Port Harcourt refinery generated zero revenue in 2019, TAM a financial mess, says Atedo
• Atiku wants NNPC, refineries, others privatised
• IYC backs NLC against fuel price increment, urges FG to license local refineries
The debate over Federal Government’s proposed $1.5 billion to be spent on rehabilitating the 210,000-barrel per day (bpd) Port Harcourt refinery intensified yesterday as more opposition voices registered their concerns.x
Renowned economist and founder of Stanbic IBTC Bank Plc, Atedo Peterside, who had earlier asked the government to subject the plan to a national debate, said NNPC would only “enmesh Nigeria into a deeper financial mess by throwing $1.5 billion (including debt) at a problem it created.”
Peterside lamented that while the Port Harcourt refinery contributed zero revenue in 2019, it incurred N47 billion; almost N4 billion a month, the reason he is recommending an end to the ‘nightmare’ through a Bureau of Public Enterprise core investor sale.
Peterside, who thought Nigeria would have learned lessons from the COVID-19 pandemic by making informed decisions did not see the rehabilitation as a priority, adding that going ahead with the project amounts to “mortgaging the future of our children and grandchildren in the hands of people who have not shown that they can manage anything.
Coming at a time that the National Assembly is calling for a probe into the whereabouts of money expended on fixing the refineries, Peterside told Arise TV that the rehabilitation is a drainpipe for public office holders and their families.
Former Vice President Atiku Abubakar, yesterday, reiterated his advice that government should urgently “privatize our refineries and the NNPC through the time-tested LNG model in which the FG owns 49 per cent equity and the private sector controls 51 per cent.”
In a statement signed by him yesterday, Atiku said: “In 20 years ending 2020, the NLNG had delivered $18.3 billion dividends to government irrespective of taxes and other benefit accruals to the country. This will not only free the government of needless spending but also clean up the infrastructure mess in the petroleum downstream sector.”
The Minister of State for Petroleum Resources, Timipre Sylva, had explained that the contract for the rehabilitation was awarded to Italian firm, Tecnimont SPA, and would be executed in three phases. The first phase is expected to be completed within 28 months, while the second and third phases would be completed in 24 and 44 months respectively.
Defending the government’s insistence on spending $1.5 billion on the rehabilitation even as the nation may have spent over N360 billion on subsidy of Premium Motor Spirit (PMS) in the first quarter of 2021, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, said the overhaul of the refinery remained the best option.
Giving the history of turnaround maintenance in the country, Managing Director of Mudiame International Limited, and Mudiame Welding Institute, Prof. Sunny Eromosele said it would be better to put funds in other areas of economy, education, and industries that would create more jobs
“Government should stop refining business for private organisations. It should be sold to available buyers while the workforce can be relocated to other ministries to save the little resources available,” Eromosele said.
Stating that the move to rehabilitate is a waste of the nation’s resources, the expert noted that the project, expected to take five years may remain a mirage after the administration is out of office. Eromosele encouraged more investment in modular refineries instead of the rehabilitation of the old assets.
Founder and Principal Partner at Nextier, Parick Okigbo, said subjecting the move to the national debate was sacrosanct. “There is nothing wrong with subjecting the sale of a national asset to a national debate. It engenders transparency,” he noted.
WHILE fears of corruption dog the refinery project, stakeholders are also raising concerns over what they described as scam in the return of petrol subsidy, questioning the nation’s daily petrol consumption, which now hovers around 60 million litres from estimated 52 million litres.
Energy expert Micheal Faniran, sees continuous subsidy payment as reinvigorating corruption and smuggling.
“That is the challenge with subsidy. At some point, people were getting subsidies in Nigeria and selling the product to other West African countries. So, in any case, we are subsidising the whole of West Africa,” Faniran said.
A professor of energy economics, Wunmi Iledare, said the politics over the increasing debt profile from the subsidy remained dangerous to the economy and not sustainable
According to him, it will deny funding for critical infrastructure – energy, road, water, and education, stressing further that the inconsistencies from the government were mind-boggling.
“It is sheer ineptitude to know the right thing to do and not do it on time. Time is of the essence and waits for no one. Price deregulation of the pricing of a commodity is a prerequisite to effective privatisation of the industry producing such a commodity. Price deregulation and privatisation do not imply absence of regulation. Effective regulation is a necessary condition for the elimination of market failures,” Iledare said.
PwC’s Associate Director Public Sector, Energy Utilities & Resources, Habeeb Jaiyeola, had said the earlier the country accepted the reality of the pricing mechanisms of the downstream petroleum sector, the better, adding that the much time and resources being dedicated to petroleum subsidy continue to be a stumbling block in freeing up some significant portion of Government revenues to fund budget shortfalls and aid National development.
“We take on the upside of the crude oil price increases, and should also be ready to take on the downsides of the refined product price increase. The government should continue to put more efforts to ensure a transparent price structure to ensure Nigerians are paying the appropriate price for refined petroleum products that accurately reflect the market realities,” he said.