The Nigerian National Petroleum Corporation has recommended the sale of
the nation’s three refineries in Port Harcourt, Warri and Kaduna due to
some challenges the agency described as critical elements, which may
continually hinder their effective operation in the hands of the Federal
Government.
NNPC has equally finalised its position on the
protracted pipeline surveillance, with a verdict that the protection of
the pipelines be entrusted to the military, which it believes can
effectively protect the critical facilities.
A source in the
corporation, who spoke to one of our correspondents on Saturday in
Abuja, said the corporation’s stance was informed by the position of the
NNPC Stock Reconciliation Committee, which met last week in Abuja to
assess the performance of the refineries and associated logistics.
The source, who is very close to the committee, explained that the
committee concluded that the operation of the refineries could not be
profitable under the current arrangements, which the panel described as
unfavourable.
The source, who spoke on condition of anonymity,
explained that the Ship-to-Ship transfer, which the corporation has
employed to get crude oil to the refineries, cost between $6m and $7m
per vessel and load one million metric tonnes of crude oil.
“MC COSMIC and MC JEWEL, which are engaged to transfer crude to Warri
refinery because of their carrying capacities of about one million
metric tonnes, collect between $12 and $14m per operation(trip)
“The same scenario is replayed to
get the crude to the Port Harcourt refineries. If you add the amount to
the already huge cost, you will realise that the nation cannot sustain
the refineries on the prevailing conditions,” the source added.
The committee, it was learnt, also recommended the stoppage of the SWAP
and the Offshore Processing Agreement (which had been carried out), in
order to increase local availability of crude to the refineries.
“Crude business is done three months ahead. It was already concluded
during the immediate past administration that the three refineries would
be sold, even though the government had stocked all the materials for
the turnaround maintenance of the refineries.
“So, there wouldn’t
have been any crude for the local refineries if the SWAP deal and the
OPA had not been cancelled; so, the quota that would have been exported
was rescheduled to the three refineries,” our source said.
Disclosing that the Kaduna refinery started production from its
Fractional Cracking Catalytic Unit at 11.50am on Saturday, the source,
however, said the threat posed by pipeline vandalism remained the
greatest challenge to the local refining of petroleum products.
“Kaduna refinery has the capacity to crack any type of crude from any
part of the world, be it light or heavy. The FCCU, which produces all
components of petroleum products from the crude supplied, started
production at about 11.50 this morning. During the week, it was
undergoing processing,” the source added.
“The fear of the
committee, however, is that the number of leakages along the
Warri-Kaduna pipeline will not allow the transfer of petroleum products
to continue. In July, when the Kaduna refinery was about to start
production, the pipeline had been breached in 78 points between Warri
and Lokoja. The vandals have been able to identify the difference
between the pipelines carrying crude, gas and refined petroleum product.
And once there is a breach in one of the pipelines, other pipeline will
be shut down.”
The source equally explained that the menace of
vandals would also not allow fuel tankers to leave the nation’s highways
soon, especially Lagos.
He said the NNPC had recommended to the
Federal Government that the military should be directed to take over
pipeline surveillance, as the agency would no longer be able to carry
out the protection of the pipelines across the country.
“With
about 250 points being attacked on a monthly basis, and the huge cost of
putting them back in shape, there is no way the government can sustain
such losses, which it had intended to stop,” he stated.
The
source said owing to the challenges outlined by the committee, the panel
believed the best operation for the government was to sell the
refineries in their current state while holding on to a “minimal stake”
in the facilities.
“The recommendation is that the government
should sell the refineries as they are. The same principle applies to
our cars; it gets to a point that we believe that they are no longer
serving the purpose for acquiring them. The refineries have become a
burden. It has been recommended that if the government will not embark
on outright sale of the refineries, it should go into partnership but
hold a minimal stake in the venture, especially with those who built the
refineries initially,” the source added.
It was also gathered
that the government had been advised to facilitate the setting up of
modular refineries, which are smaller but runs on modern technology, to
replace the existing facilities, which are even obsolete.
However, President Muhammadu Buhari is said to have disagreed with
selling the refineries for now on the ground of what the source
explained was based on “social and political” factors.
“You know
the connection between the President and how he facilitated the setting
up of the refineries in Port Harcourt. He is highly concerned about what
the people will say. He is also said to be considering what the cost of
petroleum products will be after the sales; considering what the
government pays silently at the moment to make sure petroleum products
are readily available,” the source said, while explaining that Buhari’s
reaction had been made known to the top management of the NNPC.
Meanwhile, the NNPC has denied any plans to sell the country’s refineries at present.
According to the corporation, reforms by its new management have not
suggested the sale of the three refineries located in Warri, Port
Harcourt and Kaduna.
The corporation’s Group General Manager,
Group Public Affairs Division, Mr. Ohi Alegbe, told our correspondent on
Saturday that although the firm had undertaken series of reforms since
its new management came onboard, it had not recommended the sale of the
national refineries.
Alegbe said, “There is nothing like that.”
When told that there are concerns that the NNPC might not be able to
protect the pipelines and that the Federal Government should take over
the surveillance of the facilities, the corporation’s spokesperson
replied, “It is also not true.”
On the level of vandalism and how
it affects the respective capacities and outputs of the refineries,
Alegbe stated that the corporation had adopted various measures to check
the menace of crude oil pipelines destruction.
Explaining how
the corporation had been protecting the pipelines in the interim since
the cancellation of various pipelines’ protection contracts, he said the
NNPC had engaged security agents of different communities where the
facilities run through.
Alegbe said, “Firstly, there was no
contract with the OPC (Oodua Peoples Congress) please. We have the
police, the military and we also engage with community-based
One of the latest reforms of
the NNPC’s new management, which was carried out last week, was the
trimming down of the off-takers for the lifting of Nigeria’s crude oil
from 43 to 16.
CREDIT: Punch NG.....
FACEBOOK COMMENTS
Nero Kay Dave and 6 others like this.
Jesse Osayande Vucinic Ehiagwina
I
would disagree too if twas true. Who would buy these refineries? The
same people that have profited from the destruction of this country.
Asom Ru-ching James
Lol...Nigeria a land full funny things
Ezeji Nnecky Chidinma
soon they will sell Nigeria
Jamil Imodibie
Make una no try am,why is it dat som group of pipo dnt want 2c dis con3 #progress?
Ann Ab
Aboki
Dahood Olalekan
the writeup is too long & boring
Olajide Young Johnson
Some
cabals of this country have started again, wanting the refineries to be
sold for them at all cost---- who are those that will buy it? For what
purpose? Where did they see d money? On what ground are they going to be
operating? These questions begs for answers
Lawani Efosa Jeffrey
Sale
of refinery to whom????????? Idiot and greedy bastards who were and
still been payed for the refinery to be well functioning, after they've
stolen money from it and destroyed it dey want to use the stolen money
to buy it.......please