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Rehabilitation Of The Port-Harcourt, Warri And Kaduna Refineries; A Right Step In The Right Direction

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By Adewole Kehinde

The debate over the appropriateness or otherwise of the Federal Executive Council (FEC) decision to approve the award of contracts for the rehabilitation of Warri and Kaduna refineries to Messrs Saipem SPA and Saipem Contracting Limited at the combined the sum of $1.484billion has again dominated the media space in recent times. Huge opposition has risen from some quarters, while they are truly entitled to their opinion and rightly so in democratic dispensation, it is also important to take a holistic view of issues at stake.

In all sincerity, nobody seems to have captured the reason for the strong opposition to the project than the Group Managing Director of the Nigerian National Petroleum Corporation, Mallam Mele Kolo Kyari when he acknowledged that the challenge is more of lack of trust.
Owing up on the trust deficit while answering question on a national television Kyari said,

“We agree that we have not done well in maintaining our refineries in the past 25 years because the last turnaround maintenance of Port Harcourt refinery was 21 years ago and it wasn’t done well and it has shown in the performance of the refinery.” He stated that the situation today was caused by failure in the past to do what is right, stressing that it has led to a huge cost of rebuilding.
Kyari then went ahead to assure of his administration’s commitment to ensuring that things are done properly hence forth.

Meanwhile, those who have been following the leadership style of Mallam Kyari since he assumed office while agree that much has changed in the activities of the Corporation in terms of openness to the public, accountability and transparency. In what looks like a coordinated reportage on Sunday, 8th August, 2021, most media outfits came up with headlines with that of https://247ureports.com/ captioned “Amidst Unaccounted N1.5trn, Buhari Injects N3.8trn Into Moribund Refineries.”
The criticisms against the rehabilitation plan are sufficient evidence that these interests are still lurking around seeking the least opportunity to strike again. If anything, industry watchers have applauded the refinery rehabilitation plan, saying it will create boundless benefits to Nigerians such as meeting local energy demand, growing the nation’s GDP, strengthening the naira by reducing the demand for Forex to creating thousands of jobs across the entire value chain (crude supply, operating and maintaining the refinery, product supply, etc) including several third-party contractors that will supply outsourced services or goods, the advantages are huge.

Also, locally refined petroleum products will serve as feedstock for small scale local manufacturing but most important is the significant and visible benefit such rehabilitation means to the national energy security of all Nigerians past maintenance had consumed billions of dollars without real-time visible benefits to the nation. Amid global oil price uncertainties, Nigeria’s case is particularly worsened by the sharp drop in the global demand for its oil due to environmental, social, climate change issues worsened by the ugly effects of COVID-19 pandemic. Nigeria’s tragic story is particularly appalling when considered that our dormant refineries continue to pave the way for unbridled importation of refined petroleum products steadily oiled by rapacious emergency importers and their cronies. It is envisaged that this refinery rehabilitation plan will utilize the rising domestic demand for fuel and the entry of new private players like Dangote and Waltersmith, etc to make Nigeria Africa’s major petrol refining hub using the continent’s bourgeoning middle-class propensity for cars and PMS.

This is where industry leaders such as the NNPC Management led the Group Managing Director (GMD), Mallam Mele Kolo Kyari should leave no stone unturned to wrestle the nation from the vice-grip of these few but powerful anti-Nigeria interests. It is for them to continue to summon the courage to save the day for over 200 million Nigerians and generations yet unborn. There is no better time than now to re-write Nigeria’s post-independence chequered history by unraveling the riddle of a leading oil-producing country like Nigeria that is still found among leading oil-importing nations. Mallam Mele Kolo Kyari could not have put it any better when he said last year:

‘’We couldn’t fix our refineries and that’s very difficult to explain. Why can’t we fix our refineries? For all 20 years, attempts to fix the refineries failed for very simple reasons, there’s a strategy problem’’. This strategy tallies with the refinery rehabilitation option which a few vested interests are out to shoot down. Nigerians want Team Kyari, as a national mandate, to drive this strategy to a logical conclusion, pulling the refineries back on stream and to their nameplate capacities using the Operate & Maintain model for all the sleeping refining giants to achieve, at least 90 per cent of total installed production capacity by 2023. My joy is that some oil industry and economic experts have said the rehabilitation of four refineries in the country will bring about lower pump prices, creation of thousands of direct and indirect jobs, less drain on Nigeria’s scarce resource and consequently increase its foreign reserve.

They believe that current rehabilitation moves, if properly done, would yield positive results and liberate Nigeria from the comity of importers.
Despite the abundance of hydrocarbon resources, Nigeria is the only oil gas producer in the World that does not refine petroleum products. Instead, Nigeria relies heavily on importation for most of its Petroleum Motor Spirit needs locally. Obviously, there are huge benefits in bringing the Nation’s refineries back on stream. From satisfying local energy demand, growing the nation’s GDP, to strengthening the Naira by reducing the demand for Forex to creating thousands of jobs across the value chain (crude supply, operating and maintaining the refinery, product supply etc) including several third-party contractors that will supply outsourced services or goods, the advantages are huge.
The refined products also serve as feedstock for small scale local manufacturing. The most significant and visible benefit is energy security for the country.
Unlike the regular Turn Around Maintenance (TAM), this rehabilitation will involve comprehensive repairs of the plant with significant replacement of critical equipment to ensure that the plant’s integrity is maintained for a minimum of ten years
The Kaduna Petrochemical Company Limited has 110, 000 bpd capacity while Warri Refining Petrochemical Company Limited has 125, 000 bpd capacity.

Adewole Kehinde is the Publisher of Swift Reporters and can be reached via 08166240846, 08123608662. E-mail: kennyadewole@gmail.com

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