After spending over N90 billion on Turn Around Maintenance (TAM) of the nation’s refineries without much result from 1999 to 2003, the administration of former President Olusegun Obasanjo, decided to sell 51% equity stake in the Port Harcourt and Kaduna refineries to a consortium – Bluestar Consortium Limited for a sum of $721m.
The consortium, made up of Dangote Oils (55%), Zenon Oil (25%), Rivers State Government (15%), and Transnational Corporation (5%), promised to get the refineries working at full capacity within months. The process, which started in 2003, ended at the twilight of Obasanjo’s regime making people to suspect it was a parting gift to his associates.
The Nigerian Labour Congress, NUPENG, PENGASSAN, and the NNPC strongly opposed the deal and, after a two-day strike that completely shut down the economy, the barely two-week old government of late President Yar’Adua was forced to cancel the sale. The unions, as well as the NNPC, unanimously agreed that the NNPC was capable of turning around the fortunes of the refineries to make them function at 100% capacity within months. Yar’Adua consequently directed the NNPC to revamp the refineries. Also, in withdrawing from the deal, the consortium challenged the NNPC to resuscitate the refineries within one year or they (the consortium) will bid again for the refineries. But that was never to happen as the labour unions prevailed on the late President not to privatise the refineries.
Twelve years down the line, the refineries are still in a comatose state and the nation continues to reel under the heavy cost of importation of refined petrol.
But trust Nigeria never to learn from history or is it a conscious decision to turn the dead refineries into cash cows to finance political activities and politicians in the name of turnaround maintenance?
A cursory look at the NNPC books shows that the NNPC sustained a loss of N95.09 billion in running the refineries alone in 2017. In the first nine months of 2018, it again sustained a loss of N96.34 billion. The loss for 2018 is expected to reach N132 billion when the full year financials are released.
Meanwhile, new refineries are being built at a fraction of that amount. For instance, in 2013, Comico Oil built a 100,000 barrel per day refining capacity refinery for $250 million in Serbia.
This is besides the fact that the refineries are old and obsolete and it will take less to build new ones than to make them operate optimally. The Port Harcourt refinery was built in 1965 and upgraded in 1989. The Warri refinery was built in 1978, while the Kaduna refinery was finished in 1980. Our refineries have an average age of over 30 years. Since they were built, new technology has been introduced that has made much of their operating systems near obsolete.
Other nations are building brand new refineries for less the price we are devoting to servicing our old and dilapidated ones that never seem to work.
The decision to pump more money into turning around the refineries rather than selling or discarding them, as aptly described by the common sense advocate, Ben Murray Bruce, is akin to taking for servicing a Mercedes Benz 450SEL 6.9 in the year 2019. The cost of the service will be more than the car is worth because Mercedes Benz stopped making the 450SEL in 1981. Any part required for the service would have to be custom made from Germany or cannibalised from another Mercedes Benz 450SEL. The repairer, if he were to be honest, will advise that the person buy a new Mercedes because there is nothing as expensive as an old Mercedes.
Nigerians must rise up and prevent the waste of public funds in the name of operating these dead refineries. We need to sell-off these refineries or better still discard them as scraps.
By our Reporter
