The Nigerian National Petroleum Corporation (NNPC), yesterday announced its decision to quit the management and operations of the nation’s refineries with immediate effect.
Group Managing Director of NNPC, Mr. Mele Kyari, disclosed the Corporation’s plan to exit the midstream arm of one of its core businesses during a live interview monitored on Arise Television.
The move by the NNPC to quit refining arm of business comes several years after criticisms of its endless Turn Around Maintenance (TAM) which has gulped several billions of Naira with the country having nothing to show for it as it continues to depend on imported petroleum products.
He said the management of the NNPC under his leadership took a conscious decision to shut the refineries down because the country was better off doing so to know exactly what to do with them.
To replace the NNPC in the management and operation of the refineries, he said the Corporation has secured private funding for the rehabilitation of the Port Harcourt refinery and an Original Equipment Manufacturer (OEM) contract.
Kyari said the same process would be applied for the rehabilitation of the two other refineries in Warri and Kaduna.
‘‘Ultimately, the end result as we speak today is that the refineries are not working because we never got it right. And the decision we made is conscious. We said let us just get somebody to tell us what to do because you don’t just get somebody or call people to say let us do TAM. As you uncouple the plants, you then begin to think of what to do. Let us just know what is wrong and what we need to do.
And in respect to Port Harcourt refinery today, we know exactly what is wrong which was never done. And on the basis of that, we have also secured financing to for getting it done. And on top of that, we are going to have an OEM contract. NNPC won’t run it.
We are going to get somebody who will give us a guarantee that this plant will run for a period of time on the basis of a fee to be agreed by both parties. Let us try a different model of getting these refineries to run. Once we are done with the fixing of Port Harcourt refinery on the basis of a full scoping, getting a private partnership to put their money into it and ultimately, we will allow the shareholders (Nigerians) to decide what they want to do with it.’’
He explained that upon completion of the process, the NNPC prescription would be that we make it the kind of NLNG structure where there is clear ownership of the private structure of the refinery, while decision making does not rest with the NNPC and where the end forces that is world class are allowed to play.
‘‘As we speak today, we know that there are a number of obstructions in processes when it is maintained under the same structure.
We have seen it work in our plant that we sold to Indorama at Eleme and we have also seen it work in NLNG.’’
He acknowledged the several attempts by very many past management of NNPC, including Governments effort in the last 25 years to put the refineries to optimal use without success, adding that there was something fundamentally wrong with the refineries.
‘‘In arriving at that, a couple of questions came up which we asked ourselves as management. Do we really know what we wanted to do with refineries. What kind of repairs, TAM or rehabilitation work, do we intend to carry out. Without properly scoping what we need to do which was never done in all the past attempts of TAM, it was actually a case of putting the cart before the horse.
All manner of decisions were made in the name of TAM which included calling contractors here and there. All these were aberrations which are not normal in refinery rehabilitation process that came into play.’’