Page 24 Analysis

Page 24 Analysis

Tell tales about NNPC refineries

By Daniel Adugbo

Statements in the past by the NNPC have created a perception the nation’s refineries were back on stream sooner but the realities on ground says otherwise, a reason NNPC need not make more noise writes Daniel Adugbo

Group Managing Director of the Nigerian National Petroleum Corporation, (NNPC) Dr. Ibe Kachikwu, at the weekend reportedly said the federal government needs about $500m to fix the nation’s crude oil refineries which have all now been shut down.

The above pronouncement has sent tongues wagging and lips critiquing about previous pronouncements on the state of the refineries.

Nigerians have been inundated with stories about the refineries coming fully on stream which had raised hopes of a near- end to perennial petrol shortages.There have been claims, counter claims and statements by the NNPC and officials of the refineries that the refineries will stream to full capacity October, December, some said March 2016.

In 2012 when NNPC kicked off the planned Turnaround Maintenance (TAM) of the refineries, former petroleum minister had promised that by the beginning of the fourth quarter of 2014, the TAM project would have been completed, and all the refineries would be refining 370, 000 barrels per day, which is about 90 per cent of the 445,000 barrels per day combined capacity of all the country’s refineries.

That plan never saw the light of the day with the then government citing exorbitant bills for the TAM from the original refinery builders and several other excuses why the rehabilitation failed.

Officials of the Corporation had in February 2015 said it had engaged in-house engineers to rehabilitate the ailing refineries at a cost of $550m (N99bn), down from the $1.6bn (N288bn) presented to it by foreign contractors.

Then Group Executive Director, Refining and Petrochemicals, NNPC, Mr. Ian Udoh had reportedly said everything for the three refineries combined came to around $550m for 18 months period, meaning that the refineries should be in shape early 2016.

Mr. Udoh’s pronouncement was corroborated by then Coordinator, Corporate Planning, and Strategy of the NNPC, Dr. Tim Okon.

On March 2015 Mr. Okon who in company with the Group Managing Director of NNPC, Mr. Joseph Dawah, told the Senate Committee on Petroleum Resources (Downstream) while defending the budget proposal of the corporation, that Turn Around Maintenance (TAM) of the nation’s refineries which was reduce to $550million started in October last year will be completed in the first quarter of next year.

“By the first quarter of next year, all the refineries will be functioning optimally and we would be able to refine an average of 400,000 barrels of crude oil per day for local consumption, “he had said.

Then came the news by NNPC in July that the Port Harcourt and Warri refineries had resumed production after a nine-month phased rehabilitation exercise conducted by its in-house engineers.

Expectedly, NNPC’s announcement aroused interest and questions were asked as to how the plants, which had not functioned almost two decades, were suddenly back to life under President Muhammadu Buhari’s administration.

However, none of the NNPC pronouncements have proved to be the reality. All the refineries have struggled to remain afloat and have been unable to churn out products in significant quantities.

Even the Port Harcourt refinery, which was said to be refining crude some weeks ago had stopped working, and had since been shut down, according to the NNPC GMD at the weekend.

The 37-year-old Warri refinery has remained shut since August due to some technical hitches in one of its units; a couple of weeks after it resumed operations while Kaduna refinery still remains shut.

According to NNPC data, the refineries did not process any crude oil, condensate or slop from February to June this year. In January, Kaduna and Warri refineries recorded capacity utilisation of 8.12 per cent and 33.04 per cent, respectively, while that of the Port Harcourt refinery was zero,

NNPC GMD Dr. Ibe Kachikwu had told senators while answering questions at the Senate for confirmation as minister that the Warri and Kaduna refineries have been down since August but according to him, both refineries were beginning to signal likelihood they will come on stream before the December deadline he had set for them to perform above average.

Experts say the realities on ground point to the fact that nothing concrete may be achieved when the deadline expires.

Some argue that there is a little chance to the target because the plants are old and the Corporation will need to get back to the pipelines because existing marine vessel arrangement cannot handle just yet crude supply to the refineries.