The boundless benefits of rehabilitating Port Harcourt refinery

By Emeka Nwankpa

Sentiments apart, Nigerians are going through hard times in the same way governments across the country are trying to make life livable for the people. When recently, the Federal Executive Council (FEC), approved $1.5 billion to fully fix the Port Harcourt Refinery Company Limited (PHRC) after over 20 years of dormancy, many ordinary Nigerians jubilated.

But to some vested interests, it is rather the refinery is outrightly sold, a thinking that hurts deeply. Selling such national asset is bad news to ordinary Nigerians. The gains derivable from the dormant giant refinery in over twenty years are unimaginable bearing in mind its total installed capacity of 210, 000 barrel per day that daily produces 10.4 million liters of Premium Motor Spirit (PMS). 

Like the PHRC, the refineries in Warri, Kaduna and Port Harcourt with a combined capacity of 445,000b/d capacity, have also suffered serial neglect due to delayed Turn-Around Maintenance causing performance decline and eventual shut-down. The Kaduna Petrochemical Company Limited (KRPC) has 110, 000 bpd capacity while Warri Refining Petrochemical Company Limited (WRPC) has 125, 000 bpd capacity.  

It had been alleged that these vested interests conspired with government officials to kill the refineries for possible sale after ripping government of huge profits under fraudulent fuel subsidy regimes since the dormant refineries wouldn’t meet the increasingly high local demand for petrol. Memories of imported toxic petrol that killed and maimed innocent Nigerians are still fresh. 

The criticisms against the rehabilitation plan are sufficient evidence that these interests are still lurking around seeking the least opportunity to strike again. If anything, industry watchers have applauded the refinery rehabilitation plan, saying it will create boundless benefits to Nigerians such as meeting local energy demand, growing the nation’s GDP, strengthening the naira by reducing the demand for forex to creating thousands of jobs across the entire value chain (crude supply, operating and maintaining the refinery, product supply, etc) including several third-party contractors that will supply outsourced services or goods, the advantages are huge.

Also, locally refined petroleum products will serve as feedstock for small scale local manufacturing but most important is the significant and visible benefit such rehabilitation means to the national energy security of all Nigerians past maintenance had consumed billions of dollars without real-time visible benefits to the nation. It is not surprising therefore to hear such critics call for outright sale of the refineries they mischievously cited of the sale of Shell Martinez refinery in the U.S when, in fact, they do not realize that the 105 year-old refinery was traded off as part of a crude oil supply and product off-take agreements. 

Amid global oil price uncertainties, Nigeria’s case is particularly worsened by the sharp drop in the global demand for its oil due to environmental, social, climate change issues worsened by the ugly effects of COVID-19 pandemic.Nigeria’s tragic story is particularly appalling when considered that our dormant refineries continue to pave the way for unbridled importation of refined petroleum products steadily oiled by rapacious emergency importers and their cronies.

It is envisaged that this refinery rehabilitation plan will utilize the rising domestic demand for fuel and the entry of new private players like Dangote and Waltersmith, etc to make Nigeria Africa’s major petrol refining hub using the continent’s bourgeoning middle-class propensity for cars and PMS.

This is where industry leaders such as the team at NNPC Towers led the Group Managing Director (GMD), Mr Mele Kolo Kyari, complementing the Minister of State for Petroleum, Mr. Timipre Sylva, should leave no stone unturned to wrestle the nation from the vice-grip of these few but powerful anti-Nigeria interests.It is for them to continue to summon the courage to save the day for over 200 million Nigerians and generations yet unborn.

There is no better time than now to re-write Nigeria’s post-independence chequered history by unraveling the riddle of a leading oil-producing country like Nigeria that is still found among leading oil-importing nations.Mr. Mele Kyari could not have put it any better when he said last year:‘’We couldn’t fix our refineries and that’s very difficult to explain. Why can’t we fix our refineries? For all 20 years, attempts to fix the refineries failed for very simple reasons, there’s a strategy problem’’.  

This strategy tallies with the refinery rehabilitation option which a few vested interests are out to shoot down. Nigerians want Team Kyari, as a national mandate, to drive this strategy to a logical conclusion, pulling the refineries back on stream and to their nameplate capacities using the Operate & Maintain (O&M) model for all the sleeping refining giants to achieve, at least 90 per cent of total installed production capacity by 2023.       

This project, unlike past models, has independent external stakeholders like Ministry of Finance, NEITI, ICRC, PENGASSAN and NUPENG as stakeholders synergizing with KBR and NETCO as NNPC’s Engineers, to ensure right quality, excellent delivery and within budget to maintain plant integrity for at least ten years.With $1.5 billion, there will be complete overhaul and replacement of major critical equipment to guarantee plant integrity and maintenance for at least ten years after the initial price was diligently negotiated down from $2.5 billion.  

Available Google-sourced global data shows that Aramco Oil Refinery (250,000-300,000 bpd) in Pakistan was estimated at $10bn, Abrue Lima Project (230,000) in Brazil at $12 bin, Pengerang Refinery and Petrochemical Integrated Development, RAPID (300,000 b/d + 3 mtpa) naptha steam cracker) in Indonesia at $27bn and the 650,000bpd capacity Dangote Refinery in Nigeria at US$19 billion.Nigeria is a major oil and gas producer in the world that does not refine its abundant hydrocarbon resources but heavily imports most of its PMS needs. Popular thinking is that serious countries don’t sell off their strategic national assets such as refineries even to the highest bidder when countries that don’t produce a drop of hydrocarbon still want to own refineries. God save our nation.

*Mr. Nwankpa, veteran journalist and public affairs commentator, wrote in from Abuja.  

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