Mixed reactions trail $1.4bn contracts for Warri, Kaduna refineries rehabilitation
By Uthman Salami & Ariemu Ogaga, Abuja
Stakeholders have expressed mixed reactions over the approval of $1.4billion for rehabilitation of Warri and Kaduna refineries rehabilitation contracts by Federal Executive Council (FEC) on Wednesday.
The fear over the success of the contract concerns execution and timely delivery of the projects.
The Minister of State for Petroleum, Timipre Sylva revealed to State House correspondents after the FEC meeting that $897 million is allocated for the Warri refinery and $586 million for Kaduna refinery.
Minister of State speaking at the FEC meeting chaired by Vice President Yemi Osinbajo, said the rehabilitation of the refineries will be carried out in three phases.
The FEC also approved the $2.76 billion acquisition of 20 per cent minority stake by the NNPC in Dangote Petroleum and Petrochemical Refinery.
Reacting, an economist and senior Lecturer, Lagos Business School, Dr Adi Bongo expressed that the approval is a misplaced priority.
According to him, “This is a government that has been talking about buying stake in Dangote refinery and modular refineries awarding licenses. The policy by the government is confusing.
“We have a government at one hand is interested in private sector driven economy and the other hand putting resources into wasteful and unproductive refineries.
“We have seen policy inconsistency everywhere and how do you think such economy will thrive when you have contradiction? We have pumped so many into rehabilitation of these refineries and nothing to show as outcome.
“Pumping money into refineries that will not work is corruption and it does not reflect a mindful government. We have critical needs in so many critical sector of the nation’s economy.
“Pumping money into refineries that are not obsolete is not just wasteful but conspiracy against Nigerians.”
Also energy analyst, who does not want his name in print noted that the turnaround maintenance budgets may not yield desired results going by precedent.
According to him, “I do believe that these turnaround maintenance budgets, if we go by precedent, will evaporate into thin air.”
He further expressed his disbelief that the impacts would be commensurate with the monies spent.
In a swift response, the chairman, International Energy Services, Dr. Diran Fawibe, said, “This is following the pattern of contract approved for Port Harcourt refinery of about $1.45 billion.
“But the Warri and Kaduna refineries are 125 and 110,000 barrels per day capacity.
“This is still in line with the professed policy of the federal government to rehabilitate all its refineries so that they can become operational.
“It will follow the contracting process that was done for Port Harcourt refinery. It will go through various processes to ensure transparency and accountability at the end of the process.
“The major issue now is the execution of the job to meet the expectations of Nigerians.
“This is because $1.4 billion is a lot of money. Once the contracting process follows due process and transparent, we will then monitor the execution to ensure that there was no compromise.
“We hope the contractors meet all the expectations in terms of having support base refineries at the end of the process, so that Nigerians will have a bit of relief from having to be import petroleum, even notwithstanding the fact that we are a major oil producers.
“All eyes will be on NNPC and the contractors that will be doing the rehabilitation to ensure that there won’t be any story at the end of the day.
“If these refineries are working plus Dangote refinery, we will have a stoppage of importation of petroleum products that has led to subsidy and a lot of smuggling.
“Because we are importing, fixing appropriate price for the product has become very difficult for government to do and as long as that subsidy exists, cross border smuggling will continue to be a lucrative business for smugglers.
“We hope that when the refineries are completed, there will be an orderly development of local markets of petroleum products.
“This time there will be no excuses for importing petrol into the country.
“By this, we will be able to internalize our natural resources by refining our local crude and enjoy the advantage of being a producer of oil.”
President, Oil and Gas Trainers Association of Nigeria (OGTAN), Mazi Sam Azoka Onyechi in a chat with Nigerian NewsDirect said the rehabilitation of the refineries is long overdue.
“Why should we be importing petroleum since we can refined them?” he questioned.
He urged the federal government to ensure that the rehabilitation contracts are executed and the project completed.
He said, “The project should not be on paper but must be executed. The contracts should be awarded through due process.
“The approval by FEC is a welcome development.”
The country has four refineries – including two in Port Harcourt – but all have struggled to function optimally as the country continues to import petroleum products.
The rehabilitation is expected to turn around the refineries and set them up to meet national oil demands.
In June, Managing Director of Nigerian National Petroleum Corporation (NNPC), the national oil company, Mr Mele Kyari, said the rehabilitation of the refineries, in conjunction with private efforts such as the Dangote Refinery, will transform Nigeria into a “hub of petroleum products and supply.”
“It’s going to change the dynamics of petroleum supply globally in the sense that the flow is coming from Europe today and it is going to be reversed to some other direction.
“We will be the supplier for West Africa legitimately and also many other parts of the world.”
The rehabilitation’s success can also have a positive impact on the street-level price of petroleum products such as petrol.
