- That is what spending $300m to fix any of our refineries is
For how long will the Buhari administration continue to dilly-dally on the nation’s refineries? Just when we thought that it was close to pushing through an agreement to cede their financing and operations to the private sector, Minister of Petroleum Resources, Ibe Kachikwu, in a stupendous volte-face has again recanted. Kachikwu, aside denying knowledge of plans to concession the Port Harcourt refinery also stated that a technical committee set up by the government to undertake a review of repair of the refineries was coming up with a holistic investment figure to fix them.
Now, the same refinery – once described as scrap by Kachikwu, would, according to him, require $300 million to repair. And then the catch – it was better to engage the company that built the refinery, in the first instance, for its repairs, due to the availability of spare parts and knowledge of the configuration.
If only the nation has not been on this route before. The same proposal to bring the original equipment manufacturers was made by the administration of President Olusegun Obasanjo, following the bungling of the Turn Around Maintenance (TAM) by the administration of General Sani Abacha. Soon after the proposal was made public, vested interests came together to frustrate the plan. With limited options left to revamp the refineries, Obasanjo, with only a few days left in office later handed over the Port Harcourt and Kaduna refineries to the Bluestar Consortium for $750 million –amidst the charge of not following due process – a charge that would be upheld by his successor, the late President Umaru Yar’Adua, who aborted the deal barely two months after Obasanjo’s exit from office.
Thereafter, it has been a case of jumping from frying pan to fire. Whereas the late President Yar’Adua prevaricated to no end – understandably due to his then failing health; President Goodluck Jonathan who took over following his demise kept pouring billions of naira into what had become a bottomless pit. As for the agreement signed by the administration with the Chinese government on May 13, 2010, for the construction of three greenfield refineries in Lagos, Bayelsa and Kogi states for a princely sum of $23 billion, it is yet to see the light of the day.
It is unfortunate that the Federal Government cannot make up its mind on what to do with the refineries. Ten years after the sale – which from the benefits of hindsight ought to have been allowed to stand, neither the country’s quest for uninterrupted fuel supply nor the Nigerian National Petroleum Corporation’s fortune has been enhanced in any shape or form. If anything, the conditions of the four refineries continue to deteriorate; and this is in spite of the nearly $2 billion allegedly sunk into the various TAMs ever since. If we had imagined that the earlier signals from the minister in favour of letting the moribund entities go would herald a fresh push for their long-term sustainability in private hands, this has since given way to a frenetic pace to bring them up with public funds even if it means risking further damage to an already strained treasury. Of course, President Buhari has always believed that the entities should be in government’s hands, even in their obsolete state.
Should the Buhari administration proceed with doling out the proposed $300 million on the proposed TAM, it would have merely followed the path of the administrations before it – a path that led nowhere. Even if the economy were less challenged as it is currently, the idea of throwing nearly a third of what is required to build a modest refinery into refurbishing those scraps would be absurd. It is akin to putting money into a bad venture. It makes neither business nor economic sense.
