Where did all the TAM money go?

The Punch - - EDITORIAL -

The cat has fi­nally been let out of the bag! The bomb­shell by Maikanti Baru, Group Man­ag­ing Di­rec­tor of the Nige­rian Na­tional Petroleum Cor­po­ra­tion, that no turn­around main­te­nance has been un­der­taken on the four state-owned re­finer­ies in 42 years raises salient ques­tions, in­clud­ing the ra­tio­nale for re­tain­ing their own­er­ship. Nige­ri­ans should de­mand ex­pla­na­tions on the monies claimed for TAM over the years.

The NNPC boss was un­am­bigu­ous. In his yearend mes­sage to staff cited by the NNPC’S Pub­lic Af­fairs Di­vi­sion, he said the three re­finer­ies (Port Har­court’s two are some­times grouped to­gether) had not un­der­gone Turn­around Main­te­nance “for an ag­gre­gate of 42 years com­bined.” Taken at face value, it re­veals not only ir­ra­tional busi­ness prac­tices, but also sug­gests that Nige­ri­ans have been fed lies and de­cep­tion over the years by govern­ment and the NNPC of­fi­cials. It also con­firms lin­ger­ing ac­cu­sa­tions that monies al­lot­ted over the past four decades for TAM and other re­pairs were likely wasted and em­bez­zled.

De­spite his ad­mis­sion of re­miss by his pre­de­ces­sors, Baru is sus­tain­ing the de­cep­tion. This is ev­i­dent in his boast that “de­spite the chal­lenge,” ma­jor re­ha­bil­i­ta­tion was on­go­ing in all the re­finer­ies, among them, up­grad­ing the Distri­bu­tion Con­trol Sys­tem in Warri; ma­jor re­pairs at Kaduna’s Cat­alytic Re­form­ing Unit and on the Fluid Cat­alytic Crack­ing Unit, as well as the power plant in Port Har­court’s twin re­finer­ies. We have heard this be­fore; in­deed, ev­ery GMD on re­sump­tion reels out ma­jor TAM and re­pair projects with mis­er­able re­sults that none­the­less costs the tax­payer dearly.

The bit­ter truth is that the re­finer­ies are bas­ket cases, con­duits for fraud and fleec­ing of the trea­sury. They are not run on any sound busi­ness model and their man­agers have lost the ca­pac­ity, if ever they had it, to run them prof­itably. Ex­perts say TAM should be un­der­taken ev­ery three-five years to achieve op­ti­mal pro­duc­tiv­ity and pre­serve ma­chin­ery. A loss of N10.9 bil­lion by the re­finer­ies in Au­gust 2018 was mod­est go­ing by their per­sis­tent huge op­er­at­ing deficits for over three decades. In 2015, the re­finer­ies dropped N82.09 bil­lion loss; N78.95 bil­lion in 2016, and much more in 2017. Worse: ca­pac­ity util­i­sa­tion has been dis­mal. Com­bined util­i­sa­tion in Au­gust 2018 was 3.02 per cent, down from 4.83 per cent in the pre­ced­ing month. For the year 2017, com­bined av­er­age ca­pac­ity util­i­sa­tion was 8.17 per cent, ac­cord­ing to the Depart­ment of Petroleum Re­sources. The NNPC’S monthly re­ports of­ten record zero ca­pac­ity util­i­sa­tion at Warri and Kaduna. Ibe Kachikwu, the Min­is­ter of State for Petroleum Re­sources, who un­til re­cently dou­bled as the NNPC’S GMD, ad­mit­ted in a news­pa­per in­ter­view that op­er­at­ing at low ca­pac­ity guar­an­teed losses.

This bizarre tem­plate of run­ning Nige­ria has to end. While the NNPC wastes re­sources on de­crepit re­finer­ies, Baru preened that it also im­ported 15.87 mil­lion met­ric tonnes of petrol in 2018, 62 per cent higher than the 9.8 mil­lion MT it im­ported in 2017. Kachikwu re­vealed in June 2017 that Nige­ria spent $28 bil­lion of her for­eign ex­change earn­ings im­port­ing 92 per cent of the petrol it con­sumed an­nu­ally. In the nine months to Septem­ber 2018, N2.58 tril­lion was spent on this, said the Na­tional Bureau of Statis­tics, while N1.14 tril­lion is es­ti­mated to be spent by the govern­ment sub­si­dis­ing petrol im­ports in 2019.

Baru’s rev­e­la­tion con­firms that claims of TAM over the years were fraud­u­lent. The Eco­nomic and Fi­nan­cial Crimes Com­mis­sion and other anti-graft bod­ies should in­ves­ti­gate all the trans­ac­tions in­volv­ing TAM and other re­pairs at the re­finer­ies. In 2012, the govern­ment said it voted $1.6 bil­lion for TAM. It once awarded con­tracts to Chrome Petroleum and To­tal for TAM. Vot­ing down a re­quest to bor­row $1.8 bil­lion for TAM in 2017, the House of Rep­re­sen­ta­tives claimed this had gulped N264 bil­lion in a decade. A re­quest for the NNPC to pro­vide its fig­ures for TAM was met with a stonewall and the cor­po­ra­tion, de­scribed as the world’s most opaque state-owned oil com­pany, has not pub­lished pre­cise fig­ures of its spend­ing on TAM and other re­pairs de­spite re­quests by the par­lia­ment.

Un­like Baru, Kachikwu has con­fessed that the re­finer­ies are in a bad shape and that for govern­ment to raise the $2 bil­lion needed for their re­fur­bish­ment is bad eco­nomics. Yet, Baru is re­peat­ing the dis­cred­ited, fu­tile idea of bring­ing in the orig­i­nal builders of the re­finer­ies to re­ha­bil­i­tate them when the Ja­panese and Ital­ian firms have em­phat­i­cally de­clined the deal. There is no vi­able al­ter­na­tive to pri­vati­sa­tion: the re­fusal of Pres­i­dent Muham­madu Buhari to heed the sen­si­ble con­sen­sus of sell­ing the re­finer­ies as they are is driv­ing the econ­omy to the ruin.

The Na­tional Assem­bly that should in­sist on full im­ple­men­ta­tion of the pri­vati­sa­tion laws is des­per­ate to halt any con­ces­sion of Ajaokuta Steel and fails to ap­pre­ci­ate that N3.7 tril­lion drained each year by petrol im­ports and sub­sidy de­stroys pro­duc­tion and jobs. To change its cor­po­rate cul­ture, AD­NOC, Abu Dhabi’s state-owned down­stream oper­a­tor, did an IPO in 2017, while the sale of re­finer­ies in for­mer com­mu­nist coun­tries of Eastern Europe freed them for ef­fi­ciency and prof­itabil­ity.

It is time to save Nige­ria from the power blocs that have cap­tured na­tional re­sources us­ing the NNPC and the re­finer­ies as gi­gan­tic fraud ve­hi­cles. The Na­tional Assem­bly should open probes into all re­fin­ery ex­pen­di­tures since 1999, past and cur­rent min­is­ters and GMDS of the NNPC, un­ravel the cost of re­pairs and re­cover all mis­used funds and pros­e­cute those who be­trayed pub­lic trust.

Buhari, like his pre­de­ces­sors, will at­tract ig­nominy for the con­tin­ued bleed­ing of the econ­omy through the re­finer­ies. He can make a dif­fer­ence by pri­vatis­ing them with­out fur­ther de­lay.

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