Chineme Okafor and Amaka Mozie in Abuja
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has disclosed that he would lead teams from the Nigerian National Petroleum Corporation (NNPC) and potential financiers of the planned repair of the NNPC’s refineries in Warri, Kaduna and Port Harcourt, to a resumed negotiation over outstanding terms in the deal.
Kachikwu, who stated that the repair works on the refineries would cost more than $2 billion, explained at a meeting in Abuja where he showcased the achievements of his ministry in the last three years, that the negotiations had taken longer than expected, adding that he was stepping in to see that NNPC and the financiers reach a compromise quickly.
He also warned that if the NNPC failed to get its refineries working before the 600,000 barrels per day (bpd) production capacity Dangote Refinery in Lagos comes on stream, then theirs would most likely see its financial values significantly decline.
Kachikwu equally stated that the tradition of stockpiling petroleum products and expecting it would end scarcity of petrol especially in the country was uneconomical and not sustainable.
He added that repairing the refineries and getting more investments in refinery operations to enable Nigeria produce the fuel she needs is the best option.
“In the midstream and downstream sectors, we have struggled. I would love to see a day when there will be no fuel scarcity in this country, but for that to happen, there are certain realities. Whether we want it (or not), we accept the facts, and the realities are there. The liberalisation of the sector is going to be a panacea to this.
“As long as we continue to subsidise products – very market unfriendly tactics, we are going to continue to struggle. We need to find a way to meet the needs, to provide products sufficiently for the populace and at the same time free the sector to grow,” said Kachikwu.
He noted: “Investments are lacking in this sector. We have been working on rebuilding the four refineries owned by the NNPC. We got an approval by the president in 2016. NNPC has struggled in terms of being able to find the financiers. Financiers have finally been found but now to find the terms have been taking long.
“We are actually having a meeting tomorrow and I am hoping that by the end of this year or first quarter next year, we would have completed the commercial aspect of this financial undertaking which is probably in excess of $2 billion, and finally be able to allow the private sector collaborate with the NNPC to repair this refineries and bring back 450,000 barrels capacity refineries into shape.”
He explained that this was the solutions to solving the fuel scarcity, adding that: “We are not going to trade our way out of this crisis by bringing sufficiency, by expanding reserves, by loading up at extravagant costs which cost the federation a lot of money, that is not the solution, the solution is getting the refineries to work and that is why we work very hard with Dangote Refinery as if they are government refinery.”
Speaking more on the proposed meeting between the NNPC and financiers Kachikwu said: “It is largely trying to bring both parties together – NNPC’s team, the financiers and investors. There are gaps between where NNPC stands in terms of terms and putting in the money. It is a negotiation issue and I think it is taking too much time.
“I am just saying, everybody come to the table; let’s know what the problem is and see how we can bring people together.”
“It is dangerous to the country if NNPC’s refineries don’t come on stream. It will be difficult if Dangote refinery comes on, the value of those refineries will diminish significantly. I am not looking at that possibility but that they are repaired,” he added.
The minister equally noted that no government money has been spent on repairing the refineries so far.
“For the first, the president is saying I will repair the refineries without government money and nobody is giving attention to that. No penny has been spent on any refinery. Every effort we are making is to find private investors, collaborate with them and save the country money,” he explained.