In what appears to be a never-ending situation, the Federal Government has decided to continue with the shutdown of its 3 refineries, as part of the ongoing efforts to reposition them.
This was disclosed by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, during a television interview earlier today.
These refineries, which are in Kaduna, Port Harcourt, and Warri, have rarely functioned properly for many years, despite the government’s infusion of huge investments in them.
The NNPC boss said that the corporation had decided to shut down all of its refineries in order to develop a model to upgrade them and secure enough funding for them.
Although the GMD said they have secured funding for the maintenance, he did not provide details. Note that the corporation had previously entered into several unsuccessful agreements with oil traders.
He said that the NNPC was looking at a different model for refineries, such as that used by the Liquefied Natural Gas (LNG). Kyari said:
“We made a very conscious decision to shut down our refineries. Today, after proper scoping, which was done in the past, we know exactly what to do to get them back on stream. We have also secured financing to make sure they work optimally.
“Aside from proper scoping, we are also going to have an Operation and Maintenance (O&M) contract, a different model of getting the refineries to work. We are looking at the NLNG structure where world-class processes will always be in play. We’ve seen it work with success.”
Getting Nigeria’s refineries to work efficiently and regularly has, for many decades, remained a mirage due to deep-rooted corruption in the oil industry.
In a related development, the NNPC GMD said that the corporation will no longer be involved in the management of the nation’s refineries after their rehabilitation.
He disclosed that upon completion of the ongoing rehabilitation exercise, NNPC will engage the services of a company would manage the plants on an Operations and Maintenance (O&M) basis.
He explained that the ultimate plan is to get private partners to invest in the refineries and get them to run on the NLNG model where the shareholders would be free to decide the fate of the refineries going forward.
Mallam Kyari stated that this model, which is totally different from previous approach, would guarantee the desired outcome for the refineries.
It could be recalled that in January this year, the Nigerian senate, resolved to probe the corporation over the sum of $396 million which was spent on turn-around maintenance of the refineries, between 2013 and 2015, without any positive result, as the country has continuously imported almost all its petroleum product needs.
Members of the upper chamber expressed their displeasure at the moribund state of these refineries in the last 15-20 years, due to lack of proper maintenance.
These refineries have hardly operated at more than 15% capacity utilization per annum.