected a success can also have a positive impact on the street-level price of petroleum products such as petrol, the proponents insist.

But critics have expressed concern on the humongous sums being earmarked to rehabilitate refineries when of course there have been several such exercises in the past which neither yielded positive results nor enhanced the status of the refineries as serviceable. The refineries have often been described in various negative terms, suggesting at worst that they are moribund and irredeemably comatose.

Also Read:  As The Fuel Subsidy Regime Ends…

They also maintain that it is not the first such measures to have taken on the five refineries which have gulped more than 100% of their total cost in turn-around since their inception respectively, stressing it was therefore economically irrational to continue to pump in money into an unviable project.

The latest intervention of $1.5bn earmarked for the Kaduna and Warri refineries was not spared from the hammer of the critics who opined that the sum which approximates to about N575 billion is three times higher than 10-year national budget on education and that it was capable of setting up more than two universities.

Those that argue in support of revamping the refineries note that if they had become scraps as many suggest, diligent business concerns would not have indicated interests to acquire them in the past, hence hailing the government’s move to inject monies to bring them to running.

Also Read:  N37bn NASS Renovation: Our Stand

AljazirahNigeria is wary of the various arguments of both advocates and opponents of the fresh move to revamp the refineries but we want to believe that the government must have conducted a due diligence check before embarking on this venture this time, since it is not the first time such exercises which appear good on paper end up a flop at the expense of taxpayers.

We call for a strict monitoring of the processes leading to the commencement of the rehabilitation and after to ensure that the nation is not fleeced by pretentious and incapable charlatans with little or no technical capacity to handle projects of such magnitude.

On the proposed stake in the upcoming Dangote Refinery, AljazirahNigeria calls on government to be circumspect in negotiating same to ensure that the public interest is utmost in the deal.

Aljazirahnews


Tags assigned to this article:
refineries