Emma Okonji
Partner at Commercial and Energy Law Practice (CANDELP), Israel Aye, has supported the recent call by the Nigerian National Petroleum Company Limited (NNPCL) for the Expression of Interest (EoI) from qualified oil and gas firms to partner the national oil company in operating the refurbished Port Harcourt refinery.
The move, he insisted would enhance the value of the asset after resuscitating it to an appreciable level.
Aye, who spoke against the outright sale of the refinery as being canvassed by former Vice President, Atiku Abubakar, and some other business moguls in Nigeria, said selling the Port Harcourt refinery without investing to resuscitate it, would not be an easy task as most Nigerians think, given its huge indebtedness running to over $1.5 billion.
Aye who spoke yesterday, on the Morning Show on ARISE NEWS Channels, the broadcast arm of THISDAY Newspapers, noted that there had been attempt by previous governments to sell Nigeria’s refineries, but it was not as easy as the government officials thought.
He said it would be easier for private oil and gas firms to build their own refineries than to buy Nigerian refineries that had been operating below capacity for several years, without first refurbishing them.
He gave an analogy of a car owner who would rather refurbish his car before selling it in order to have good value, than to sell the car as scrap and get very low value for it.
According to Aye, refinery business was about economies of scale, while stressing the need for proper regulation of the downstream oil sector to enable investors to have good return on investment and be able to make good business margins.
Asked if it would be easy to get investors with N2 billion annual turnover as partners to manage the Port Harcourt refinery as stipulated by NNPCL, Aye said getting partners with N2 billion annual turnover could be a tough one, but insisted that any partner that willing and qualified to invest in Port Harcourt refinery, must be highly accountable to the people and must come with full disclosure because they could no longer conceal details of transactions at that level, even if confidentiality exists.
Asked if it makes business sense and if it was attractive for private firms to partner NNPCL in managing Port Harcourt refinery, Aye said it would be difficult to say whether it would make business sense for private investors to partner NNPCL in managing Port Harcourt refinery because the success of the partners would depend on the business model of the partners. He however said the government needed to do more to boost the interests of investors that are willing to invest in Nigeria.
