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Why Nigerian Refineries May Be Privatised Or Put Up For Sale After Rehabilitation

 By Stephen Ubanna

Ahead of the February 18, 2023, general elections, President Muhammadu Buhari, a retired Army General, appears determined to fix the country’s ailing refineries. Last April, the Federal Executive Council, FEC,  had approved $1.5 billion for the rehabilitation of the 150,000 b/d, PortHarcourt Refinery ,PHRC which has been working in bits and fits over the years. 

With the approval of the $1.5 billion contract sum, for the refinery  the Nigerian National Petroleum Corporation, NNPC, was emboldened to sign  the Contract  for the rehabilitation of the  refinery with SPA Tecnimont, an Engineering firm from of Italy. Already  the Company  Engineers have arrive on site to start  work  in  earnest with the hope  delivering  on the project in the 44 months as contained in the Agreement.

Barely  four months after  the FEC, approved  the $1.5 billion to be used to fix the PHRC,  on Wednesday,  august 4, 2021, at the usual FEC, meeting, presided over by the Katsina state born Nigerian President,   the Council  had approved another  $1.4 billion  for the rehabilitation of  the Warri  and Kaduna refineries , in Delta and Kaduna states respectively.

Temipre: Minister Of State, Petroleum Resources

 The FEC, according to Sylva Temipre, a former governor of Bayelsa state and now minister of Petroleum Resources. The Council   also approved   the sum of $2.76 billion acquisition of 20% stake by NNPC in the 650,000b/d,Dangote Petroleum and Petrochemical Refinery , expected to be completed with the sum of about $15billion.     

Many believe that the Completion of the rehabilitation of the country’s three ailing refineries and that of the Dangote , will save the country’s scarce Forex  from being spent on importation of Premium Motor Spirit,  popular , Petrol and Automotive Gas Oil, AGO or Diesel, into the country. Mele Kyari,  the Managing Director of NNPC, who could not hide his feelings had told those  that cares to listen that ‘’the rehabilitation of the country’s existing refineries, which had often broken down   and the acquisition of  20% stake in the Dangote multi-billion dollar refinery project  and which hen Completed  to start production ‘’transform  the country into a hub  of Petroleum Products and supply, in the West African subregion  by taking advantage of the, African Continental Free Trade Area, AFCTA, to do so and other parts of the world. 

Dangote Hydrocarbon Plant

Kyari, who could not hide his feelings had said that ‘’ it is going to change the dynamics of petroleum products supply globally in the sense that  the flow  which is coming from Europe  at present  will be reversersed to some other direction, including Nigeria.

The Nigeria government  has every reason to facilitate the Completion  of the PHRC, Warri, Kaduna and the Dangote Refineries,  because of  the huge loss suffered  by the refineries  over the last couple of year. Take for instance between February , 2020 and February 2021,  the Kyari led Corporation had confirmed that  the Refineries  N104.3 billion  as much of the 445,000 b/d, meant for the local refineries have  be taken to the offshore refineries  for refining and repurchased by NNPC  from the foreign refineries at exorbitant price in addition to the cost of freighting it into the country, thus forcing the price of Petroleum Products to go up in the country despite spending N6.88  billion as operating cost to  bring the refineries back to life. 

Many believe that the Buhari Administration has taken the rehabilitation of the country’s three existing refineries which had been out of production because of the pressure from the Leadership f the Retail Marketers Association of Nigeria. The Association  had repeated told the Nigerian President  at different times that ‘’it was high time  the country which  is an oil producing nation  a member of the Organisaton of Petroleum Exporting Countries, OPEC,  start refining its own daily  Crude allocation  instead of taking to offshore refineries to refine and then resort to importation.

Temipre, the minister of state, Petroleum Resource may have given an insight why the government has taken  it  serious the Rehabilitation the  broken down Refineries  in order to get buyers for it at good price for it. ‘’The government does not subscribe to the idea of selling off the refineries in the present condition   as such action would be politicized by Nigerians’’.

. He had said that that the government was not repairing the refineries to manage it because of past experience of mismanagement which was still hunting it.  Hear him: the government is not the best manager of refineries ‘’.   It is not surprising why he had said that the government would do everything possible to bring the refineries back to life before the government would decide whether to privatize it or sell all the refineries to private operators. For now, he said the government   is looking out for Professional managers  to take over control and management of  the refineries from NNPC and run it as a business venture as obtained in other parts of the world where there functional refineries in order to make profit and not become a drain pipe.       

Stephen Ubanna

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