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Foreign investors barred from running Nigeria’s refineries

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The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who is also the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), has stated that foreign investors are not going to run the refineries in the country.

 

They are only going to provide funds and technical support, he said.

 

He declared that he would never give up in the discharge of his duties, while urging Nigerians to give change the opportunity to work, while assuring that the refineries would not be sold.

 

Kachikwu also apologised again to Nigerians on fuel scarcity, saying it had started easing off in Abuja, Lagos and some other cities.

 

He confirmed that Port Harcourt and Warri refineries had started refining, while Kaduna refinery had been receiving crude oil and would be back in production (refining), within one week to ten days.

 

The petroleum minister stated these yesterday at the Port Harcourt Refining Company Limited (PHRC) in Rivers State, a subsidiary of the NNPC, shortly after re-commissioning of the crude line of the PHRC.

 

Kachikwu was received by the Managing Director of PHRC, Dr. Bafred Enjugu, in company with other officials of the company. Enjugu stressed that the refineries (two – old and new – in Port Harcourt, but one currently working and one each in Warri, Delta State and Kaduna) had come up, because crude oil was now available, and gave an assurance that the refineries would no longer come down, unless by circumstances beyond their control.

 

The minister of state for petroleum resources hinted that the refineries currently had capacity of 12 million litres of refined petroleum products per day, but could go up to 20 million litres per day, when all the refineries would be working optimally, but he put the national total consumption at 45 million litres of petroleum products per day.

 

Kachikwu said: “I have always believed in the capacity of our people to deliver and I have always encouraged them. Port Harcourt and Warri refineries are back in production. Kaduna today is receiving crude and should be back in production, sometimes very soon, within one week to ten days. It is something of joy, because one is taking a lot of attacks on this thing, but these are problems that existed before we came. These are what we set out to correct and we are correcting them one by one.

 

“I thank Nigerians for their patience and I urge them to remain resilient and support what we are doing, because it is the only way to change the system. I do not focus on the attacks and all kinds of publications. I focus on the results, which are coming out one by one.

 

“We are not inviting foreign partners to take over the refineries. We do not have the funds. Even now that they are working, they are probably working at about 60 per cent or less below capacity. We need to upgrade the refineries and get them to a level where they will be at least 90 per cent performance, which requires money. Total investment for that is in the excess of $700 million and we do not have it. Let us be honest about it.”

 

He added, “What we have now done is to find a very creative way of bringing in investors, who will work with our teams who have skills, reactivate and operate the facilities in these refineries and help us to provide technical support and they will be paid through the flow out of the refined products, over a period of time, while we have also changed the refining model, in such a way that refineries pay for their crude into the federation account, whatever they produce will be sold to the PPMC and the marketers themselves, for which we should be praised actually.

 

“The feat recorded will not end fuel importation. Even if the refineries are working at 100 per cent installed capacity, they will provide only 20 million litres daily. Our daily consumption is about 45 million litres. If the three refineries are now functioning, we will have about 12 million litres, far below the 45 million litres. The advantage they bring is distribution. From Port Harcourt refinery, we can distribute to the East. From the Warri refinery, you can distribute to the West. From the Kaduna refinery in the North, you can distribute to the farther areas of the North.”

 

In addressing this, Kachikwu observed that “It does not solve the problem completely, but two things will happen. When the upgrade and repairs, led by the foreign investors, with our joint team, are concluded, our capacity will move from about 50 per cent to about 90 per cent, resulting in movement from 12 million to slightly excess of 20 million litres production per day. The co-located refineries that we have also advertised, which will be private sector-led, by the time they are attained in about two years, there will be excess of 750,000 barrels refined petroleum production capacity per day. Our hope is that by 2018, fuel importation will be reduced by at least 60 per cent, because of the upgrade that would have taken place. By 2019, when the co-located refineries are in place, we will actually be exiting importation and begin to export refined petroleum products. That is the strategic way. That is what we are working on.”

 

The minister of state for petroleum resources also stated that to secure the pipelines would be a collective responsibility.

 

He said: “Securing our pipelines from vandalism is a call to all Nigerians to secure their own assets. We must ensure that the pipelines are protected. Federal Government cannot do it alone. Military has done a yeoman’s job, in terms of supporting us. From the environmental point of view, we must also ensure that we provide things in the communities, that will shift the people’s attention from pipeline vandalism.”

 

Kachikwu also thanked God for making the day possible, in spite of all the challenges, while lauding President Muhammadu Buhari, who he said through all the trying times, continued to be with the minister and his team, as well as encouraging them to keep going.

 

He said: “I apologise to Nigerians, who have suffered all this time, because of products’ supply, especially those in the North, who bearing a big brunt of this (fuel scarcity), particularly Abuja and Lagos, who are the key consumer cities; Abuja, Lagos and Kano, but we are beginning to recognise now that Lagos is easing off and Abuja is doing the same thing. Once Kaduna begins to produce, the North will see a lot of improvement. Over and above that, we are putting long term policies in place to ensure that while smaller marketers go out and do their stuff, we can then be the key suppliers for the rest of the country.  I told you I will never give up. We have signed the advertisements for investors to come in. There is no confusion about what they are coming to do.

 

“We owe Nigerians the duty to ensure that the refineries are working. We cannot give up. I visited a refinery in Cote d’Ivoire, a smaller refinery. One of the things I will hope is to take some of the leadership team to Cote d’Ivoire, spend some time and see the processes that are there and they are almost 100 percent Ivorians-led. So, if they can, we started first and we have the larger profile in terms of refining. So, we will like to see us do the same thing. We will be there and bring in some of that into our system.”

 

Also speaking at the commissioning of the multibillion naira crude oil underground pipe line from Escravos to Warri and Port Harcourt, which is expected to deliver crude directly to the refineries rather than the use of marine vessels, he emphasized that fuel queues will soon be a thing of the past in the next one week.

 

He thanks the president and said, “This underground pipeline will check sabotage and I can tell you the sufferings of people will soon be a thing of the past.”

 

He lauded the contractor, Ocean Marine Solution, chaired by Capt. Hosa Okunbo, saying that despite the fact that the contractor has not been paid before embarking on the job, they did a good job that will help solve the problems confronting the oil sector.

 

Capt. Okunbo who attributed the completion of the multi-billion naira project to President Buhari’s determination to bring total reform in the oil and gas sector noted that this was the first time in the last ten years that crude will be delivered to the Warri and Port Harcourt refineries through pipe-lines.

 

According to Okunbo, “As I speak to you there is no contract in place because in our industry there is something you call proof of concept and Q and pay. In our company we believe that everything is possible when you have the will, there must be a way and that is what we have achieved today.”

 

He lauded the community because they “are able to cooperate with us. We used carrot and stick approach and our security surveillance and also the contract of actually doing the job and replacing the contract. It was very tedious and sometime we almost got killed and threat to our lives which inform why you see all these security around us.”

 

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