In search of transparency for Port Harcourt refinery ROM deal

The news of engaging Oando Plc and Eni (Agip) to Repair, Operate and Maintain (ROM) Port Harcourt Refinery and Petrochemical Company Limited has taken many stakeholders by surprise on why federal government chose to go secret in awarding such a contract that affect the nation’s largest refinery, our Business Editor Hamisu Muhammad revisit the issue surrounding the deal.

When President Muhammadu Buhari appointed Dr Emmanuel Ibe Kachikwu as the Minister of State for Petroleum Resources, in 2015, one of the primary tasks him was to revive the local refineries and make them profitable, since then Kachikwu has been exploring many options to get the refineries on stronger foots. Initially, he re-opened discussion on privitisation of the refineries as an alternative to revamp them and generated more foreign exchange to the government coffers. However, that move was toppled by those opposed to the privitisation of national assets.

Recently, Kachikwu was on a mission to Europe and America soliciting partnership with some International Oil Companies (IOCs) to participate in the management of the local refineries, part of the outcome was that he succeeded in reaching agreement with Eni, an Italian oil company that has local branch in Nigeria as Agip to participate in the ROM agreement. The deal has left many stakeholders in the dark on how transparent and open such an agreement would be without throwing it open and competitive. There is no doubt, the downstream oil sector, especially refining of products is least attractive when it comes to investments option. Many investors are shying away from the sector due to the risk and low level returns associated with the sector. But despite that many other companies have decided to invest in the areas.

The announcement by Ibe Kachickwu that Eni accepted to participate in the Nigerian downstream oil sector and the effort by the Oando Plc to clarify their partnership last week with Agip to Repair, Operate and Maintain (ROM) the Port Harcourt refinery left many questions on the lips of stakeholders unanswered.

The proposed deal, no doubt is a great initiative by Kachikwu for him to achieve a lasting solution on the management of the nation’s refineries, but process and style of sealing the deal are not encouraging especially in this regime that believe in due process, transparency and anticorruption campaign.

It was on records that the Nigerian National Petroleum Corporation (NNPC) has invited investors to enter into a Joint Venture (JV) arrangement with it to fund, rehabilitate and jointly operate any of the three Nigerian refineries. The JV deal will also include but not limited to off-take of refined products for sale primarily in the Nigerian Market early last year but since then noting much was heard about the invitation.

The Corporation in a public tender notice said the refineries will be jointly operated by NNPC and the selected investors for a defined period until investments are fully recovered, however, there was no time the management of the corporation announced the number of participating firms, their interest and what they offer.

Even some major stakeholders such as the Bureau of Public Enterprises (BPE) that was empowered by law to conduct such exercise and labour unions were not aware of the deal when contacted by newsmen. The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) when contacted also claimed ignorance of the deal which is likely to be officially signed in July between the federal governments and the two parties involved.

If such critical stakeholders were not aware of how and where such deal was sealed, what were the criteria used to select the ENI/Oando to maintain and operate Port Harcourt refinery, certainly the minister or any other person interested in the deal is about to create a big hole that will be hard to fill in the anti-corruption crusade of the president administration.

In the past we have witnessed many concession agreements between the federal government and private sector operators, notable was the Concession of the nation’s sea ports. In those days the processes were open, transparent and competitive.

The effort by the Oando Plc to clarify the project last week even exposed further some of the underground issues. Oando said its role in the planned rehabilitation of the Port Harcourt Refinery, in pursuant to the Memorandum of Understanding (MOU) reached by the federal government and Nigerian Agip Oil Company (NAOC/ENI), it will partner the Italian firm in the proposed rehabilitation.

The company’s Chief Strategy and Corporate Services Officer, Ainoije ‘Alex’ Irune, who made the clarification in a statement, further stated that Oando shares the vision of the federal government to become a petroleum product selfsufficient country in the short to medium term and ultimately be a net exporter of such products. However, if the process to select the IOCs will be in secrecy, what were the criteria to choose the local partner?

Efforts to get the details of the agreement proved abortive when NNPC was contacted to provided details on the agreement and the selection process as the NNPC Group General Manager Public Affairs, Ndu Ughamadu was not reachable on his phone and did not reply the text massage sent to him for enquiry.