The challenges before the new NNPC GMD, MELE KYARI

July 15th, 2019

By Joseph Ambakederimo

It is good and heart-warming development to hear the NNPC GMD to have prioritize the revamping of the country’s refineries to an optimum capacity as one of his agenda. It is believed that the issue of subsidizing petrol would become minimal only if the refineries work in optimal capacity to save scarce resources that is fast been freighted away in the guise of importing petroleum products.

The refineries have become like a sore thumb that has refused to go away, to get the refineries working at optimum capacity has become a nightmare. Isn’t a shame on all of us that a country as the seventh oil producer in the world has now become a net importer of petrol.

The volume of petroleum products allegedly been consumed and the amount spent to subsidized these consumption as always been a contentious issue and its looks like it’s not going to go away anytime soon unless the country’s refineries are made to work to installed capacity. Now, in making the refineries work at installed capacity to meet our consumption levels there must be a thorough and excellent turnaround maintenance to be carried out by only competent companies that have the capacity and know – how to execute the job. Our advise to the GMD would be to engage the original builders of these refineries whom are still very much around and not engaging some mushroom companies that will come and fiddle with the refineries and bring them to further deterioration. Engaging the original builders of these plants is key if the GMD must make a difference and put his name in the oil and gas Hall of fame. The GMD must deviate from the style of the past by resisting political interference in the management of these refineries and ensure Nigerians enjoy and benefit from a product that we have in abundance.

The GMD must get it right this time and in getting it right the process of engaging the original builders must start in earnest for them to be able to complete the turnaround process on his set target of 2023, which is doable by our estimation. The contracts for the turnaround maintenance can be done on a single source basis because the original builders are well known worldwide as experts in this field thereby short- circuiting the long tender process. The GMD must be in a hurry to get this job done to further save the country from this huge financial haemorrhage.

The petrochemical plant which is a component of the refinery is not been mentioned we talk about revamping of the refineries. We always talk about the refining capacity leaving out an equally important revenue generating component. The production of feedstock such as carbon black, polypropylene, petroleum Jelly, paraffin wax and others is important for industrial raw materials for many industries especially the plastic industry and in the manufacture of many car parts for the Automobile industries. We can meet 80% of our industrial needs of theses raw materials mentioned that is produced by the petrochemical plants thereby saving scarce foreign exchange that would be deployed to other areas of in dire need.

Another issue crying for attention is the Direct sales and Direct Purchase ( DSDP) program that has ambiguity written all over it. We are yet to know the checking mechanism of the petroleum products brought back to the country. If the NNPC is allocating as much as 800,000 thousand barrels of crude oil per day for the DSDP purposes then there must be a cause for concerned, Nigerians should not just be satisfied with only the availability of petrol we must look at other variables and contending issues of transparency of the program. We just hope it’s not just another guise of allocating the nations crude oil to some cartel and privileged Nigerians.

We therefore urge the GMD to revisit the DSDP program that has existed since 2016 to date. The entire program is fraught with thick cloud that has blurred its openness. I therefore call on Mr Mele Kyari, to use a fine tooth comb and bring some reforms to the program as there are too many unanswered questions one of which is “if this DSDP program is effective and open as claimed why do we still pay as much subsidy that we pay?

On his plan to raise the daily production level to Three millions barrels per day is none the less encouraging. We have lagged behind for too long as a result of failure of successive administrations to invest more or outright refusal or delay in paying cash call components to the international oil companies (IOC’s). Adequate funding of its cash call obligations by the NNPC to the IOC’s must be intensified and promptly as and when due. The latest trend in the oil industry now is deep water drilling and the NNPC must pursue investment in this area. The issues of the Niger Delta should also be taking into cognizance with renewed political will to provide A- class infrastructure in the area, while also exploring more frontiers for hydrocarbon such as the chad basin, Benue and Bauchi trough and others. The resolve to explore oil in the north is a welcome development, this way we have multiple approach to drive the increase of our daily production.

The increase of the country’s reserves too must be pursued with vigor and the only way to do this is by ways of massive investments in the upstream sector and prompt payment of cash calls as earlier stated.

Another area that is worthy of mention and to bring to the attention of the GMD, is the NNPC’s Biofuel project which is scattered across the country with little information as to the true status of these projects. At the last count we know the corporations plan to invest $100million in the Mayine sugar project in Adamawa state, the $300million investment in ethanol production in Benue state, the 65 million liters cassava based ethanol plant proposed for Ondo state, the Memorandum of understanding with the Kogi state government for the Development of 84 million litres of ethanol per year, the cross River palm oil biodiesel project that will produce 14MW of power and others. Some of these projects are said to have bankable and detailed feasibility studies undertaken by reputable international organizations. The need to encourage alternative energy sources must aggressively be pursued by NNPC in order for the country to depend less on hydrocarbon resource coupled with the rave in driving green technology all around the world.
The NNPC and Nigeria cannot be left behind in the world’s effort to revolutionize going green. A more robust policy thrust on biofuels production must be developed and pursued vigorously by the NNPC under the life span of the Mele Kyari’s tenure.

Joseph Ambakederimo, Associate Environmental professional, is the CONVENER, SOUTH SOUTH REAWAKENING GROUP.

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