THE REPAIR WORKS ON REFINERIES

What has become of the controversial budget approvals and contracts awards to fix the Port Harcourt and Warri refineries?  

By failing to properly manage its refineries in Kaduna, Port Harcourt, and Warri, the ‘old, Nigerian National Petroleum Corporation (NNPC) turned Nigeria into a full-blown petrol importer, with dire consequences. Before changing name and logo, the old NNPC embarked secured the Federal Executive Council (FEC) approval to rehabilitate the Warri and Kaduna refineries with a reported $1.5 billion ($897,678,800 for the former and $586, 902,256 for the latter) contract awarded to Italian company, Saipem. The Port Harcourt refinery also got a $1.5 billion contract awarded to another Italian firm, Maire Tecnimont SPA to fully overhaul it.  

Warri and Kaduna refineries have installed output capacities of 125,000 barrels per day (bbl/d) and 110,000bbl/d respectively, while Port Harcourt has 210,000bbl/d. As announced, their revamps which NNPC’s head, Mele Kyari said would be a complete overhaul and rehabilitation, are in phases of 21, 23, and 33 months for Kaduna and Warri, and 18, 24 and 44 months for Port Harcourt. Funding for Port Harcourt, according to the Minister of State, Petroleum, Timipre Sylva, will come from NNPC’s cash flow, government’s budget provisions and Afreximbank. The ‘new NNPC’ has inherited these contracts, but we are worried about the status of works at these refineries now that it’s clear the country is broke. As at the end of May, the NNPC had failed for a fifth month running to remit monies to the federation account, bringing its cumulative deficit to N704 billion.  

In April 2022, while inspecting the Port Harcourt refineries, Silva promised that the first phase of the repair would be completed in the first quarter of 2023. “This project kicked off second quarter last year, and where they are now is quite impressive. It is on schedule. The commitment is to deliver 60,000 barrels per day from this refinery by the first quarter of next year, and, of course, we are quite happy,” he said. Soundbites from Sylva and Kyari, two key actors on the issue, do not look too different from what obtained in the past. Besides, 60,000bbl/d out of 210,000bbl/d nameplate capacity of Port Harcourt is meagre and uninspiring. It makes no dent on our reliance on foreign petrol and how it has ruined our national economy.  

Again, we are talking about a case with established evidence of failure–practically defying all forms of rational reasoning even when it should be a non-issue. Pertinent questions are: How do we know that this is different from the previous calls? And by what percentage will both refineries at full blast reduce our fuel imports?  

Repairing and productively running its refineries should be the last of any challenges on the plate of a corporation with more than four decades of operational experience. Yet, NNPC’s failures have cost Nigeria a lot, and its successor must not continue on this path. An African adage notes that you could tell how the day would pan out from how the morning begins. The posture of the new company could thus be read from how it manages issues such as the refineries repair which is really important to Nigeria.  

Questions that revolve around the status of the repair work, an affirmative date of return to partial and full operations, percentage contribution to national daily petrol consumption vis-à-vis reduction of imported volumes, and most importantly, the funding disposal given the country’s economic challenges, should be in the front-burner of the conversation between the ‘new NNPC’ and Nigerian stakeholders. Transparent and accountable business processes should be the hallmark difference between the new Nigeria National Petroleum Company (NNPC) Limited and its offshoot company, the ‘old NNPC’ which was poorly run.  

We hope that Kyari and his management will learn useful lessons from the inglorious past.