Amidst the heated national discourse generated by the Federal Executive Council’s approval of the sum of
$1.5 billion United States dollars for the rehabilitation of the redundant Port Harcourt Refinery last month, the Nigerian National Petroleum Corporation (NNPC) on Tuesday, April 6, 2021, signed a contract for the project with an Italian engineering company, Tecnimont SpA, a subsidiary of Maire Tecnimont SpA in Abuja.
While the Managing Director of the Port Harcourt Refining Company (PHRC), Mr Ahmed Dikko, signed for the nation’s oil giant, Mr David Pellizola, Vice President of Tecnimont SpA for sub-Saharan Africa, signed for his company.
Speaking at the event, the Group Managing Director (GMD) of the NNPC, Mr Mele Kyari said that the sum of $162.39 million had already been provided, adding that an escrow account would be opened in respect of the project in the coming weeks.
The GMD reassured that several stakeholders from within and outside the country had been engaged to guard against fears expressed by a cross section of the Nigerian public over the cost and modalities of the project.
“We dragged in several stakeholders like the Ministry of Finance, ICRC, NEITI, labour unions, foreign technical partners and others. If we had anything to hide, we won’t do this. This is a great history for us. We are aware of the misgivings around cost, political compromises, etc,” he said.
Mr Kyari added that “We acknowledge we made mistakes in the past with regard to Turn Around Maintenance (TAM). But this is not a TAM. Major procurement and construction are involved here. We’ve neglected these refineries and TAM procedures abused. This is retrofitting. Some parts will be replaced and others upgraded, and these spendings will be published”.
According to the Federal Government, funding for the project is to be derived from the NNPC’s internally generated revenue, budgetary allocations provisions and the African Export-Import Bank.
The contractor, Maire Tecnimont SpA has also acknowledged that the project involves the provision of a suite of services for the major rehabilitation of NNPC subsidiary, Port Harcourt Refining Co. Ltd’s Port Harcourt refining complex which includes a 60,000 – b/sd hydroskimming refinery and 150,000 –b/sd full-conversion refinery.
As part of the contract, Tecnimont SpA will deliver engineering, procurement and construction (EPC) activities for the full rehabilitation project which aims to restore the complex to a minimum of 90% of its nameplate capacity over 24 – 32 months, with the final stage to be completed by the year end 2024 or 44 months from April 2021 award date.
Earlier, the project plan had elicited strong criticisms from various stakeholders across the country, one of such critics being the former Vice President of the country, Alhaji Atiku Abubakar.
According to Alhaji Abubakar, the sum to be expended on the project was prohibitive and would appear to be an unwise use of scarce resources for a number of reasons including the fact that the parent company of Shell Petroleum Development Company (SPDC) only last year sold its refinery of similar size with the Port Harcourt Refinery in the United States for $1.2 billion and wondered if there was a public tender before the cost was announced.
“Was due diligence performed? Because we are certainly not getting value for money. Not by a long stretch”, he said, adding that the Shell Martinez Refinery was more profitable than the Port Harcourt Refinery and therefore couldn’t have cost less than it would cost to rehabilitate an ailing one.
“First of all, our refineries have been recording losses for multiple years, and indeed, it is questionable wisdom to throw good money into such venture. At other times, I have counseled that the best course of action would be to privatise our refineries, so they can run more effectively and efficiently.
“At this critical period, we must, as a nation, be prudent with the use of whatever revenue we are able to generate, and even if we must borrow, we must do so with utmost responsibility and discipline,” he said, adding that “we cannot, as a nation, expect to make economic progress if we continue to fund inefficiency, and we are going too deep into the debt trap for unnecessary overpriced projects. Our national debt has grown from N12 trillion in 2015 to N32.9 trillion today. Surely, that is shocking enough to cause us to be more prudent in the way we commit future generations into the bondage of bonds and debt,” he stressed.
In the same vein, the founder of Stanbic IBTC Bank Plc, Atedo Peterside had implored the Federal Government to put the project on hold and subject it to a national debate, arguing that it was too expensive and that many experts preferred that the refinery is sold by the Bureau of Public Enterprises (BPE) to core-investors with proven capacity to repair it with their own funds.
The thinking is the same with a former President of Nigeria Association of Petroleum Exploration’s (NAPE), Abiodun Adesanya who intoned an ulterior motive of fund raising for 2023 political activities.
“The $26.5 billion spent altogether in trying to fix these refineries over the years has not yielded any results”, he said, adding that “public confidence that any of the refineries will work without selling them off to the private sector is weak”.
For Bank Anthony Okoroafor, Chairman, Petroleum Technology Association of Nigeria (PETAN), “The government has no business running refineries. They should sell the Port Harcourt Refinery for $1 billion to capable private investor who will run it profitably and pay tax to the government. The government’s role should be regulatory”.
Conversely, the Independent Petroleum Marketers Association of Nigeria (IPMAN) commended the Federal Government for the move to rehabilitate the Port Harcourt Refinery. Executive Chairman of IPMAN in Rivers State, Comrade Joseph Obele who gave the commendation in Port Harcourt said the project would employ over 25,000 persons when completed.
Comrade Obele also expressed the hope that the resuscitation of the Port Harcourt Refinery would put an end to importation of petroleum products like the premium motor spirit (PMS), otherwise called petrol, adding that the venture would also open up businesses within the host communities of the refinery and make products readily and easily available for marketers.
“It will make us have the best quality of products as against all the rubbish they are importing into Nigeria. It will make things very easy for marketers by getting products without stress. We have plenty reasons to say thank you, Mr President,” he said.
The Ijaw Youth Council (IYC) Worldwide, on its part, has described the rehabilitation project as a signal that the Federal Government has finally woken up from its slumber. According to the President of the Council, Peter Timothy Igbifa, though the reviving and optimizing of the refinery was long overdue, it was better done late than never and expressed the hope that it would create employment for the teeming jobless youths in the Niger Delta, we will be constituting an action committee to work closely with the Ministry of Petroleum and the contractors that will be in charge of the rehabilitation project. We will monitor the execution of the project from the beginning to the end and if we notice any foul play, we will surely raise the alarm”.
While The Tide supports the rehabilitation of the Port Harcourt Refining Company in the light of all the benefits accruable to the nation and the enormous economic impact to the immediate environment of the firm, we strongly advise the Federal Government to hands off the direct running of the company as it has done over the years, bringing only wastage and economic misery to the nation.
For the 32 years that the refinery has been in operation, it is evident that it has gulped more money than it has generated for the country. There is therefore no reason whatsoever for the government to continue to run it under whatever guise. This is why we insist that government should concession or privatise it upon completion of the rehabilitation work.