POLITICS OF CRUDE OIL REFINERIES IN NIGERIA

Dan D. Kunle takes Ibe Kachikwu, Petroleum Resources Minister, to task

Iread on the internet of Dr. Ibe Kachikwu’s declaration to resign if Nigeria continues to import petrol by 2019. I am sure he is entitled firstly as a citizen of Nigeria, secondly as Minister of State for Petroleum Resource, of the Federal Republic of Nigeria and also as the current Chairman of the Board of Directors of NNPC. These three status eminently qualify him to express himself at any time, in any place and on any matter in Nigeria, but I will be talking to him as an ordinary citizen of Nigeria.

One, his resignation should be now and not 2019 because in August/September 2015 during his visit to Port Harcourt and Warri refinery sites he publicly declared that the management of Port Harcourt refinery had used $10 million to fix the refinery as against the realistic figure of about $295 million offered by the original equipment manufacturers vendors/engineers for the TAM programme. He also declared that by the close of 2015 it is expected that Port Harcourt refinery and probably Warri would be working at 90% capacity, thus reducing petroleum importation and possibly eliminating the subsidy controversies. Till this moment that I am writing, the crude oil refineries in Port Harcourt, Warri and Kaduna are yet to be fixed, needless to mention if they have ever attained up to 50 or near 90% production capacity utilisation since the minister came on board.

Two, his resignation should be now because he still has not concluded the preliminary planning and necessary tender processes that will lead to the final award for the TAMs of the four refineries. Between 2015 and 2016, he made a public declaration that ‘would be’ investors should come to fix Port Harcourt Refinery and invest in relocating any operational refinery of about 100,000 barrel capacity to be co-located within the facilities of Port Harcourt Refinery and probably same for Warri Refinery. Nigerian people have waited till this moment to see how such transaction would be consummated, but to no avail. Could this still be the new transaction he is trying to consummate with Oando and Agip? I am aware from records that Agip built Warri Refinery and not Port Harcourt Refinery. So how easy will it be for them to take over the Japanese plant in Port Harcourt against their own in Warri? Meanwhile, petroleum product importation and storage management has remained an endemic problem in Nigeria.

Three, his resignation should be now because as the GMD of NNPC in 2015 he declared that he would get all the refineries to work in order to stop the importation of petroleum products and this led to NNPC/ PPMC almost becoming the sole importer of petroleum product for a very long period because all the major private retail companies in Nigeria became apprehensive and hesitant in competing with NNPC/PPMC. Not until the crises of petroleum shortages were imminent before the downstream operators were again invited to join the import transactions. Petrol importation has continued till this moment plus the famous SWAP that was originally widely condemned for the opaque manner in which the transactions were structured. Today, he has just realigned the SWAP transactions to continue, maybe for the next two years he has set for himself to resign. How will he manage these two contradicting objectives? For some companies to be taking crude outside for refining and at the same time getting them to fix the four refineries for Nigeria. Who will be the umpire, BPE/NCP or the almighty PIB that is yet to be passed? If by chance the four refineries become operational in the next two years with a total capacity of 445,000 barrels per day plus Dangote’s 650,000 barrels per day, Nigeria may then become a net exporter of refined petroleum products rather than crude export for white product imports; big dreams! Let us pray the Tesla vehicles will not harm this dream.

Four, his resignation should be now because by the year 2019 he would have completed his second half of this match if the imminent cabinet reshuffle does not exit him. It appears he is targeting 2019 when the Dangote group would have almost, if not completed the 650,000 barrel crude oil refinery in Lagos which he knows will give Nigeria between 30 to 40 million litres of petroleum products per day. This is about the volume currently consumed in Nigeria without the functional Warri, Port Harcourt and Kaduna refineries. I hope you will by this fact know that you are playing on the senses of the ordinary citizens of Nigeria who are not as privileged as yourself within the exclusively privileged petroleum industry.

Five, his resignation should be now because he knows that to fix the four federal government owned refineries cannot happen in the next one to one and half years if he were to have the mandate and the funding today, taking into consideration all the due processes that are involved as enumerated by Mr. Simon Kolawole at the back page of THISDAY newspaper of Sunday, May 21, 2017. I am sure you are fully aware that most of the four refineries are technically insolvent and they have huge social liability issues because they were poorly maintained over the years and the communities have never totally offered their social licenses to the owners and operators of these refineries. There are also environmental issues to be attended to because of the corrosive nature of these refinery complexes.

Six, his resignation should be now emphatically because he has for the last two years not allowed the four refineries to be opened up for privatisation by concessioning or by liquidation or by core investor sales. This your fresh ambitious move to either concession or farm out the refineries to any ‘would be’ investor must be advertised and all the criteria stipulated by the procument laws, BPE laws and ICRC laws must be complied with as raised by Simon Kolawole in THISDAY of May 21, 2017. This is the transparency issue.

Seven, he should resign now because for the last two years we have not been made aware of what he has done with the Nigerian Gas Master Plan and the possible divestment of federal government interest in the Nigeria Gas Company to allow for more private participation in the gas production, processing and distribution across Nigeria. This singular lack of focused attention to the Nigerian gas supply, security and sustainability has caused the power generating companies including the NIPP plants (owned by FGN), a very serious performance hardship emanating from the inadequate and inconsistent gas volume and quality supplies. The appropriate gas pricing and tariff is yet another serious fiscal issue but that can be addressed as a subsidiary item in the entire Gas Master Plan implementation strategy when it is opened up. His so-called Gas Investment Blueprint was just paperwork and had no investment appetising content. This may be the reason why nothing has been heard since the public declaration was made by him last year.

Eight, he should resign now because all the gas power generating plants in Nigeria depend largely on the gas supply from NGC and they have continued to perform below optimal, compared to SHELL operated AFAM 6 Power Plant and OKPAI Power Plant operated by AGIP. He superintended over NNPC as the GMD until he was promoted to become Minister of State for Petroleum and now Chairman of the Board of NNPC, but he has not been able to either stabilise the supply of gas to all the power generating plants in Nigeria nor has he been able to proffer an alternative solution to the erratic supply of gas. I am sure he is aware that Ghana and Senegal are planning to build regasification plants to receive LNG from near suppliers such as Nigeria, Malabu or any other economically viable sources across the globe. We are yet to know when Kachikwu will initiate the first Nigerian regasification plant as an alternative to the pipeline vandalism and maintenance problem. Nigeria has 49% of the 22 million tonnes LNG capacity at Bonny Island, it is all for export. How can you explain this?

Nine, he should resign now because NNPC to all intents and purposes is still a loss making going concern and not a profit declaring entity. Dankonsult @yahoo.com