Rhetoric Of Revamping Refineries

<strong>Rhetoric Of Revamping Refineries</strong>

In the face of poor performances and huge overheads, fixing Nigeria’s unprofitable refineries to functional capacity has remained the promise of every administration since 1999.

Abuja has however piled up debt rather than embrace global examples on how to run a successful refinery, failure to curb an appetite for waste that has eaten the country’s national budget for decades.

Nigeria’s long history of wasteful spending on turnaround maintenance has continued with the present government, as the Nigerian National Petroleum Corporation, NNPC, spent close to N2 trillion on maintaining its struggling refineries from 2015 till 2021, a development that had not brought Nigeria any closer to ending imports of refined petroleum products.

“Inefficiency is the gift of the present administration, except that sometimes, this gift is in oversupply. Or how else can anyone explain all the expenses on the refineries without any due diligence or risk evaluation.

“It would take more than another repair to cover the developing scandal that Nigeria’s refineries have become.

A detailed breakdown shows Nigeria’s four public refineries have been a drain on the finances of Africa’s biggest economy, as the NNPC data showed it spent N82.82 billion on maintenance in 2015.

Even though the spending has been futile, the wasteful pattern continued in the last seven years of President Buhari’s administration as the state-run energy company, NNPC, spent N78.95 billion, N604.127 billion and N426.66 billion in 2016, 2017 and 2018, respectively, on the refineries.

Refineries Turn Around Maintenance, TAM, is one of the worst corrupt dealings entrenched in Nigeria’s oil and gas sector. The deal is characterized by a lack of transparency between government officials and their cronies. Over $20bn billion spent on TAM without a functional refinery.

Agents of this corrupt act do not feel the consequences for their action, and if they continue to be set free, they will not change their actions and Nigerians will continue to bear the predicament.

As the corruption ranges, the Nigerian state is under pressure to explain to her citizens why refineries are not working for decades.

In 2015, Nigeria said it has fixed the refineries and they are functioning optimally. Unfortunately, in 2017, the state admitted that the refineries aren’t working and set a committee to review and oversee the fixing and repairs of the refineries by 2019.

In the current oil and gas sector reform national debate, the citizens and the ruling class must understand that petroleum debate is so central that it has the capacity to shape the state polity. For instance, the discourse on how to address petrol issues played a fundamental role in the People’s Democratic Party, PDP exit from power in 2015. And, it also has the capacity to influence the outcome of the 2023 presidential election.

In recent times, the state has resorted to the excuse of non availability of funds to fix the refineries and build new ones as justification for the refineries not functioning.

However, there are indications that the private sector wants to invest in crude refining, although, this is yet to yield the desired outcome. One of them is the Orient Petroleum Refinery, OPR, in Anambra State. It was designed to produce 55,000 barrels of refined products daily. Former President Goodluck Jonathan had inaugurated the project in 2012. Six years later, the refinery is yet to commence operation. Another is Dangote Oil Refinery and Petrochemicals. It is to commence production by 2018 with 500,000 barrels daily production capacity. Our hope is that it meets its deadline and comes into operation this 2018.

The last audit report by the NNPC showed that Kaduna refinery had not made any dime, yet it costs us billions of naira for staff payment, and that has been ongoing for several years now.

In a world where global private refiners with stronger and more efficient systems are struggling to break even, most experts are in awe of President Buhari’s decision to shell out $1.5billion to flog the dying Port Harcourt refinery horse, before, according to the new plan, handing them over to private companies to manage

While Nigeria’s economic managers seemed obsessed with maintaining its refineries; Petrobras, Brazil’s equivalent of the NNPC, decided that the smart thing to do was to sell off the refinery’s assets and cut its losses.

AljazirahNigeria suggests that the Federal Government and the management of the NNPCL and other relevant agencies should move above rhetoric’s and be very practical to have a functional refinery that can refine daily even if it is not in full capacity. It is very disheartening that year in year out, Nigeria being a major oil producer has no functional refinery while other countries in the same category have more than enough. We should rather focus on putting down our own than exporting all the produce which only benefits the petroleum managers and countries where the petroleum is refined. The private refineries such as Dangote, BUA and other modular’s should be sped up to help make the product available, the subsidy is no longer tenable as it has caused the nation to be bankrupt in this time of surplus as a result of the war in Ukraine.  

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