For Fuel Sufficiency, Kachikwu Stakes Job


Following Minister of State for Petroleum Resources Ibe Kachikwu’s recent comment that he would resign as minister if Nigeria did not end importation of refined petroleum products by 2019, Chineme Okafor looks at the pressure on the minister

Last week, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, disclosed that he would resign his ministerial appointment if in 2019 Nigeria did not meet the target he set to end importation of refined petroleum products. Speaking in a BBC programme, Hardtalk, in London, Kachikwu stated that he was certain his plans to get Nigeria to stop importation of petrol in 2019 would work out fine, saying he has set in motion measures to accomplish this. He explained that if in any case his plans failed, he would not hesitate to resign because it was an honourable practice expected of public office holders who fail to meet their mandates.

The BBC programme’s anchor, Stephen Sackur, was quite hard on the minister in requesting accountable responses to questions. But the fact remains that the government in which Kachikwu serves would end its first four-year term in May 2019, which makes his resignation plan immaterial.

Accused by Sackur of making a lot of promises without really fulfilling them since taking over as oil minister, Kachikwu quickly refuted the claim and posited that every promise he made since he assumed office had been fulfilled. He listed such achievements and reiterated his drive to bring to fulfilment all others still outstanding.
Asked when Nigeria would be self-sufficient in petroleum products’ refining, which would see her exit importation, Kachikwu said, “I have targeted 2019, that is the target that I gave.”

He was then reminded that time was running out on the 2019 target and that a failure could, perhaps, come with costs which may blight his work records. The minister interjected, “Don’t worry, I put the date, I will work it.”
The anchor further asked him, “And if you don’t achieve it, you will walk (away)?” to which he said, “Yes, of course, that’s the reason why you are in government.” He further stated that it was necessary Nigeria stopped products importation and grow her domestic refining capacity.

According to Kachikwu, “It is wrong, we ought to process rather than ship out crude. If you look at the efforts, I have made in the last few months, including major efforts working with investors to begin to reshape the refineries that were comatose for many years. We have been able to get them (refineries) back to produce seven million litres versus zero that is not the 90 per cent template, we are now refurbishing the refineries. I have just signed an agreement Agip to build a new refinery in Nigeria, we are focusing on multinationals.”

He further stated, “I have delivered on everything I promised when I took office. First, I took NNPC and moved it to a profit-making organisation, first time in history, I reshaped the organisation and I removed cash call deficit of over $6 billion and have re-negotiated it, everything that I have promised, I have delivered.

“I will deliver on the refineries and I am committed to that, and I will also deliver a future of oil that makes sense for Nigeria. But bear in mind that one has been there for one and a half years, the president has been there for two years, I can’t pretend that we are going to solve in one day all the problems that happened in Nigeria in the past. We will solve the Niger Delta militancy problem, it was there, we sorted it out in one year.”

Kachikwu in a subsequent interview on Bloomberg reaffirmed his resolve to resign if the target wasn’t met, but added that accomplishing the target was dependent on certain conditions.
“People have focused more on the resignation than the fact of trying to get the refineries to work. For me, it is a no-brainer. We absolutely have to have refineries work, but it is going to depend on so many things,” he said.
The minister added, “It is going to depend on the unions being with us on that; it is going to depend on the owners of the assets – NNPC – being able to stay on the speed at which I am going. I hope they will; it is going to depend on militancy remaining as calm as it is.

“If all those things are taken, and we are able to accomplish on those, my conviction is that we can still deliver on 2019.
“The reality is that when you repair all the refineries, there is probably still going to be a little gap in terms of actual consumption versus local refineries production, but we think that an upgrade would be able to remedy that. I have said that if that doesn’t happen by 2019, we have all failed and I will be on my way exiting.”

Industry Experts
Industry experts have offered their perspectives on the import of Kachikwu’s resignation comment. Some preferred to offer their views anonymously. Their comments centred on the rationale behind Kachikwu’s choice of 2019 for resignation, an action they considered to be more political than economic.
They explained that the government’s continued hold on the NNPC’s refineries was uneconomical primarily due to the fact that they had gone insolvent and unproductive from profligate management models. Most of the analysts advised that Kachikwu should rather push to have the refineries sold to private investors to return them to profit-making centres, warning that at their current standings, the refineries may not be able to compete with Dangote Group’s refinery, when it eventually begins operation in 2019.

An oil industry expert, Dan Kunle, stated regarding Kachikwu’s resignation threat, “His resignation should be now and not 2019 because in August and September 2015, during his visit to Port Harcourt and Warri refinery sites, he publicly declared that the management of Port Harcourt refinery had used $10 million to fix the refinery as against the realistic figure of about $295 million offered by the original equipment manufacturers vendors/engineers for the TAM program.
“He also declared that by the close of 2015, it was expected that Port Harcourt refinery and probably Warri would be working at 90 per cent capacity, thus, reducing petroleum importation and possibly eliminating the subsidy controversies. Till this moment, the crude oil refineries in Port Harcourt, Warri and Kaduna are yet to be fixed, needless to mention if they have ever attained up to 50 or near 90 per cent production capacity utilisation since he came on board.”

Kunle further stated that Kachikwu was yet to conclude the preliminary planning and necessary tender processes that will lead to the final award of contract for the turnaround maintenance of the refineries. According to him, “Between 2015 and 2016, Kachikwu made a public declaration that would-be investors should come to fix Port Harcourt refinery and invest in relocating any operational refinery of about 100,000 barrel capacity to be co-located within the facilities of Port Harcourt refinery and probably same for Warri refinery.

“Nigerian people have waited till this moment to see how such transaction would be consummated, but to no avail. Could this still be the new transaction he is trying to consummate with Oando and Agip? I am aware from records that Agip built Warri refinery and not Port Harcourt refinery, so how easy will it be for them to take over the Japanese plant in Port Harcourt against their own in Warri.
“Meanwhile, petroleum product importation and storage management have remained an endemic problem in Nigeria.”