The Nigerian Senate has asked the Ministry of Petroleum Resources to halt all transactions relating to the planned concessioning of the Port Harcourt Refinery to Agip and Oando, pending the outcome of a report of its ad-hoc committee.
The seven-man ad-hoc committee will carry out a holistic investigation to determine the criteria used to select the two oil companies to maintain and operate the refinery.
Members of the committee include Abubakar Kyari, Chairman; Benjamin Uwajumogu, Vice Chairman; Dino Melaye, Sabo Mohammed, Aliyu Wammako, Matthew Uroghide and
Duro Faseyi.
No time frame was given for the submission of the committee’s report.
Nigeria has struggled to keep its poorly maintained four refineries- which have a combined capacity of 445,000 barrels daily- functioning optimally. The country’s per capita refining capacity is low even by African standards at 0.002 barrels daily, compared with 0.06 in Libya and 0.01 in South-Africa.
To get its refineries functioning optimally, the government plans a raft of concessions to the private sector.
The review of Agip and Oando’s selection to operate the Port-Harcourt refinery followed a motion by Senator Sabo Mohammed (APC, Jigawa State) at plenary on Tuesday.
Although Minister of State for Petroleum Resources, Ibe Kachikwu, had last week explained that no decision had been taken yet on the matter, the upper legislative chamber expressed concern at the disclosure by the Chief Executive Officer of Oando on the floor of the Nigerian Stock Exchange on May 11 that the group had received approval of the Federal Government to repair, operate and maintain the refinery, in partnership with Agip.
While observing that the deal will be signed officially in July this year, the federal lawmaker argued that the planned concession of the refinery without recourse to due process is not only illegal but also a clear attempt at ridiculing Nigerians.
This, he stressed, will negatively impact the anti-corruption campaign of the present administration.
“Aware that in such transactions, the best practice is to select partners through open and competitive bids, i.e. prepare the business for sale, market the business, buyers selection and close the transaction.
“Notes that any exclusive arrangement that does not follow the above procedure hatched in the dark without the knowledge and participation of relevant stakeholders tend to lead to sub-optimal outcomes for the seller (in this case the Federal Government).
“Also aware that the major stakeholders such as BPE that was empowered by law to conduct such exercise and labour unions are not aware of the deal that is supposed to be signed officially in July this year.
“Concerned that since Agip has no technical record/history in the Port Harcourt Refinery that was built by a
Japanese firm, one would have expected the concerned authority to look at the Warri Refinery that was built by Agip where they have technical record.
“Saddened that on assumption of office as the Group Managing Director of the NNPC, Ibe Kachukwu declared that by the end of 2015, the Port Harcourt, Warri and Kaduna Refineries would be working at 90% capacity, thus reducing importation and the subsidy controversies, up till now in 2017, the Refineries are yet to be fixed and cannot even produce at 50% not to mention 90%,” he submitted.
Speaking at the 172nd meeting of the Organisation of Petroleum Exporting Countries (OPEC), Kachikwu said the Federal Government has decided to concession all four refineries in the country by August this year.
“We hope to award the contracts by July/August and hopefully between 12 to 18 months to be able to get the refineries fully back, and the model is to bring investors, who will repair the refineries and they recoup their money from the incremental production,” he stated.
OWEDE AGBAJILEKE
