NNPC (1)Due to the twin evil of corruption and mismanagment, Nigeria’s four refineries have remained comatose, writes Assistant Editor ADEKUNLE YUSUF

Like the mixed blessings which oil discovery and exploration in Nigeria has assumed, the history of refineries in the country is laced with ups and downs. Although oil exploration began before the country’s independence in 1960, Nigeria did not have its first refinery until five years into self-rule. In 1965, the military regime of Gen. Yakubu Gowon built Nigeria’s first refinery. It was called “Port Harcourt I” with a capacity of 60,000bpd. Ten years later, Gen. Gowon awarded the contract for the construction of Warri Refinery with a capacity of 100,000bpd. It was completed and inaugurated by the regime of General Olusegun Obasanjo in 1978. Later, Obasanjo started the 100,000bpd Kaduna Refinery, which was inaugurated by President Shehu Shagari in 1980. Port Harcourt II, also started by Obasanjo, was completed by General Ibrahim Babangida in 1989 to process 150,000bpd. Since then, Nigeria has stopped building refineries – even though her consumption has been doubling and tripling.

By and large, all the refineries built by the government have total installed capacities of 410,000bpd. Unfortunately, all the four refineries barely produce enough to meet local demand, paving the way for importation of petroleum products to bridge the gap. And as experts insist, even if all the refineries work at full capacity, they cannot meet the country’s bourgeoning demand. Up till now, there is no reliable figure on the cash Nigeria has wasted on importing fuel, including cost of freighting, demurrage, storage at fraudulent tank farms, fraudulent subsidy payments, bank charges, and such like, since the dark days of the late General Sani Abacha’s . This is without computing the opportunity cost – how much Nigeria could have been generating if it were refining and exporting products? How many jobs could have been created?

While opening the 2011 Society of Petroleum Engineers’ (SPE’s) yearly conference and exhibition in Abuja, Minister of Petroleum Resources Mrs. Diezani Alison-Madueke revealed that the government would unveil an all-encompassing strategy that would raise Nigeria’s refining capacity from the then 60 per cent to a record 90 per cent in two years. As a matter of fact, she emphatically stated that the nation’s refining capacity would receive significant boost through the execution of a comprehensive turnaround maintenance (TAM)  that would increase refining capacity from 445,000 barrels per day (bpd) to about one million barrels per day (1mbpd). She said measures were being taken to ensure completion of the proposed three Greenfield Refineries in Lagos, Kogi and Bayelsa within a three-year time-frame to further boost the country’s refining capacity and drastically reduce the rate of importation of refined petroleum products.

Assuring that the TAM on the traditional refineries, located in Port Harcourt, Warri and Kaduna was executed in accordance with best global practice, Mrs. Alison-Madueke said the TAM would be handled by the companies that first built them, pointing. The NNPC has already invited the original builders to undertake a professional overhaul of the plants and to ensure that the TAM, which had been planned to begin with the Port Harcourt Refinery, took off as scheduled.

Speaking on the sidelines of the June 2012 meeting of the Organisation of Petroleum Exporting Countries (OPEC) in Vienna, Austria, Mrs. Alison-Madueke also expressed optimism that Nigeria would stop refined petroleum products importation after government was done with the TAM of  existing refineries, which first phase, she reaffirmed, would commence with the Port Harcourt Refinery. “At this point in time, we are trying to ensure that our refined petroleum products are produced in the country within the next 24 months or so. To do that we need to do the TAM of the refineries that we already have on ground, we have already moved into the first phase of the TAM of PH, using the original people that built them. So at the end of this year, PH should be up to 90 percent capacity and by the end of 2013, Kaduna, and then Warri will follow suit.”

Again, when the minister appeared before the House of Representatives in 2012, following an invitation by the lower chamber of the legislature, requesting clarification on the issue of the lingering kerosene scarcity across the country, she restated government’s plan to boost refining capacity. She assured the lawmakers that the expected increase in refining capacity would help increase the volume of kerosene supply from the refineries in the medium and long term. Also echoing the minister’s statements, the then Group Managing Director (GMD) of the NNPC, Mr. Austen Oniwon, had stated categorically at an energy conference that the existing refineries in the country would be upgraded to 90 per cent capacity utilisation. He even put December 2013 as scheduled date for attainment of optimum refining capacity, assuring that the corporation had designed refinery revitalisation working plan using the original contractors that built the refineries.

