BREAKING NEWS, Oil & Gas
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The Independent Petroleum Marketers Association of Nigeria and the Petroleum and Natural Gas Senior Staff Association of Nigeria argue over the best way to make refineries in Nigeria perform optimally
| By Anayo Ezugwu | Jan 18, 2016 @ 01:00 GMT |
THE idea of selling the four government-owned refineries in Nigeria is generating controversy among stakeholders in the oil and gas sector. The Independent Petroleum Marketers Association of Nigeria, IPMAN, says they refineries should be sold as scrap while the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, says doing so amounts to sabotaging the interest of the nation.
IPMAN wants the refineries sold off to private investors because they can manage it better than the government. It also argued that government is not in position to continue to fund the Turn Around Maintenance of the refineries due to the dwindling revenue accruing to the country now because of the decline in the price of crude oil in the international market.
However, Emmanuel Ojugbana, national public relations officer, PENGASSAN, described IPMAN’s suggestion as a fraudulent way of ripping the country off its national assets. The union supports the efforts of the government to ensure that the four refineries were back on stream, especially with the recent report that the Kaduna and Port Harcourt Refineries have commenced production.
“Nigerians need to ask the IPMAN leadership why they want the refineries which can be said to be in good form now to be sold as scrap. Even when the government has shown that the refineries can work and take care of 75 percent of the nation’s local demand of refined products,” he said.
From his view point, the proof that the refineries are still viable and profitable was exhibited by the Port Harcourt Refining Company, PHRC, which posted a net profit of N11.2 billion for December 2014, representing N8.2 billion or 250 percent above the N3.2 billion posted by the company in proceeding November 2014. This is attributed to the improved financial performance for the phased rehabilitation programme, which was done by the workers.
The challenge confronting the functionality of the refineries is not the ownership because there are countries even in West Africa such as Ghana and Chad Republic, where refineries are owned by the government. The refineries in those countries are not only functioning but Nigeria even imported products from them in the past. “IPMAN should know that aside from the challenge of Turn-Around Maintenance of the refineries, inadequate and irregular supply of crude which is the main feedstock is another major impediment to the efficient and effective operation of the refineries,” Ojugbana said.
According to him, workers in the refineries are poised not only to produce refined products but also to add the needed value to the crude oil, noting that the adverse effect of rationing or not feeding the plant with crude oil was that the plant remain idle for a long time. “When the plant is idle for too long, this breeds residual faults and problems whenever there is an attempt to start up, since the design of a refinery is better when it is continuously operated. We are again demanding adequate and regular supply of crude oil to the four refineries to alleviate the suffering of Nigerians and reduced or eliminate subsidy payment, considering the plunge in global oil prices,” he said.
Also, PENGASSAN has challenged the government to grant the managements of the refineries autonomy for effective accountability while sustaining the rehabilitation process already initiated. “If any of the refineries fails to pay back the funding (if granted financial autonomy) and refuse to make commensurate returns to the NNPC within one year, the government is free to apply appropriate sanctions,” he canvassed.
Supporting PENGASSAN, Ibe Kachikwu, minister of state for petroleum resources and group managing director, Nigerian National Petroleum Corporation, NNPC, also said the refineries would not be sold rather they would make direct payments into the federation account from 2016. The Cable reported Kachikwu as saying that the NNPC was adopting a plan that would give the refineries some sort of autonomy, without privatising them.
Similarly, Ohi Alegbe, group general manager, Group Corporate Affairs Division of the NNPC, said that high level discussions were underway with local and international investors to bridge funding gap in the sector. “The new model is that refineries would now buy their own crude oil, refine it and make remittances to the federation account allocation committee. They would operate a semi autonomy system that would enable them to run in a profitable manner.”
If this is done, perhaps in another 24 months, Nigerians would see a positive change in the refinery model to meet petroleum products needs not only in Nigeria but in the West African sub-region, according to the NNPC.
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