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TAM: Reps reject planned $1.8bn spend on refineries

TAM: Reps reject planned $1.8bn spend on refineries

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Adewale Sanyaolu; Ndubuisi Orji, Abuja

impending plans by the Nigerian National Petroleum Corporation (NNPC) to spend $1.8 billion on the Turn Around Maintenance (TAM) of the nation’s three refineries located in Port Harcourt, Warri and Kaduna may have been put on hold by the House of Representatives Ad-hoc Committee on Petroleum Downstream.

The suspension order came as the NNPC to dust up its 2017 proposal to spend about $1.8 billion on the refineries turn around maintenance.

The House had subsequently set up the ad-hoc committee to carry out a comprehensive investigation of the state of the refineries to ascertain their actual maintenance cost.

Addressing journalists yesterday, Garba Muhammad, Chairman of the committee, said the lawmakers have asked NNPC to withhold the planned spend for the time being.

“The committee has communicated Ibe Kachikwu, Minister of State for Petroleum Resources, and Maikanti Baru, Group Managing Director of NNPC, requesting them to stay action on the facilities, pending the outcome of the committee’s investigation,” he said.

“We also want to seek full cooperation of the stakeholders and the general public in the course of the full exercise,” he said.

The abysmal performance of the nation’s refineries has been a source of concern and national embarrassment to oil and gas stakeholders.

For instance, the latest monthly (November 2017) operations report for NNPC indicated that the three refineries produced 55,187 MT of finished petroleum products and 39,562 MT of intermediate products out of 107,748 MT of crude processed at a combined capacity utilisation of 5.92 per cent compared to 17.63 per cent combined capacity utilisation achieved in October 2017.

The decrease in operational performance recorded, according to NNPC, was attributed to decline in crude processed by WRPC while PHRC and KRPC remained shut during the month under review, adding that ongoing revamping of the refineries will enhance capacity utilisation once completed.

However, the decision of the Reps’ ad-hoc committee to suspend further spending on the refineries may have contradicted the Minister’s position, who told a gathering of oil and gas stakeholders at the Nigeria International Petroleum Summit (NIPS), that government would name investors for the refineries next month.

Kachikwu said the government was also considering a policy that would compel multinational oil and gas firms operating in the company to build refineries in Nigeria. The minister said by that time, international oil firms are no longer be allowed to ship out all the crude they produce in Nigeria.

The minister noted that emphasis would shift to local production of substantial portion of the crude produced in the country.

But a Professor of Petroleum Economics and Policy Research, and President of the Nigerian Association for Energy Economics, Omowunmi lledare, said it was very unfortunate that many have described the condition of Nigerian refineries as hopeless. He said it was not that the country doesn’t have experts, who can actually make the refinery work, but the biggest challenge is the mentality of the people.

“With the level of professionalism, people tend to convert commonwealth to personal wealth. If we don’t have a reorientation whereby we regard commonwealth and make the process of converting it to personal wealth more difficult, not much would be achieved,’’ he worried.

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