NNPC boss on refineries

LAST week, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele  Kyari, declared that the corporation would soon relieve itself of the responsibility of managing the country’s refineries after the ongoing rehabilitation. According to the NNPC boss, the four refineries, which some industry experts once described as scrappy, obsolete and a drain on the country’s resources, would be managed under an arrangement between the corporation and private investors. Kyari said the corporation planned to partner with a company to manage the refineries with a combined capacity of 445,000 barrels per day, though never attained, to run on an Operations and Maintenance (O&M) basis. The ultimate aim, he said, was to make private partners to buy into the corporation with their resources and operate it on the Nigerian Liquefied and Natural Gas (NLNG) model. Under the NLNG template, the Federal Government controls 49 per cent shares while other shareholders own 51 per cent. The board is also empowered to take business decisions like privately-owned businesses, except on matters that border on the national interest.

The NNPC boss’ new position has vindicated our stance. We had strongly opposed his position when he assumed office and promised to carry out turnaround maintenance of the refineries. Our stand was informed by the history of similar money-guzzling exercises in the past, as well as the moribund condition of the refineries and the notoriety of the oil and gas industry as a cesspool of corruption. From 1999 to September 2016, a whooping N264 billion allegedly went into phony contracts on turnaround maintenance of the four refineries. Reports even indicate that the venture has gulped about $25 billion in the past 25 years, yet the sector is still gasping for breath. Sadly, the National Assembly which has oversight powers over the corporation has consistently played to the gallery instead of arriving at a firm conclusion on probing it for alleged malfeasance, lack of accountability and probity. The Senate once resolved to probe the corporation over the sum of $396 million expended on turn-around maintenance of refineries in the country between 2013 and 2015, but nothing came of it.

As we said in previous editorials, the government’s involvement in business in Nigeria has almost always turned awry. There has often been no efficiency in service delivery, and no profitability. Many otherwise crucial agencies of the government end up being conduit pipes for slush funds. If the refineries had been owned by private concerns, they would not have ended up being the monumental losses that they have now become, because the investors would not have watched their investments waste away. As we noted, the NNPC had been involved in the so-called turnaround maintenance of these refineries over the years only to cause wastage of public funds. At the same time, there can be no doubting the fact that it has only facilitated the economic advancement of the few technocrats within the system. We have not been persuaded to change our view that what the country needs desperately are efficient and productive private refineries positioned to exceed the amount of local fuel consumption and subject the pump price of premium motor spirit (PMS) to market forces.

Given the litany of insincere policy statements on refineries by top government functionaries over the years, Nigerians will have to wait and see if the latest pronouncement by Kyari will be implemented. In any case, the NNPC boss needs to reconcile his latest position with his declaration not too long ago that the corporation was in the process of establishing two new 200,000 barrels-per-day condensate refineries to boost in-country refining capacity and ultimately exportation. That would surely amount to the corporation undermining global best practices and principles regarding less government presence and involvement in businesses that can best be managed by private investors with proven integrity, competence and responsibility. If the oil industry  must be sanitised, there can be no half measures.

 

 

 

 

 

 

 

 

 

 

 

 

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