CRUDE OIL REFINERIES AND KACHIKWU’S PROTECTIONISM

Dan D. Kunle argues that the crude oil swap deal is not transparent enough

Iread on the pages of some national papers your lecture at the Fifth Triennial Delegates Conference of PENGASSAN on June 28, 2017, where you again took time to dwell on your struggle to give the refineries to some third party financiers or investors either via crude oil swap deals with some local oil trading companies or by direct negotiations with some other financiers.

Let me quote you before I make my own humble observations and suggestions: One, “There have been no attempt and there is no approval to concession or to sell the refineries. What we have approved is to bring in a financing mechanism that would enable us finance, develop and upgrade the refineries as they are today. In their present epileptic performance levels, they would become obsolete over the next three, four years.

Two, “My drive is to see that those investment coming through the transparent process; it would go through the NNPC Board and National Executive Council (NEC). Until that happens, nobody would have been said to be selected.

Three, “Nothing in the equation of what we are trying to do is taking away the management of the refineries from NNPC. Or taking NNPC away from the management. However, we need to bring in funds, we need to bring in best practices, we need to bring these institutions to work at the level where they are important for this country, otherwise we are losing money.”

Four, “The whole idea of continuing to import petroleum products in this country is a shame. And I imagine that all of us feel that shame.

Five, “We need to fight anything that prevents us from stopping fuel import. Once that happens, it is going to open a new vista of opportunities.

Six, “Today, I urge you as members of the union, to take the sort of solidarity that you have to sing so passionately away from just fighting the issues of staff welfare and move into the issue of staff investment. I like to see you begin to participate in the value chains. How do you become entrepreneurs? Some of you are some of the best brains there are in this sector. How do you make it possible to participate in a way that you can transit from being active players as the ideas people because you know all the problems in the industry. Some of you have been here for 20, 30 years, like I have been. You know the areas where the opportunities lie, you know the areas where you can create new idea. I urge you today as part of the process of this deliberation, to begin to transit from the model of protectionism around welfare and items you are entitled to, to protectionism in terms of opportunities that exist in this sector.”

Having captured all of the above quotes from your presentation to the august body, PENGASSAN, last Wednesday, it is very clear to me as an ordinary citizen and many Nigerians that you are still repeating yourself all over again and trying to justify your missteps about the crude oil swaps and the refineries rehabilitation. It is apparent that you have failed or refused to heed advice. From your statement, you publicly declared that “you kept hearing all over the place, especially from people who should know better”. Yes! Many observers are well informed on this subject and their professional conclusion is that your steps are wrong in this very particular transaction.

May I for the third time put it to you that all your efforts and struggles to validate, panelbeat, re-align, window dress and paint to Nigerians of your transparency in respect of the crude oil swap of 150,000 barrels per day for “Refineries’ Repairs or Investment”, cannot stand the crucible pot test. This debate is avoidable because transparency does not respect semantics. It is simple and straight forward. Please do the needful, which was my advice to you when I rode on Simon Kolawole’s piece on transparency and the supposed characteristics, in the crude oil swap and refineries’ repairs or concessions a couple of weeks ago.

I will like to maintain my stand because the oil sector is key to our political and economic diversification aspirations. Why this Insistence? Because you misled the Nigerian people in 2015, during your visit to Port Harcourt and Warri refineries, where you publicly declared that the refineries will all work at about 90% installed capacity by December 2015. This has not happened till date. In fact you declared that $10 million has been used by the management of PHRC to carry out the TAM as against the OEM/ consultants estimate of about $295m. If you were the listening type, you would have revisited the report of the consultants on behalf of the Japanese OEM of the refinery to ascertain the veracity of the aiagnosis report.

Because from ‘i to vi’ above, you have publicly failed to address the simple issue of opening up the refineries for ICB (International Competitive Bidding), either for repairs or concessions or core investors’ sales. You have dribbled all over the places, trying to exhibit your showmanship of industry knowledge. While the basic truth is suppressed. BPE/NCP or ICRC would have provided you the honest legitimate approach of getting these refineries off the hook since they were built and operated by NNPC. Let me emphasise once more, that you cannot win this self-created debate on the refineries and oil swap deal.

Because your new twist to bring in, a third party financing mechanism to the refineries cannot stand the transparency test without BPE/NCP or ICRC advert, calling for such Investment opportunities with all the requisite terms and conditions for such transactions. How do you intend to make the third party investor recover their money? How much will the third party be investing in each of the four refineries? At what cost and for how many years will it take the investors to recoup their investment before the refineries revert to FGN? What percentage will they control in the three refineries? I think you just want to complicate this simple transaction and process of privatisation which is doable within one year.

You publicly declared that you want the investment coming, to go through transparency, but your actions are in the opposite when you are preventing the best practices of an ICB and subjecting the process to the legitimate Council of Privatisation and ICRC