That Port Harcourt and Warri refineries commenced preliminary production most recently should be a pleasant surprise to Nigerians. This is because the refineries literally written off by past governments could be rehabilitated less than three months into the life of the President Muhammadu Buhari-led administration. Political glory hunters in the ruling All Progressives Congress (APC) insist the credit goes to Buhari, while opposition Peoples Democratic Party (PDP) stalwarts laud former President Goodluck Jonathan government for the feat. Both sides cannot be right. It is common knowledge that the government lacked the commitment to revive the old refineries or building new ones while Buhari, from day one, insisted the refineries must work.
In truth, as the Nigerian National Petroleum Corporation (NNPC) told it, however, the decision to revive the refineries was taken in 2011. The Original Refinery Builders (ORB) were initially contacted for the project. They declined and nominated partners who embarrassed the FG with horrible terms, forcing the NNPC to look inwards. Preliminary production in the Port Harcourt and Warri facilities came after nine months of phased in-house rehabilitation exercise by NNPC engineers and technicians; assisted by Original Equipment Manufacturer representatives, who handled major equipment overhaul and rehabilitation. The exercise begun in October 2014 scaled down costs by 70 per cent. All things factored, the refinery in Port Harcourt will be operating at 60 per cent of its 210, 000 barrels per day installed capacity and yielding 5 million litres of petrol per day, while the one in Warri will be doing 80 per cent of its installed 125, 000 bpd capacity and contributing 3.5 million litres of petrol to local refining capacity. The NNPC says it has shifted its attention to the Kaduna Refining and Petrochemicals Company, which has an installed capacity of 110, 000 barrels per day.
The nation’s four refineries (two in Port Harcourt, one in Warri and the other in Kaduna), most of which were built in 1979, were to feed 18.2 million litres of fuel into the system had they been producing at installed capacity. Nigeria’s average daily consumption of Premium Motor Spirit (PMS or petrol) is 40 million litres; Automotive Gas Oil (AGO or diesel) 12 million litres; Dual Purpose Kerosene (DPK) 11 million litres; and Liquefied Petroleum Gas (LPG) 1.2 million litres, official figures say. But the country refines only 5.10 million litres of PMS; three million litres of AGO; 2.10 million litres of DPK; and 0.34 million litres of LPG daily and imports the difference of 34.90 million litres of PMS; nine million litres of AGO; 8.90 million litres of DPK; and 0.86 million litres of LPG per day; about 90 per cent of Nigeria’s daily petroleum products’ need on a rough average. The NNPC superintends the import outrage and the inherent monumental subsidy fraud, which critics believe is one of the major reasons the Federal Government never bothered about the rehabilitation of the old refineries, construction of new ones or encouraging private refiners to come onboard.
Former President Olusegun Obasanjo, before he left office in 2007, sold two of the refineries for $750 million. But his successor, the late President Umaru Musa Yar’Adua, reversed the deal. Earlier in 2002, Obasanjo government issued licenses to 18 investors to build refineries, all to no avail. The Jonathan government continued in that path, promising in one breath to build new refineries or turnaround the old ones since 2012; and in another, canvassing the non-viability of government running refineries; and private refiners’ reluctance to invest in such facility under a regime of fuel subsidy. But had the refineries been in shape and additional ones built, local refining capacity would have climbed, while subsidy would be paid on just the difference imported to meet local demand.
We insist that it is stranger than fiction that an oil-endowed nation like Venezuela has a network of refineries operating at 74 per cent of capacity, running 1.2 million barrels per day (bpd) of crude. Singapore is not a crude oil-producing nation, but she owns about 60 refineries. Singapore takes pains to import crude, refines, sells and makes huge profit, among others. May it, therefore, be hoped that the era of business as usual in the oil sector and incessant hikes in the pump price of fuel is over with the rehabilitation of the old refineries. Nonetheless, the National Assembly should fasttrack the passage of the Petroleum Industry Bill (PIB) to pave way for openness, transparency and accountability in the oil sector. The down-stream sector yearns for honest deregulation to allow competitors engage in refining to boost local supply and force down products’ pump prices in the long run.
