• Thursday, April 25, 2024
businessday logo

BusinessDay

Reps ask FG to handover moribund refineries to IOCs, others

Port Harcourt refinery ready to restart as marketers eye price reduction

The House of Representatives on Tuesday urged the Federal Government to handover the moribund refineries to International Oil Companies (IOCs) operating in Nigeria or other competent private organisations with a view to resuscitating the facilities for functionality.

The resolution was sequel to the adoption of a motion of urgent public importance sponsored by Awaji- Abiante, calling on President Muhammadu Buhari administration to save Nigerians from the recurring hardship of petroleum products scarcity across the country.

Presenting the motion, Abiante noted that exploration for crude oil commenced in Nigeria in 1937 when Shell D’ Arcy was granted the sole concessionary rights over the whole territory of the country and crude oil was first discovered in commercial quantity in Oloibiri in present-day Bayelsa State in 1956 when the company (Shell D’ Arcy) drilled the first successful well.

He recalled that in the same year (1956), Shell D’ Arcy changed its name to Shell-BP Petroleum Development Company of Nigeria Limited and continued its exploration and exploitation activities in Nigeria without hindrance, saying in 1958 the first cargo of crude oil was shipped In February, 1958 through the oil tanker ship Hemisfusus to Britain.

“The House further recalled that as the economy of the nation grew, demand for petroleum products was met by importation. Shortly after independence‘ the Shell-BP Petroleum Development Company saw an opportunity to meet the products’ needs of the country; hence it embarked on the construction of the first refinery in the country, Port Harcourt Refinery. The 38,000 barreis per day (bpsd) Shell-BP Refinery was completed and commissioned in 1965.

“The House is aware that the Federal Government of Nigeria initially acquired 50percenty shareholding under a participatory agreement with Shell-BP, and later increased its shareholding to 60percent in 1972 which prompted the refinery to be registered as the Nigeria Petroleum Refining Company (NPRC), but it remained as a Joint Venture (JV) Company under private sector control and management. The premier refinery was debottlenecking in 1972 and a Naphtha Catalytic Refining Unit (CRU) added, thus increasing its capacity to 60,000 bpsd.

“The House is also aware that the Federal Government acquired the remaining 40 percent shares in 1978 under an outright buy out, and renamed it NNPC Refinery, Port Harcourt.

“It was thereafter fully Nigerianised and came under Government contra and was manned mainly by professionals who were recruited from the private sector – International Oil Companies (lOCs) to grow capability for Nigeria to be an active player in the fast developing oil industry in Nigeria.

“The House is further aware that in order to meet up with high demand for refined petroleum products as a result of increasing population and economic activities; the Federal Government of Nigeria constructed three additional refineries namely: the Warri Refining and Petrochemical Company with a capacity of 125,000 bpsd, commissioned in 1978; the Kaduna Refining and Petrochemical Company With a capacity of 110,000 bpsd, commissioned in 1980; and the New Port Harcourt Refinery with a capacity of 150,000bpsd, commissioned in 1989.

Read also: 2,500bpd modular refinery, 5mw power plant set to roll in Edo

“The House observes that the aforementioned refineries have become moribund and obsolete, and in an effort to resuscitate them, the Federal Government of Nigeria have spent a whopping sum of $26.5 billion (the Guardian, 21 March, 2021) on their Turn-Around Maintenance which has not yielded any positive results. According to experts the amount spent so far on the Turn-Around Maintenance of these moribund refineries is capable of building three new refineries of the same size going by the cost analysis of refinery projects across the world.

“The House also observes that the whooping sum of $26.5 billion (the Guardian, 21 March, 2021) that have been wasted on the Turn-Around Maintenance of the moribund refineries in 2021 should have been used to solve the problems bedeviling critical sectors such as education, health and road networks across the country.
“The House is worried that the non-functioning of the refineries has resulted in payment of fuel subsidy, importation of bad fuel, and the resurgence of long queues at failing stations across the country which has seriously impacted negatively on the wellbeing of Nigerians.

“The House is further worried that if the moribund refineries remain under the control of the Federal Government, coupled with the inefficiency of the Agencies of Government in charge, it will be a great disservice to Nigerians who continue to bear the brunt.

“The House notes that during the tenure of President Olusegun Obasanjo, machinery was put in place to commence the process of privatization of the nation’s refineries from unnecessary wastage of foreign exchange earnings on Turn-Around Maintenance and operating losses.

“The House further notes that apart from the reported $26.5 billion, these refineries have in recent years reported operating loss of N778.71 billion (Punch Newspaper, 19 March, 2021) on these critical assets which can clearly be termed as wasting assets.

“The House believes that having wasted billions of dollars over the years, the Federal Government of Nigeria cannot successfully execute the Turn-Around Maintenance of the moribund refineries, hence it will be better for the Government to seek alternatives with a view to ensuring their resuscitation,” he argued.

Therefore, the House mandated the joint Committees on Petroleum Resources and Public Procurement to ensure compliance with the resolution.