NIGERIA’S moribund refineries have purportedly gulped $396.33 million in the professed efforts by successive governments to fix them for optimal production. But vacuity in the desired result has provoked an inquest in the House of Representatives. Despite being a major global crude producer, the country has for three decades been importing petroleum products. It is an inexplicable irony, evidence of abject leadership failure, which continually bleeds the public treasury and promotes inestimable corruption.
The House Committee on Petroleum Downstream, chaired by Abdullahi Gaya, which visited the Warri and Port Harcourt refineries, discovered that the refineries had not undergone any Turnaround Maintenance since 2004. A former Group Managing Director, Nigerian National Petroleum Corporation, Maikanti Baru, had earlier confirmed that TAM on the refineries had not been carried out in 42 years. This is curious! Every administration takes the repair of the four refineries as its cardinal policy, ostensibly to reposition the economy. Lack of vision and sound economic policies have stuck the country in this wasteful trajectory.
Certainly, the lawmakers’ investigation is not the first since the Fourth Republic began in 1999. Nevertheless, its objective of bringing to account those who spend public funds wastefully or enriched themselves in the process has never been achieved. This national gambling to fix obsolete refineries cost the country N99 billion in the twilight of Goodluck Jonathan’s administration in 2015. The NNPC had used local engineers to repair them, after the original builders from Japan and Italy had turned down contractual offers to carry out their TAM. But the refineries broke down barely three months after. The overhaul, the authorities usually claim, will increase the refineries’ capacity from 445,000 barrels per day to 700,000 barrels per day. In spite of the $396 million expended on them, however, daily capacity utilisation vacillates between 15 and 25 per cent.
Shockingly, the Federal Government still engaged in this absurdity after the 2012 National Refineries Special Task Force it set up had wisely recommended in its report that the refineries be sold within 18 months. Its position was based on the fact that they had outlived their usefulness.
But instead of learning from the mistake of its predecessors, the regime of the President, Major General Muhammadu Buhari (retd.), decided to take the country through the same famished road. A former NNPC GMD, Ibe Kachikwu, vowed to resign by 2019 if the country did not achieve self-sufficiency in refining. However, he soon realised that the system is oiled by corruption. He confessed, “It got to a point where I started wondering whether, as we repair this, somebody was going out there to destroy so that contracting will be done.”
This is the truth. It is therefore surprising that the Buhari regime has not given up on this cesspit of corruption. The current GMD, Mele Kyari, said a revamp of the refineries would end fuel import by 2023. He argued, “We will deliver on the rehabilitation of the four refineries within the life of this administration.” In pursuit of this agenda, the Minister of State for Petroleum Resources, Timipre Sylva, said last October that rehabilitation of the two Port Harcourt refineries was ongoing, while those at Warri and Kaduna would be repaired within the first half of 2020. They are both giving the country a false hope like their predecessors.
Buhari should end this serial fraud. The National Assembly needs to go beyond the occasional sabre-rattling and empty boasts. The money wasted or stolen so far would have been better spent in providing standard primary healthcare centres for the 774 Local Government Areas at N181.1 million each, based on the exchange rate of $1 to N380, with Nigeria’s increasing grim health burden.
The expenditure of $5.8 billion on fuel imports from late 2017 to February 2018 and the subsidy scam of N1.53 trillion in 2011 demonstrate how the treasury is battered by the government’s failure to privatise the refineries.
Instructively, in 2019, the NNPC again spent N218.18 billion on the ailing refineries with barely anything to show for it. No public or private business operates infinitely on such a bankrupt and corrupt template. Though the Jonathan administration said it obtained a $1.6 billion loan to repair the refineries to prepare them for sale, the then Minister of Petroleum Resources Diezani Alison-Madueke’s position in 2012 that government’s continued ownership of these oil assets was counter-productive still resonates. “We would like to see major infrastructural entities, such as refineries, moving out of government’s hands into the private sector…Government does not want to be in the business of running major infrastructure entities and we haven’t done a very good job at it over all these years”. That’s just it.
This is really the global trend. Saudi Arabia’s reduction of its stake in its oil behemoth, Aramco, described by Bloomberg as the most profitable business outfit globally, points the way forward. In 2019, it generated $25.6 billion from the sale of a fraction of its shares. But Nigeria holds on firmly to unprofitable entities, with full complement of staff paid monthly and given pensions for unproductive years of service.
Obasanjo’s administration, as it tailed off in 2007, sold the refineries for $750 million. But his successor, the late Umaru Yar’Adua, in a major error of judgement, revoked the transaction. Evidently, the Dangote Petrochemical Refinery with a planned 650,000 bpd capacity, the biggest single-train facility globally, whose production might begin in the next two years, will ultimately consign these state refineries to irrelevance.