The Minister of Petroleum, Mrs. Diezani Alison-Madueke, recently intimated the Senate Committee on Petroleum (Downstream) with the plan of the Federal Government to spend N251 billion (about one billion British pounds) on the repair of three refineries in the country.
The three facilities scheduled for the Turn Around Maintenance (TAM) are the Kaduna, Port Harcourt and Warri refineries in Kaduna, Rivers and Delta states, respectively. The refineries have total production capacity of 445,000 barrels per day (bpd) but they are currently running below 25 percent of that capacity as a result of their poor management. However, in spite of the fact Nigeria needs to refine more fuel to meet local demand, the projected cost of this planned repair is too high.
It is more than enough to build two new modular refineries, going by the government’s disclosure, in June, that it had signed a Memorandum of Understanding (MoU) with a consortium of American investors and the Nigerian Venture Group, Vulcan Petroleum Resource, for the building of six high-tech modular refineries at a cost of N697.5 billion, with installed capacity of 180,000 barrels per day.
At that time, the modular refineries were touted as a better option to endless repairs of existing refineries that are largely believed to be obsolete. Under the agreement, two of the modular refineries ought to be completed within one year, each with capacity to refine 30,000 bpd. At that time, we commended the government for the initiative.
The Minister has, however, now submitted that the N251 billion TAM of the old refineries is the ultimate solution to the recurring problem of scarcity of petroleum products in the country. Beyond the wisdom or otherwise of the planned repair, however, is the huge cost of the TAM. The amount is scandalous, and may serve the nation better if committed to the construction of two or three more modular refineries.
If we will allow history to be our guide, Nigerians will recognise that over the years, Turn Around Maintenance of our refineries has always been characterised by colossal fraud. This is largely so because the nation’s oil industry under the management of the Nigerian National Petroleum Corporation (NNPC) oftentimes breeds corruption. It is doubtful that the proposed TAM will be the magic wand to end the continuing scarcity of petroleum products in the country.
Previous TAM of the existing refineries in the country did not yield the expected results, in spite of the huge capital sunk into them. The Ministry of Petroleum has also not convinced Nigerians that the current plan will make any difference. In the past, such repairs ended up creating a cartel of fuel importers, which feasted on the money voted for the exercise.
This has resulted in loss of confidence of many Nigerians in the ability of the NNPC to keep the refineries in good shape to meet its installed production capacity. Nigerians have been fooled too many times under the guise of maintenance of refineries. There is also the fear that the planned repair may be a smokescreen by government towards complete removal of subsidy on petroleum products, which government failed to actualize in January due to the nationwide strike that trailed partial withdrawal of the subsidy. This fear may not be unfounded because the Minister of Information, Mr. Labaran Maku, had hinted late last year that the repair of the old refineries and the establishment of three additional ones in Bayelsa, Lagos and Kogi states, would be part of the measures to address the lingering problems in the production and supply of petroleum products across the country, and possibly a prelude to a total deregulation of the downstream petroleum sector.
The proposed TAM is likely to be part of the plan to actualize that script. Although we are not totally opposed to the maintenance of existing refineries, the proposed budget for the TAM is questionable. It makes more economic and logistic sense to put the plan on hold until the modular refineries are constructed and brought on stream. There is also need for government to seriously consider viability of this initiative before its implementation. As attractive as the revamp of existing refineries may seem, government should not gloss over the systemic factors that led to the failure of previous TAMs to achieve the desired objectives.
In this regard, it is better to channel the funds earmarked for the repair of old refineries into building new ones that are based on the latest technology. Nigeria’s oil sector needs faster, result-oriented refinery platforms. When that is achieved, government can give attention to fixing the old ones as back up or complementary refineries. That, we think, is the way to go. Let government work assiduously with the foreign partners to ensure speedy completion of the modular refineries.
” It is doubtful that the proposed TAM will be the magic wand to end the continuing scarcity of petroleum products in the country”.
No, proposed TAM is not the magic wand to end scarcity , but the magic wand for the next pillage of the nation’s wealth via the oil & gas sector. The same dramatis personae that approved more than N2trn as fuel subsidy payment in 2011 knowing only N400bn was budgeted- most of which payments were fraudulent and have been shown to be so are still in the saddle, so what else do we expect. Check that against the background of a budget of N4.62trn. So the nation spent about 40% of its budget on largely fraudulent fuel subsidy payments and those who approved those apyments are sitting pretty
You can only get value out of the said refineries in a privatised set up, not under government management where they represent a nice setup for sinking the nation’s revenue. They always were and will remain so.
Yes ooooooooooooooooooooooooooo
DON’T THE GOVT HAVE MONITORS OVER MAJOR PROJECTS? IF JONATHAN’S REGIME
WANTS TO BE CORRUPT AS IBB AND ABATCHA’S HANDLINGS OF FORMER TAMs
DURING THEIR REGIMES THEN NNPC SHOULD
NOT BE BLAMED.
