Anybody who has followed happenings in the petroleum sector, right from the days the Peoples Democratic Party (PDP) held sway at the Presidency and now that the All Progressives Congress (APC) is in charge, would notice one trend: The opposition political party and its members have always viewed any move by the ruling party with suspicion. It has always been a case of “you are wrong” and “we are right.” Politics has been brought into affairs of the petroleum sector, with the ruling political party at the receiving end, even when it has good intentions.
At present, the APC Federal Government, in general, and the Nigerian National Petroleum Corporation (NNPC), in particular, have been on the spot because of the planned turn-around maintenance (TAM) of the Port Harcourt refinery. The Federal Executive Council (FEC) had approved the sum of $1.5 billion (about N600 billion) for the rehabilitation and revamping of the refinery. Since the announcement, a groundswell of opposition has gathered. The opposition to the TAM of Port Harcourt refinery, especially as it concerns the approved amount for the exercise, has mainly come from members of the PDP and those who have sympathy for it. Many have said that the approved $1.5 billion was outrageous, alleging that the said sum may has been inflated. Others have made comparisons between this proposed TAM and another refinery outside Nigeria.
The presidential candidate of the PDP in 2019 and former Vice President of Nigeria, Abubakar Atiku, in opposing the Federal Government’s plan, had pointedly stated: “To, therefore, budget the sum of $1.5 billion to renovate or turn-around the Port Harcourt refinery would appear to be an unwise use of scarce funds at this critical juncture for a multiplicity of reasons.” He said the country’s refineries had been recording losses over the years and, therefore, it would be a misplaced priority to commit $1.5 billion to rehabilitate one of them, at this point in time. He recommended the privatisation of the refineries, instead of the government spending such a huge sum to fix one of them.
Atiku raised issues about the cost, declaring: “Moreover, the cost appears prohibitive. Too prohibitive, especially as Shell Petroleum Development Company last year sold its Martinez Refinery in California, USA, which is of a similar size as the Port Harcourt refinery, for $1.2 billion. We must bear in mind that the Shell Martinez Refinery is more profitable than the Port Harcourt Refinery.”
Mr. Atedo Peterside, on his part, called on the Federal Government to stop the plan to rehabilitate the Port Harcourt refinery, saying it would be better to privatise it, instead of such expenditure. He charged government to “halt $1.5 billion approval for repair of Port Harcourt refinery and subject this brazen and expensive adventure to an informed national debate…Many experts prefer that this refinery is sold by BPE to core investors with proven capacity to repair it with their own funds.”
However, defending the plan to rehabilitate the refinery with $1.5 billion, the group managing director of the NNPC, Mele Kyari, said it was cheaper to do so, since it would cost far more to build a new refinery. He said: “We have people saying, why not build a new one? Why would you repair an old refinery with $1.5 billion? The fact is available even by Google search, what it takes to build a refinery of this status today.
“It will be difficult for the country to build a new refinery as it will take four years for it to commence production. It is around $7 billion and $12 billion to construct a refinery of this nature. This is the estimate you see in public space and there are things you do outside the construction battle-limits, like the utilities that are never accounted for when estimates of this nature are done.
“Typically, there is an additional 25 per cent cost for construction battle-limits. So, when you say a refinery can be built at $7 billion or even $10 billion, also think of that 25 per cent.”
At a time when politics has been brought to all spheres of life, it is obvious that Kyari is talking to himself. Even if he makes sense, there is no way members of the opposition political party will believe him or acknowledge his good sense of judgment. They would always fault it, to prove that they know better. Funnily enough, we were in this country when the PDP was in charge of governance and could not fix the refineries. The PDP Federal Government sold the refineries at a time. Another PDP government revoked the sales. The refineries were not rehabilitated for optimum performance. The country has been left with the only option of importing refined petroleum products, with the payment of subsidy, which has left a hole in the purse of government.
It is not surprising that members of the PDP are the most vocal ones in opposing the rehabilitation of the refineries. When the PDP was in power, the Action Congress (AC), Action Congress of Nigeria (ACN) and later APC made it a pastime to criticise every move made by the then ruling political party. We cannot forget that the opposing political parties then told the world that there was nothing like fuel subsidy and sounded convincing enough. We remember that the APC, in criticising the PDP’s rehabilitation efforts, told Nigerians: “If you give (APC) the opportunity to remove this (PDP) government that told you the refinery will work, we are going to make the refinery work.”
The chicken has come home to roost for APC and the political party has not been able to do anything whatsoever in six years. From what has happened, with the APC doing everything it accused the PDP of in the past, especially in the petroleum sector, it would pay the country better if we remove politics from everything we do in Nigeria. The APC is now convinced that there is fuel subsidy and has paid to the tune of trillions of naira. The APC now knows that it is necessary to turn around the refineries. However, the roles have reversed. The PDP is faulting the APC’s move. Gullible Nigerians believe the PDP, just like they believed APC in the past. We should never be fooled again.
One really sympathises with NNPC’s Kyari. He has been in the saddle for one year plus. He did not cause the comatose condition of the refineries. He only wants to take action to get things done better. So far, he has shown some level of transparency more than those who called the shots at the NNPC earlier. Sadly for him, the rehabilitation of refineries must be politicised. Politics or not, we have to agree whether the rehabilitation of the refineries is desirable or not. Methinks that this is necessary, whether the government would do it by itself or sell the refineries and have the buyers do it.
Assessing the cost of the assignment is relative. It is easy for people to say that the proposed $1.5 billion is huge. It is easy for people to say that it would have cost less if handled by another company, instead of the Italian firm, Tecnimont S.P.A. These are true. However, we must all agree that Julius Berger, for instance, will not give the same quote for construction of road with another company, say CCECC or Arab Contractors. And the quality of work will not be the same. Each company has its unique selling point (USP) and this comes into play in their pricing. The power of negotiation also varies from person to person.
Instead of politicising the rehabilitation of refineries, what should concern us more is whether the NNPC, and the Federal Government, would do what it has promised. I am of the school of thought that the refineries should be fixed first and then sold. If the Port Harcourt refinery is rehabilitated and working, the value would be higher when it is time to sell. If it is sold in its current decrepit state, it would be dispensed with at pittance. The fact that people are pressing for the privatisation of the refineries means that these refining facilities are not in a hopeless state. They could be fixed to work better. In doing this, we should avoid the mistake made in the privatisation of the electricity sector, wherein investors who did not have the wherewithal bought them and then started shopping for funds to make them work. We as a country are still left with this albatross.
Some people would say that it does not concern government if those who buy the refineries do not have money to make them functional. No! It does concern government. Whether fixed and managed by government or sold to private investors, the ultimate goal should be to make the refineries work. When refineries work, the country will save scarce foreign exchange expended to import fuel. Besides, although the world is shifting to electric vehicles and downplaying petroleum, it is obvious that fuel or petroleum products would not be phased out completely. Even with electric vehicles, there will still be people who would use fuel-powered vehicles. Such people need refineries, like Nigeria’s, to use their vehicles.
We should rather hold government by its word to fix the refinery that has been earmarked for rehabilitation. With a rehabilitation programme of 18 months for the first phase, 24 months for the second phase and 44 months for the third and final phase, our worry should rather be about continuation. Whether the APC retains power in 2023 or not, what Nigerians should hope for is that the next government would continue the rehabilitation programme and complete it by 2028 or 2029, by which time Kyari would be leaving office, if he is lucky to be retained and given a second term in office by whatever new government.