Probe, punish those responsible for non-performing refineries

Amidst the normal tales of untoward happenings in the oil and gas sector, Nigerians have been further inundated with reports that the four refineries owned by the Nigerian National Petroleum Company Limited (NNPCL) for which huge amounts have so far been spent to revamp and put back to production are still not able to come […]

Amidst the normal tales of untoward happenings in the oil and gas sector, Nigerians have been further inundated with reports that the four refineries owned by the Nigerian National Petroleum Company Limited (NNPCL) for which huge amounts have so far been spent to revamp and put back to production are still not able to come on stream as expected.

As reported in the media last week, an energy expert, Kelvin Emmanuel stated that the status of Port Harcourt, Kaduna and Warri refineries, which the government had commissioned, was allegedly a hoax. He further stated that as they are presently, the refineries can never operate as they should despite the billions of dollars purportedly spent to put them back into operation.

“The refineries have had problems for many years, so they needed complete repair and overhaul, not just small fixes,” Emmanuel stated.

Other reports confirmed the assertion that indeed, the refineries have been in a state of total disrepair and comprehensive paralysis in the past three decades. The investigation further revealed that within the past 16 years, a total of $1.746 billion was spent on mandatory turnaround maintenance, which amounted to N11 trillion  under the current  exchange rate.  

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Over the years, from one administration to another and under various petroleum ministers and group  managing directors, it has been the same tale – huge sums of money ostensibly spent to either revamp or conduct turnaround maintenance with outlandish promises to bring the refineries to operation – but which yielded little or next to nothing.

Invariably, as investigation by Weekend Trust sAt the recent symposium by Platform Nigeria held in Lagos, Taiwo Oyedele, the chairman of the Presidential Fiscal Policy and Tax Reform Committee, while raising concerns about the humongous expenditure on the refineries, suggested that rather than continue to sink money in the bottomless pit that refineries have become, Nigeria might be better off selling them.

He said, “Nigerians would say, ‘If only our refineries were working, we would be fine.’ Nothing can be farther from the truth than that. In fact, Nigerians should come together and say, ‘Please make sure that our refineries do not work. We should sell them.’’’

Oyedele’s observation and suggestions, while germane, only touch the surface of why our refineries have remained non-performing despite the amounts of money spent on them over the years. The real issue has to do with the infamous opaque nature of the NNPCL’s procurement procedures and accountability.

The NNPCL has simply become like a giant ogre. Under the NNPCL, not just midstream facilities like refineries have remained underperforming but whole assets like pipelines, upstream and downstream ventures like depots.

Technical operations have been left to go aground. If the solution to the rot in the refineries were to privatise them, then the experience of the private Dangote Refinery is instructive. The refinery, which was built on the hope of covering up the slack in domestic supply by the non-performance of the four local refineries, has been running the gauntlet of NNPCL’s disruptive practices since its inception to date.     

It is not just enough to mothball the refineries or sell them as some have suggested. The NNPCL has proven to be so inefficient that even the Petroleum Industry Act (PIA), which was passed to unbundle it and put it on the path to fit for purpose efficiency, has not so far yielded the desired result. Needless to say that the NNPCL has failed to meet the various targets set for it in the area of meeting local demands for petroleum products, attracting local and foreign investors to boost its financial state and to provide cutting edge research and development to expand and advance the frontiers of the country’s oil and gas industry as some of its counterparts in the world have done.

In the light of this, we note that President Bola Tinubu has finally taken the bull by the horns by probing the top echelon management of the company. They should not stop there; they should subject the NNPCL to a comprehensive probe, with consequences meted out to those found culpable. As president and commander-in- chief of the armed forces of Nigeria and the substantive minister of petroleum, Nigerians expect nothing less. The buck stops on his table.