THE MINISTER KNOWS ABOUT THE GRAND PLAN TO SELL THE REFINERIES TO SOME
OF THEMSELVES.
A long way to solvin petroleum importation if implemented.but we had heard this song for a long time now,previous admistr.had sunk billions without result.i do we start gettin our priority right.
Nigeria government of shame,My hapiness is dat one day u will give acount of urself befor ALMIGHTY GOD,and u will sufer for ur wickedness ecept if im not a servant of GOD,all of u must sufer for it,wicked government.
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How much is a new refinery? Just a fraction of this outrageous amount. You people are playing with the nation’s intelligence. When TAM was under Chrome Oil clutch, what became of it at a whooping $300 million cost? Give incentives to private sector and Nigeria will be exporting refined fuel and creating jobs. This is insane. Minister What do you learn when you come here each spring for the OTC?
Yes, govt continues chop chop the money oooooh na God give U na.
Good comment, Sun. But better still, why doesn’t the gov simply build new modular ones with the money they are proposing for the TAM and then sell off the old refinery to the private sector at a price that reflects the 25% current operational capacity and with enough incentives to encourage the new owners to increase their capacities.
The monies realised from the sell off can then be reinvested in building more modular units. This can only engender a win win situation where refineries are not fully devolved into private hands and still gives the govt some leverage and say in the crucial and strategic industry.
Huge some,they must be preparing 4 2015,surely no turning around anything,pdp may want to raise money via the TAM via the petroleum sector.
When a country is corrupt, it is corrupt. day by day they fine tune clever ways of rping off the tax payers. Years ago the govt. granted licenses to all the power brokers and their surrogates. These people were supposed to build refinieries and maintain them with their money, the FGN retained some ownership percentage but was small. The refineries metamorphosed into Petrol Farms which is nothing storage thanks for petro products. No single refineries were build, instead they used the subsidy and govt guarranteed loan to import fuel and sold it to nigerians at three times its cost. Petro products and Kerosine are diverted to other countries for more profit.
The signs of corruption is always there when you see people who have no business with any project start getting the contract, you know it is Ojoro, Wayo and corruption, and they know it. In other countries where transparency is the operating word, you used the facilities you had to borrow from the bank, start and complete the project before you get paid. Here in Nigeria, you recieve this days upwards of 50% paid up front as mobilization funds. You got to be kidding what has mobilization got to do with it?. Projects of this magnitude is supposed to be awarded to internationally aclaimed multinational corp with versed experience and resources. They finish building, we pay them. Its time this country get its act together, this Ojoro no longer work, every nigerian knows about it.
OOOH UNTIL THE DAY THE POWER OF LOVE OVER COMES THE LOVE OF POWER THEN THE WORLD WILL KNOW PEACE,…THE SPIRIT OF THOSE IGBO’S KILLED DURING CIVIL WAR WILL NEVER LET NIGERIA HAVE PEACE, APPEASE THEM NIGERIA, GIVE THEM BEFITTING BURIAL, GOWON SAID HE HAS NO REGRET TO FIGHT CIVIL WAR, LET SEE GOD MUST FIGHT FOR IGBO’S WHAT IS HAPPENING IN NIGERIA TILL NOW AT 52 YEARS THEY SAID IGBOS WILL NOT RULE THEN, WHAT IS THE STATE OF NIGERIA? IS NIGERIA GOOD? IS NIGERIA WORTH TO BE COUNTRY, STILL AT 52 YEARS NIGERIA ACHIEVE NOTHING, NO LIGHT NO ROAD BUT STILL THE WEST AND NORTH SAID THEY WANT TO RULE, BUT WE SHOULD REMEMBER THAT GOOD THING ALWAYS COMES FROM NAZARETH, WISE MEN COMES FROM EAST, GIVE IGBO’S PRESIDENCY AND SEE IF NIGERIA WILL NOT BE A PARADISE ON EARTH, THROUGH IGBO MAN NIGERIA GO INDEPENDENCE SO THROUGH IGBO MAN THE COUNTRY WILL BE NICE AND WONDERFUL BELIEVE IT OR NOT, GOOD THING CAN COME FROM NAZARETH, WHERE PEOPLE NEGLECT OR ABANDON WILL BE THE WAY, REMEMBER THE REJECTED STONE WAS LATER BECOME THE CHIEF CORNER STONE QED
D citizens of dis great country ve ben taking too much 4 a raid by govt in power the money for d TAM of d refunaries should b use 2 build a new one.
I advice the government to build more two refineries has proposed and maintain the old ones,by so doing create more jobs for people and terminate scarcity in the nation.