Checkered History Of TAM
President Muhammadu Buhari was declared the winner of the presidential election, all of the 48-trailer load of materials for TAM, which had been at the seaport since 2010 were hurriedly transported to the refinery.
gathered that Maire Tecnimont proposed to carry out the TAM at $297m under President Jonathan. But by 2015, the management of the refinery allegedly spent about $10m on the rehabilitation of the refinery that enabled the Area 1, which is made up of the Crude
Distillation Unit (CDU) and the Vacuum Distillation Unit (VDU) regarded as the mother unit that produces kerosene, diesel and other feedstock for Area 2, to become operational.
Rehabilitation work was also allegedly completed in Area 2, which is made up of Naphtha Hydrotreatung Unit (NHU), where Naphtha is hydro-desulphurised; the Catalytic Reforming Unit (CRU), responsible for upgrading naphtha to reformate which has a higher octane value; the Kero Hydrotreating Unit (KHU) where kero is treated to make it acceptable for aviation use. The Area 3 that is made up of a FCC, where Vacuum Gas Oil (VGO) and heavy diesel oil are cracked to obtain more valuable products PMS was not achieved. Former Group General Manager, Corporate Planning and Development Division, Dr. Joseph Ellah, said in the downstream section such as refining and petrochemicals, there is sufficient evidence to support the view that a sale of substantial equity to core refiners would improve the way refineries are managed.
According to him, this will help to inject additional capital for maintenance and rehabilitation and pave way for possible profits provided that enabling competitive climate is created.
“In consideration of the epileptic performances of our refineries and the huge financial requirements for their rehabilitation, we could go along with the phased privatisation provided the final ownership structure will retain a respectable percentage of government equity, of up to 40 percent. Government would then be a major minority shareholder. The old Port Harcourt refinery was structured that way in the 1960s and operated efficiently under the management of Shell BP before the NNPC acquired it,” said Ellah.
The Warri refinery, the first Nigerian government wholly owned refinery was commissioned in 1978. It has also suffered from serious underinvestment for the past decades in terms of TAM.
Built to process 100,000 barrels of crude oil per day, it was later de-bottlenecked to process 125,000 barrels per day in 1987.
The last TAM, according to a source at the facility was done in 1994, by MORPOL, Lee Engineering, E-OFF Company. After millions were spent, it failed completely. It was gathered that staff members later carried out the maintenance work in 1994. That also was a failure and money was allegedly embezzled.
“There has not been a comprehensive TAM at the Warri refinery for decades. There was a small TAM that was carried out by workers and that is the reason that the facility has been shutdown since last month. We are told that once Eni and Tecnimont are done with the evaluation of the Port Harcourt refinery, they will come here.
After the evaluation, they will then start the real TAM, which will take about three years. Nigerian political leaders cannot manage refineries. What they need to do is JVC with Shell and others to run the refinery like the NLNG.”
He revealed that for now, only nitrogen plant products that are sold to Shell and other companies are operational for now.
Tstate of the refineries is very worrisome, particularly for a country that exports crude oil and imports refined products. The Turn Around Maintenance (TAM) has been going on for years, yet there are no positive results. One then begins to wonder whether the much talked about TAM actually took place, or it was used as a pipe for siphoning money from government’s treasury. That the refineries are producing and/or performing grossly below installed capacity is an indictment on every past and present government in the country, as well as past and present managements of the NNPC. I hope the experts are aware of the new technology in this area. In the 1980s, the refineries were doing well, and we were even exporting refined products. So what happened?
The current state of the refineries to say Only time will tell. But I don’t see anything different from the promises we have had. It is one thing to promise, and another to have concrete strategies to bring the plans to reality. I may be wrong, but I have not seen any plan by the NNPC that will overhaul the refineries.
The state of the refineries has implications for the economy. First, the country would continue to import refined products thus losing foreign exchange. The backward and forward linkages with other sectors of the economy would be affected thus resulting in job losses. For now, it is difficult to determine the linkage of the sector to agriculture and pharmaceutical industries, among others.
There are implications on efforts to diversify the economy. The revenue earned from the sector should aid the development of other sectors of the economy; with a comatose oil sector and refineries that are not performing, its contribution to the diversification process becomes a huge challenge. The Ninth National Assembly has an oversight function. It is high time it acted wisely on salient national issues through its committees. There is also need for the entire chamber to take a look at the waste occasioned by the TAM. There is need for a comprehensive review of money spent on TAM and the outcomes. There should be sanctions for those found wanting in the process.
It is necessary to commercialise the refineries, but not to privatise them. However, if they must be privatised then the process must be transparent and undertaken through public offer with a caveat as to how many shares an individual can buy. Let me note that the country has experience with privatised government companies; none if any ever became viable after privatisation. We need a bold attempt and commitment to halt the waste and ensure that the refineries continue to work thus saving the economy the much-needed foreign exchange. It is a tall order because there are those benefiting from the TAM syndrome. We need to commercialise the refineries and demystify the oil sector. We should not forget that oil is a wasting asset hence it is non-renewable. Moreover alternative energy sources are being developed every day.