Downstream troubles – The Nation

What ought to be Africa’s largest and most lucrative state mega corporation seems deeply decayed and a mere shell of its old self. The Nigerian National Petroleum Corporation, NNPC, which manages Nigeria’s huge oil wealth has not only continued to lag far behind its contemporaries around the world, it does not rank among the top three state oil firms in Africa.

Such is the hollowing out of the NNPC. While the upstream sector of the business is still largely controlled by multinational oil giants that seem to be having a field day in a poorly structured environment, the downstream is mired in a myriad of challenges. These include acute lack of capacity – both manpower, technical and financial, as well as obsolescence and graft.

Starting with the refineries in Warri, Port-Harcourt and Kaduna, the four facilities, cumulatively, produce at less than 10 per cent optimum utilisation. Notwithstanding millions of dollars shovelled into (and still being spent) on what is termed turnaround maintenance (TAM), the refineries are in a derelict state with one completely shut down.

Unable to maintain old refineries and refusing to build new ones since the last one was built about 30 years ago, Nigeria has had to rely almost largely on imported products in the last two decades.

The result is that the aggregate cost of imported products and the subsidy therein sometimes are as high as about 30 per cent of Nigeria’s federal budget. Grave as this situation is to the very survival of Nigeria’s economy, successive governments have been unable to tackle Nigeria’s petroleum products refining challenges.

Apart from refining issues, NNPC has also been inept in managing the network of pipelines and depots for the distribution of petroleum products across the country. There is about 5,000 kilometres of NNPC pipelines crisscrossing the country which consists of crude-to-refinery supply pipes and products-from-refineries/depots supply pipes.

In the manner of a mega firm that has been in perpetual atrophy in the last few decades, there seems to be hardly any structure to consistently maintain and upgrade these pipe lines. So many of them have become obsolete and not a few have ruptured. Oil thieves and militants who occasionally breach the pipes to steal fuel have not helped either. But it can be said that they succeed largely due to the fact that NNPC does not keep its eyes on the ball.

For instance, you would think if keeping up a refinery was complex, running a fuel depot ought to be a simple bolt and nut affair requiring no sophisticated technical know-how. But recent checks show that of the 22 petroleum products depots owned by the NNPC, only seven are functional up until a month ago.

Again, until recently, the expansive Ejigbo Depot in the Alimosho Local Government Area (LGA) suburb of Lagos was a bedlam of tankers, refuse and bushes. It could have been a den of hoodlums and addicts. The littering of petrol tankers has been cleared revealing a well-planned, world-class facility. It could actually make for a beautiful postcard if kept well as was conceived.

Why would NNPC leave its facility to decay for a long time, becoming half dumpsite, half bushes and mainly an ugly trailer pack? What does it take to maintain lawns and hedges, rid adjoining environments of refuse and keep the barbed wire perimeter fence standing?

According to report, depots have long become grounded across the country from Enugu, Aba; to Benin, Ibadan, Ore, Ilorin, Minna, Makurdi, Kano, Maiduguri and Yola, among others.

The result is that private tank farms have mushroomed in Lagos, with sorry consequences. And worse, fuel tankers have grown like ants, traversing the country with attendant carnage. If NNPC’s depots are functioning, these would repudiate the need for tankers littering the country’s roads.

NNPC must raise its game for it to continue to be relevant. Compared with its contemporaries, it would seem an abysmal failure. We urge it to benchmark against other state oil corporations and begin to add real value to the sector and the economy in general.

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