Damilola Oyedele takes a look at the recent decision of the Senate to halt further talks between the federal government and Agip-Oando Plc on the planned concession of the Port Harcourt Refinery
News of the planned concession of Port Harcourt Refinery to AGIP/Eni and Oando Plc for its rehabilitation, caused some discomfiture in the sector. Not just because of the planned concession, but because of the non-transparent manner in which the deal was allegedly brokered, particularly under an administration that sold itself on the promise of transparency, openness and anti-corruption to Nigerians.
The planned concession was further confirmed when the Group Chief Executive of Oando Plc, Mr. Wale Tinubu while speaking at the Nigerian Stock Exchange in Lagos on May 11,2017, disclosed that his company had signed an MoU with the federal government, to manage the refinery under a ‘repair, operate and maintain’ arrangement.
“We also got approval from the president to repair, operate and maintain the Port Harcourt Refinery together with our partner, Agip. We plan to increase the refinery’s capacity from 30 per cent to 100 per cent, subsequently to 120 per cent,” Tinubu was quoted to have said.
Tinubu also reportedly said that details of the arrangement were being fine-tuned, and would be concluded by the end of July 2017 (last month).
It was therefore a relief when the Senate in May, 2017 ordered that any planned concession of one of the country’s three refineries be put on hold, until its investigations into the allegations of non transparency in the deal, are concluded.
The Senate, therefore on May 30, 2017 constituted a seven member adhoc committee to probe the alleged deal, with the mandate to carry out a holistic investigation to determine how and why such a deal was sealed, and the criteria used to select AGIP/Eni and Oando Plc to maintain the refinery, and at what cost and time frame. The committee had summoned the several stakeholders including the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and officials of the oil companies involved in the deal.
Controversies at Investigative Hearing
At the hearing, which took placed on July 13, 2017, Kachikwu denied there was no plan or intention to concession or privatise the refinery. He also practically disowned Tinubu, when he declared that he did not know what informed the statement by the Oando boss.
“Oando seems to have jumped the gun in announcing something that isn’t happening. No planned concession, nothing like that in the works, so I do not know where that information is coming from. There has never been any approval from anybody including President Muhammadu Buhari, to concession any refinery. There has never been any memo that I did, to ask for concession of any refinery,” the minister told the committee.
Kachikwu also faulted publications quoting him as speaking about a plan to concession the refinery and denied making any statement that indicated that the government would privatise or sell the Port Harcourt Refinery, or other state owned refineries.
He also disclosed that an estimated $300 million would be required for the repair of the refinery to get it to function optimally at its full capacity.
His position was corroborated by the Chief Operating Officer (Refineries) of the Nigerian National Petroleum Corporation (NNPC), Mr. Anigho Kragha, who also said there was no plan for the concession.
“At no time has there been any plan for any privatisation of any of NNPC’s refineries. So let me just reiterate that there is no plan to privatise the Port Harcourt refinery,” he said.
Tinubu, in his presentation to the committee, said his statement regarding the rehabilitation of the refinery was taken out of context with some media stating ‘Oando Takes Over Port Harcourt Refinery’.
Tinubu stated that Oando placed some advertorials to clarify his statement at the NSE, adding that the controversy started as a result of a misconception that there is a concession plan.
“I think parties in the industry must be allowed to engage the regulators to discuss solutions and possibilities and they must be negotiated and crafted into something worthy of being taken to the regulators, to consider whether or not it will lead to concession or transactions worthy of regulators’ approval,” he said.
He added: “The truth of the matter is that we do need to be allowed as professionals to carve out our position before we can present it. Along the line, as corporates, we do meet with our regulators and many times expressions of interests have been submitted regarding how the refineries can be revamped. We call it memorandum of understanding.”
Tinubu told the committee that in the course of his career spanning over 25 years in the oil sector, he has signed over 100 MoUs with the NNPC, which were derived from meetings.
Memoranda submitted to the committee by Agip/Eni and Oando, as quoted in the committee’s report, stated that no mandate of agreement was signed for the sale, equity transfer or privatisation of the Port Harcourt refinery.
The committee had noted that the NNPC publicly disclosed that it was evaluating the current state of its refineries and the cost implications for rehabilitation, for which it was holding preliminary discussions with private sector organisations to aid the development of a technical and financial structure that will support the rehabilitations.
“ENI has proposed to support the refinery rehabilitation programme, specifically Port Harcourt Refining Company, in which it has a long history of technical involvement. In addition, ENI’s credentials and track record showcase extensive experience necessary for a successful rehabilitation programme,â€
“ENI/NAOC have selected Oando PLC as local partner to support FG’s refinery rehabilitation efforts since Oando plc and ENI/NAOC share a long standing and successful working relationship,†the memo added.
The Committee’s Position/Report
The Committee led by Senator Abba Kyari however maintained that there have been several statements by Kachikwu himself which pointed to plans that the refineries may be, or should be concessioned.
Kyari also noted that the advertorials, which were intended to clarify Tinubu’s statement, also lent credence to the impression that the refinery was being concessioned.
In the final report of the committee which was adopted at Senate plenary last week, the committee said the process of the concession was not transparent.
The Senate therefore ordered a discontinuance to talks between the Federal Ministry of Petroleum Resources, Agip/ENI and Oando Plc, on the rehabilitation of the Refinery.
It condemned what it described as the non-transparent process that was seemingly being adopted by the ministry and the NNPC, to engage the companies, to rehabilitate and improve the performance of the refinery.
The Senate further stated that it is ‘highly unlikely’ that the proposed agreement to handover the rehabilitation of the refinery to ENI/Oando, is false, following a separate deal of $6 billion contracts for Crude -for- Products swaps of Direct Sale-Direct Purchase (DSDP) by the Ministry to 10 groups or consortia which included ENI/Oando Plc.
Adopting the report of the committee, the lawmakers directed that the process must be open and competitive, to allow participation of all relevant stakeholders.
“Otherwise, it would be misconstrued as backdoor transfer of the asset to the preferred investorâ€, the Senate said, adding that the public invitation for bids under clearly spelt out terms and conditions should be re-advertised.
The committee’s report noted that the parties involved denied that there were plans for concession of the refinery; it however cited several pointers indicating that the plans existed, to include reported comments by Kachikwu and Tinubu.
“There have been various contradictions in the Hon. Minister of State for Petroleum Resources public statements and media briefings on the true position of the subject matter culminating in his statement at the public hearing that there is no planned concession on the refinery, no concession has been embarked upon and none is in the pipeline,” the committee added.
The statement did not correspond with the alleged earlier press briefings including one at Vienna, Austria by Kachikwu, the committee observed.
It also stated that there had been advertisements for Expression of Interest in April 2016 seeking financiers to fund, rehabilitate and jointly operate NNPC refineries, whose tender process was truncated in May 2016 following concerns raised by other relevant stakeholders.
“That competent independent technical consultant should be engaged to review the diagnostic report (under preparation) on the refinery, and recommend a suitable strategy for attracting private sector investment, taking into consideration re-appraised rehabilitation cost estimates, environmental concerns of host communities and labour issues,” the report noted.
“Based on international best practice, it is more likely that a credible financier will cause an independent diagnostic review to be undertaken that would be the basis for determining cost estimates for rehabilitation,” it added.
As observed by Senate President Bukola Saraki when he declared the investigative hearing open, it is important that Nigeria does things in the right manner in order not to send wrong signals to investors and international development partners.
“As a country, for us to move forward, we should be seen to be doing right things in line with the change agenda of the present administration,†he said.