Oniwon said the turn-around maintenance of the refineries was part of effort towards ensuring adequate local refining of petroleum product. According to him, the Port Harcourt refinery was billed to commence the projected capacity production by the fourth quarter of 2012 to be followed by Kaduna refinery by the first quarter of 2013, while Warri refinery would come on stream by the fourth quarter of 2013. “In my presentation before House of Representatives Ad-hoc Committee on the Monitoring of the Subsidy regime, I made it clear that at 90 per cent, the three refineries will be able to produce 20.3 million litres of PMS, 9.2 million litres of kerosene and 15.3 litres of diesel as compared to the average national daily consumption of 35 million litres of PMS, 10 million litres of kerosene and 12 million litres of diesel,” Oniwon said.

Oniwon, who sounded very optimistic that the plan was achievable, urged Nigerians to hold NNPC management accountable to the promise. He noted that the coming on stream of Greenfield refineries would not only make Nigeria self-sufficient in refined petroleum products, but would also make the country a net exporter of refined petroleum products. At a town hall meeting with staff in the Eastern zone of the Corporation, shortly after he was appointed in 2010, Oniwon outlined what he described as the NNPC’s grand plan to refurbish and upgrade existing units of the refinery through the execution of a comprehensive TAM exercise, saying the corporation was ready to “go full throttle to ensure a successful TAM, which was last executed in year 2000.” He added: “What we want to do is to undertake a different type of TAM that will guarantee maximum benefit. So we are going back to the original contractors who built all the units to ensure an effective and total refurbishment of the plant. Unlike in the past when the scope of work was not clearly specified, we intend to conduct a full scale technical audit with well-defined scope of work for the contract.’’

Over the years, corruption and poor maintenance had undermined the performances of Nigeria’s refineries while previous TAMs have been unable to redress the woes bedeviling the subsector. In 2008 and 2010, all the four refineries were completely shut down by the NNPC, blaming the resurgence of violence in the Niger Delta region, which resulted in attacks on crude supply pipelines, for the closure of Kaduna and Warri Refineries. For the Port Harcourt Refinery, the closure was attributed to the damage on its vital units owing to epileptic power supply. Also, in December, 2011, the Port Harcourt refinery was shut down after attacks on its crude supply pipeline. Soon after the botched sale of the plants in 2007, the NNPC claimed it had awarded the contract to a Nigerian firm to carry out a comprehensive TAM on all the refineries. The contract sum as revealed by the then GMD, Abubakar Yar’Adua, was $57 million. But despite the said TAM, the refineries remained comatose, prompting Nigerians to demand clarification on the real status of the plants. The corporation, in the wake of public outcry over the poor state of the refineries, claimed that the Pipeline breaks at the Ewe and Bantan axis had affected crude oil supply to the Warri Refinery.

The NNPC also stated the TAM for Kaduna Refinery had been scheduled for November 15, 2008, adding that the contractors would conclude TAM and hand back the refinery to NNPC Management on January 15, 2009. In 2009, the NNPC also announced that it spent $20 million (about N31billion) on TAM of the Kaduna refinery alone.  The then GMD, Alhaji Sanusi Barkindo, who made the disclosure at a meeting of the Trans-Saharan Gas Pipeline in Abuja, said the TAM became necessary because the Kaduna refinery  “is very strategic as the only refinery serving the nineteen states of the North”.

Despite NNPC’s claims that the refineries were undergoing routine TAM, it later dawned on the nation that funds allocated for the TAM were diverted, as was the routine in the corporation. It was revealed that the new Port Harcourt Refinery had undergone TAM only thrice since it was inaugurated in 1989. The last one was carried out in 2000. For the old Port Harcourt Refinery, which was commissioned in 1965, the only major rehabilitation work on it took place in 1989, while the first and only TAM was carried out in 1998. In the case of Warri Refining and Petrochemical Company, the record showed that the last TAM was executed in 2004.


[The Nation]