NNPC managing refineries to extinction say experts
Experts in the oil and gas industry are intensifying calls for the Nigerian National Petroleum Corporation (NNPC) to privatise Nigeria’s three derelict refineries that have produced at eight per cent capacity in the past 21 months.
They are also calling for efficient management of the process to ensure that only companies with technical and financial competence buy the refineries to forestall the situation that the power sector is currently is in where the assets were handed to clearly incompetent managers.
Diran Fawibe, the chairman and chief executive officer of International Energy Services (IES) said the refineries are a source of national embarrassment as they could not meet the demand of the nations in spite being an oil producing.
He described the refineries as a no win situation, a musical chair that has remained in one place without making any progress for the past two decade.
“There is no value in an asset that has remained unproductive for so many years and yet the government is still pumping money into it thereby given the impression that they can still be revamped. They are being managed to extinction.
Chuks Nwani, energy law and vice president Powerhouse International Limited, said: “A problem with NNPC running some of the refineries is the time it takes to get approvals for funding, to do repairs to increase efficiency of the assets, this takes time and when it is given, the amount of money released may not be enough to do those projects, because of some fundamental changes in the financing models such as foreign exchange differentials and costing, will make the NNPC buy from local operators which may not be efficient,”
He added, “Selling off the assets with government retaining at least 40 per cent and there must be clear guidelines as to key performance indicators so that we don’t have the same experience with power sector.”
Ikenna Ifedobi, economist and consultant of the American Petroleum Institute, says challenges such as an unsafe operational environment, lack of industrial regulation in the supply of feedstock to plants and the failure to secure the piping and tubular network makes NNPC’s claim farfetched.
Experts say as 2018, when Dangote’s refinery is expected to come on stream draws closer, Nigeria’s refineries will not command high value even if government agrees to sell them.
“With the 650,000 barrels per day capacity Dangote Refinery set to come on stream in 2018 and if all goes according to plan, Nigeria will literarily pay someone to take those refineries,” said a top industry source.
Aliko Dangote, president of the Dangote Group, is building an oil refinery in Lagos at the cost of $12 billion, a fertilizer plant at the cost of $2 billion, and a subsea pipeline at the cost of $3 billion.
It is estimated that upon completion, the refinery will process 650,000 barrels per day of crude and the gas plant will generate 12,000 megawatts of electricity.
ISAAC ANYAOGU