Govt spends N96b on repair of refineries
By Yakubu Lawal,
Asst. Energy Editor
T HE failure of Nigeria's refineries over the years may be deemed colossal. But, ironically, more colossal is the amount of money supposedly spent to prevent that failure.
Not less than N96 billion ($739 millon) has been committed by the Federal Government to the repair of the nation's four refineries and construction of petroleum products distribution facilities since the inception of President Olusegun Obasanjo administration in 1999, The Guardian has learnt.
Of this amount, N63 billion or ($485 million) went into the Turn Around Maintenance (TAM) of the refineries located in Port Harcourt, Warri and Kaduna with combined output level of 445,000 barrels per day while N33billion or $254 million was spent on the construction of distribution and jetty facilities for products movement.
The refineries, which sources said were at various stages of completion, are expected to improve the supply of domestic fuel before the end of this year. The huge sum so far spent on the refineries is contained in a report now being collated with a view to locating how the nation got to where it is with the facilities and where it might go from there.
The sources said that report on the state of the plants were being prepared as part of guide for the privatisation of the refineries, stressing that government needed to know how much was actually spent on the plants in the last five years to be able to factor in all the indices that would help in negotiating with prospective buyers.
The outcome of the Nigerian National Petroleum Corporation (NNPC) report, the officials said, had been forwarded to the committee set up by the government recently on the privatisation of the refineries to avoid under-pricing the investment.
The report would be used as basis of negotiation with the foreign investors that have indicated interest in the purchase of the plants beginning with Port Harcourt Refinery, which is slated for sale by December this year.
An insight into the report indicated that the government spent about N33billion for the rehabilitation of NNPC Abaji and Escravos import berths, Apapa jetty as well as the construction of Single Buoy Mooring (SBM) in Lagos for the distribution of products in the country.
The report, which had allegedly been released to the Petroleum Products Pricing Regulatory Agency (PPPRA), the Bureau for Public Enterprises BPE is designed to facilitate the implementation of the downstream liberalisation policy of the government and how the refineries should be sold.
"This report is the outcome of studies carried out by the NNPC, which shows all that have been done in the refineries and the amount spent by the authority to put them right. The ultimate objective is for us to do this thing right as we proceed to privatise the plants," an official said.
The source said that about N23billion or $172million was spent on the Kaduna Refinery during the period under consideration. The TAM of the plant was handled by a French oil firm, Total, in 1997 but the job was not completed until early 2000.
Similarly, the Warri Refinery and Petrochemical Company in Delta State gulped about N14billion or $108 million in a contract that was awarded to another oil service firm EDBN in 2002.
The NNPC Group Managing Director, Mr. Funso Kupolokun, said the job had been completed and ready for operations but for the vandalisation of crude oil pipe, especially at the Shanomi Creeks in the Escravos area of Delta State.
The report also revealed that the contracts for the Port Harcourt refinery TAM exercise was awarded to an indigenous oil service firm - Chrome in 1998 at a cost of N26 billion or $205 million. Though the scope of the contract was said to have been completed in 2001 the government did not give the go-ahead on other utility rehabilitation as the move was truncated in 2003.
But the state of the refineries showed that their Fluid Catalytic Crackers (FCC) units are not in good working condition which has affected production of Premium Motor Spirit (PMS) or petrol, Automotive Gas Oil (AGO) or diesel, household kerosene and even aviation jetty fuel.
Kupolokun said at the weekend in Lagos that the FCC of the four refineries would be ready for operation in the first week of September, adding that when on stream, the plants would be able to produce 18milion litres of PMS for domestic market.
The breakdown of the refineries output shows that Port Harcourt plant has 210,00 barrels installed capacity, Warri, 125,000 barrels, and Kaduna Refinery 110,000 barrels per day.`
