Plan to build more refineries

Last week, the federal government said it would build new refineries to ensure steady supply of petroleum products.  Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Dr. Emmanuel Ibe Kachikwu, who spoke in Kaduna, said the new ones would be built at the site of existing refineries in the country.  At the moment, […]

Last week, the federal government said it would build new refineries to ensure steady supply of petroleum products.  Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Dr. Emmanuel Ibe Kachikwu, who spoke in Kaduna, said the new ones would be built at the site of existing refineries in the country.  At the moment, the country has four refineries; two in Port-Harcourt, RiversState; one in Warri, Delta State and the fourth one in Kaduna.
Kachikwu, who spoke after a tour of the Kaduna Refining and Petrochemical Company (KPRC), noted that all the refineries are old. He added that building new ones to support them would ensure they have back-up in times of challenges while ensuring constant supply of products.
“Most of our refineries are close to30-40 years old; we need to begin to look at building new refineries in the same land space where they can share facilities so that you will have something to lean on when these old ones are beginning to kick out. It is as simple as dealing with an old dilapidated car; if you don’t maintain; it breaks down,” he said.
He said three out of the six units in the Kaduna refinery are down and there’s a need to turn around the refinery, adding that without the refineries working, Nigeria cannot get out of problems of fuel supply.
How do we even justify the fact that despite producing about 2.2 million barrels of oil a day, we cannot boast of functional refineries?  If Nigeria was refining its crude, the issue of scarcity of petroleum products will be eliminated. Not long ago, Executive Secretary of the Depot and Petroleum Products Marketers Association (DAPPMA), Mr. Olufemi A.Adewole, said his members and the
Major Oil Marketers Association of Nigeria(MOMAN) were still being owed over N291 billion unpaid subsidy reimbursement for fuel imported, interest on delayed payment and foreign exchange differentials. If our refineries are working at full capacity, issues like this will not arise. It is also true that the existing refineries, which had hitherto been comatose until recently when some of them resumed activities, are very old and in need of support. So, efforts must be made to change the current situation and improve on production. The refineries working at full capacity will also help in the government’s job creation drive. However, before the government commits to this very huge investment, it must look at all the parameters. First of all, efforts must be made to improve the nation’s maintenance culture. If the refineries had been maintained, they won’t be in the state they are now. If nothing is done to change that culture, having new ones or backups will not be the solution in the long run, because those ones will also go bad if they are not maintained.
This decision despite its merit was received by many with a lot of skepticism because of government’s history in management of projects and businesses.  Many projects which government undertake are either never completed or end up running at a loss. Therefore for this project to succeed, government must be ready to go the whole hog and ensure strict monitoring so that it is completed according to specification. It is also very worrisome that over ten years ago, the government based on the same reasons highlighted by the NNPC GMD, issued licences to about 18 companies to build refineries and till date, nothing has been done. In 2012,the federal government signed an agreement with Chinese companies for the construction of three refineries; the deal never saw the light of the day. Also in 2012, a $4.5 billion deal was signed for the construction of six mini refineries in Nigeria. Yemi Kolajo, a spokeswoman for the Ministry of Industry, Trade and Investment, said in a statement then that U.S.-based Vulcan Petroleum Resources Ltd. and Nigerian-based Petroleum Refining and Strategic Reserve Ltd. signed a memorandum of understanding with the government in Abuja. Two of the six refineries were to be built within the next year, she said. She further stated that the six new refineries will refine a total of 180,000 of barrels of oil per day. Over two years later, nothing has been heard of the deal. So, before the government embarks on this project, we urge it to find out what happened to previous arrangements; why did the projects fail, what can be done differently now to ensure that the refineries are actually built.