Outrageous Lies about Nigeria’s Refineries
Recently, the media was awash with reports that Nigeria is the only member country in the Organisation of Petroleum Exporting Countries (OPEC) that still imports petrol. The country currently imports one million tonnes of premium motor spirit (PMS) every month, ranking it the largest importer of PMS in the world.
NNPC’s Group Managing Director (GMD), Dr. Maikanti Baru, represented by the Chief Operating Officer (COO), Upstream, Alhaji Bello Rabiu Baru, made the disclosure during this year’s Oloibiri Lecture Series. He described as “shameful”, a situation where Nigeria, Africa’s top oil producer, depends on petrol imports to meet daily needs.
Nigeria’s four refineries located in Port Harcourt (two), Warri and Kaduna, with combined installed capacity to refine 445,000 barrels of crude per day, have been comatose, because top oil industry officials divert huge funds earmarked for their routine comprehensive turnaround maintenance (TAM).
Industry sources, hinted recently that the four refineries might not have undergone comprehensive repairs in a decade or more as contracts awarded for their repairs, were either abandoned half way or not executed at all.
“What has happened over the years was that the authorities set up shell firms that win contracts for the repairs that were never carried out at the end of the day. The huge funds are often used for election purposes”, said the source told THISDAY recently.
In May last year, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had vowed to step down “if by 2019, Nigeria fails to attain self-sufficiency in refining of petroleum products.”
Kachikwu, who confirmed the poor state of the refineries, boasted: “I’ve delivered on everything I promised when I came into office. First, I took the NNPC and moved it into a profit-making organisation, which was the first time in history. I removed cash call deficit of over $6bn and we renegotiated it. Everything that I promised, I’ve delivered and I will deliver on the refineries; I’m committed to that.”
Four months after he made the declaration, the minister, retracted the statement, asserting that he would not resign again if the ambitious target was not achieved. “The issue of resignation is quite secondary and more so, 2019 is an election year”, he said.
Sundry Targets
The oil industry has become synonymous with unrealistic sundry targets. In recent years, top officials of the sector, freely set assorted targets on when the refineries would commence optimum production after announcing repairs that were never carried out. All these were aimed to deceive Nigerians that the huge money earmarked for their repairs had been utilised for the purpose. Captured briefly below were some of the unrealistic set targets:
Baru: NNPC to Upgrade, Expand Refineries (Nov 2016)
Four months after he was appointed the GMD, Dr. Maikanti Baru had announced that one of the ailing refineries, Kaduna Refining and Petrochemical Company Limited (KRPC), would be upgraded in line with the 12 key business focus areas of the Corporation’s present management. The aim, he said, was to return the plant to the path of growth and profitability. The plant, according to recent checks is still in bad shape today.
NNPC to Shut Down 3 Refineries for Overhaul – Baru (Sept 2017)
Also in September last year, the GMD had reiterated that the nation’s refineries would be shut down briefly for “an overhaul for optimal performance”. He made the promise in Abuja at the inaugural Nigerian Pipeline Security Conference and Exhibition, organised by the Pipeline Association of Nigeria (PLAN).
Baru said the comprehensive rehabilitation was aimed at bringing the refineries in Warri, Kaduna and Port Harcourt back to their nameplate production capacities. He had expressed optimism that the refineries would return as new facilities after their overhaul ahead of Nigeria’s plan to stop the importation of petroleum products by 2019.
“We intend to focus on the repairs of the refineries with all that it takes to ensure that by the time we are done, by 2019, these refineries will be as good as new,’’ he said. Almost one year down the line, there is nothing to suggest that the corporation carried out major repairs on the plants.
Refineries to be Revamped Soon, Baru (March 2018)
In March this year, Baru had pledged that the corporation would not relent in its quest to get the refineries back to their optimal, nameplate capacities. He made the pledge shortly after he received ‘Man of the Year Award’ from Nigerian NewsDirect, a Lagos-based newspaper publication.
Baru said as part of the ongoing reforms in the NNPC, the corporation had been holding far-reaching discussions with some consortia to get the best funding options towards the refineries’ overhaul. Aside from this mere pronouncement, there is nothing on ground to show that plan is in the pipeline.
Refinery Overhaul Begins in Q2, Says NNPC (March 2018)
Again in March this year, the NNPC had again announced that the refineries overhaul would now take place in the second quarter of this year. According to Reuters, the chief operating officer of refineries and petrochemicals, NNPC, Anibor Kragha, disclosed that NNPC was in the final stages of talks with consortiums including top traders, energy majors and oil services companies to revamp its long-neglected oil refineries in an effort to reduce its reliance on imported fuel.
He made the pledge during a presentation to the African Refiners Association in Cape Town, South Africa. He said: “We believe that by the second quarter of this year we will … start getting the ball rolling on the refurbishment and rehabilitation exercise and believe this will run to the end of next year”, he told delegates at the African Refiners Association conference in Cape Town. According to NNPC reports, the highest capacity utilisation last year (2017) was just under 37percent, and it fell as low as 5.92 percent in November same year.
NNPC to Raise Refineries Capacities to 1mbpd- Baru (March 2018)
At the Society of Petroleum Engineers (SPE) Oloibiri Lecture Series and Energy Forum 2018, the GMD had disclosed plans to increase the production capacity of the refineries to one million barrels of crude oil per day from the current 445,000 bpd.
Again he said the NNPC was looking at the total revamp and comprehensive rehabilitation of refineries “to ensure that we refine all our in-country requirements.” Baru said: “We are in the process of reversing the trend of massive importation of finished products as this is unsustainable; therefore, upgrades of our refineries are the way to go”.
Baru, who spoke through the Chief Operating Officer, Upstream Directorate of NNPC, Mr.Bello Rabiu, said discussions with relevant investors and financiers were ongoing, and emphatically stated that the refineries “will be fully back on stream by December 2019.” This set target is also another mirage as the four refineries are still comatose.
Refineries Revamp Process Almost Concluded – Kachikwu (March, 2018)
Echoing the GMD’s statement, Kachikwu, also in March stated that the four refineries “will soon undergo revamping and will be ready at most in 18 months”. Given the 2019 target set for Nigeria to end fuel importation, Nigerians had expected that the refineries ought to have started producing at full capacity by now. However, recent checks revealed that their operations have been epileptic. In fact, Kachikwu revealed in February that “collectively, they are producing at 14 per cent capacity utilisation.”
Industry sources, who berated the duo of Kachikwu and Baru for disinformation about the state of the refineries, argued that it will take a miracle for Nigeria to end petrol importation next year, given the poor state of the refineries. In a twist, the minister, noted when he retracted his earlier statement that he would resign if Nigeria continues to import petrol by 2019, that year 2019, being the election year, the target he had set for umpteenth time might not be achieved.
No End in Sight
Last month, the Central Bank of Nigeria (CBN) disclosed that $36.371billion was expended on the importation of petroleum products from 2013 to 2017 alone. The Director in charge of Research in the apex bank, Mr. Ganiyu Amao made the disclosure while testifying before the House of Representatives Ad-hoc Committee on Refineries TAM. The apex bank lamented that the huge amount spent on petrol imports had affected the nation’s external reserve and induced the depreciation of the naira.
Recent checks revealed that apart from the mere statements by Kachikwu and Baru, no comprehensive repairs had taken place in recent times on the refineries and there is no information as to the award of contract for their repairs and the identities of the contractors.
Baru’s recent statement that Nigeria currently imports one million tonnes of petrol daily and the startling revelation by the CBN clearly indicate that there is no end in sight on importation of refined petrol.