How cabal kill refineries, oil distribution
By ADETUTU FOLASADE-KOYI, Abuja
Wednesday March 14, 2012
Sen Lanlehin
In January, Senator Magnus Abe led his colleagues in the Petroleum Resources (Downstream) committee on an oversight tour of the Kaduna refinery.
That visit turned out to be more than a routine tour of the facilities as it revealed so many things wrong with the refinery built with public funds less than 30 years ago.
For one, the facility that was supposed to produce bitumen and other petroleum products among some of its core functions could only resort to producing drums for oil companies survival.
Senator Abe and his colleagues on the tour found it appalling that members of staff could comfortably collect N12 billion from the public treasury as salaries and allowances per annum.
More sordid revelations were to follow. For instance, the refinery, as at that visit was not just only not refining fuel for public consumption, even imported fuel was not getting to the plant.
Besides, should the imported fuel get to the plant, the discharge point was non-functional as well.
An enraged Abe equally wondered why a plant that was supposed to generate billions of naira for the country was comatose with staff content to draw salaries from the treasury.
His words: “I must say that as a committee, we are not happy with the state of this refinery. It is shocking that a refinery that was built less than 30 years ago, that has the projected production capacity of 110, 000 barrels currently running at less than 35 per cent capacity, it’s unfortunate that as we could see today in one of the production plants that was made to produce asphalts plants has today been converted into a drum-making plant producing containers for oil companies for a price that could simply be described as unfortunate and sad development, and situation, and we are doing this at a time we are spending N12 billion per annum to keep the place running and sustain the staffs.
I think a lot needs to be done and in fact, quickly.
As we leave here, we are going to engage the Minister of Petroleum and the GMD to look for immediate solution to some of the problems of this plant and also to find out why the importation of crude for the other plant has stopped and in fact, completely.
I was made to understand that even the discharge point for the crude to come in into the plant is not functional. So, it’s not that the plant is not running, but it has shown clearly that there is no plan to run in the immediate future!
I think all these are very serious challenges that we all need to work together to overcome. One is even unhappy when you look at the total amount of investment that has gone into this refinery over the years and then, look at the total possibility of what this refinery could produce for this country if it is made to function optimally. I think if you take the figure 110, 000 barrel and make an estimate of this plant running at even 90 percent capacity, I think on a conservative estimate, we could be making more than N719 billion annually, and for a place that can generate up to this as turnover, no matter how much you spend, at least the country would be left with over N200billion as profits from this operation, but instead of generating a turnover, we are here with various stories.”
In the course of the visit, the committee was displeased to note that there is a general belief in the Nigeria National Petroleum Corporation (NNPC) that not all revenues generated on behalf of the government of Nigeria should be taken to the Consolidated Revenue Fund (CRF).
Senator Abe and his colleagues would have none of that and specifically warned the management of the Kaduna refinery that service delivery premised on a value chain should be their watchword.
“The best way to stand on our own is to stand on our strength and our own in Nigeria is oil. We, therefore, need to make use of it in a very resourceful manner, the end will justify the benefit that we should be getting and unless we get it, it will be difficult to convince our people that we are making good use of our resources.
So, all the attention of the Nigerian people at this time is on the petroleum sector particularly the downstream sector, the Kaduna Refineries represent one of the most critical investment Nigeria has, but sincerely, what is the value we get from this investment and if we are not getting the expected and required value, why are not getting it, and what are the guarantees that the people of this country will get the value they clearly expect?
I also want to correct one notion that there is always this belief within the NNPC that as long as you don’t go to FAAC to collect money, you are not spending public money and I want to make it very clear for the avoidance of doubt that every penny that is being spent in NNPC, whether you generated it, or whichever way it came about, it is the money belonging to the Nigerian people because the investment were from public finances and they are expected to yield benefit to the Nigerian public.
Therefore, every expenditure within this public trust must also reflect the standard of probity, accountability, diligence and transparency expected in the management of public affairs.”
The story changed only marginally in the Port Harcourt refinery. In the Okirika community which houses the refinery’s pipelines, it was akin to living with death on a daily basis.
There were some cases where the community completely built a market on the pipelines while in some other cases, make-shift roads were built right on top of the pipelines.
Straight-away, the committee was told that the major problem confronting the Port Harcourt refinery is repeated vandalisation of its pipelines which traverse the Okrika community.
Another challenge is the inconsistency of crude oil supply. The plant has had to shut down repeatedly because it runs out of crude owing to repeated vandalisation of crude supply from its pipelines especially at Khana Local Government Area.
Again, there are many illegal refineries which dot the landscape.
Beer parlours situated right in front and at the back of the pipelines is a regular feature in Okrika. Straight on to the Okrika jetty which was burnt sometime ago by the militants in the Niger Delta, some staff of Lee Engineering seen working on the jetty were without lifeguards.
Asked by Senator Ben Ayade why that should be so, one NNPC official explained that the two workers working on the pipelines within the jetty took turns to use just one lifeguard jacket.
Moving on from there, the committee moved to the Petroleum Products Marketing Company (PPMC) loading bay and another sordid tale confronted the committee.
Before the committee’s bus moved into the loading bay, Daily Sun, which was on the entourage, had observed rows and rows of tankers lined up on each sides of the road leading to the refinery and the loading bay.
Some tanker drivers were seen either lying idly under their respective vehicles while others contended themselves with going in and out of the expansive loading bay premises to presumably ascertain when they would be called upon to drive in to load fuel.
But the most striking feature of the tankers was that most of them were branded in NNPC colours and upon entering the loading bay, out of nine tankers that were loading PMS, five belonged to NNPC.
Out of curiosity, committee members asked the NNPC officials whether only NNPC tankers were given preference. A PPMC official told the Senators that NNPC tankers load only about 30 per cent while major marketers also take 30 per cent and independent marketers make up the remaining 40 per cent.
Not satisfied, Senator Abe demanded to see the movement and loading register for the day. It was not readily available.
Again, he demanded for the records of the previous day and it showed that NNPC actually took 40 percent of the loading for that day. There and then, the committee demanded the records from that depot.
As if that was not enough drama, as the committee was about to move out of the PPMC loading bay, some group of people gathered and were seemingly agitated.
The Senator Abe committee, which included Senators Hosea Agboola, AbdulMumin Hassan, Olufemi Lanlehin, Ben Ayade, Ibrahim Musa, alighted from the bus and demanded to know what was amiss.
A leader of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Jonathan Olisah told the Senators that some of their members had paid for petroleum products as far back as 2010 and were yet to lift any product!
Olisah only stopped short of pointing fingers and naming some oil cabal operating within the South south and South east geo-political zones who have allegedly hijacked fuel supply in the PPMC depot in Port Harcourt.
He specifically pointed at the management of the PPMC who he described as “bad.” “Nigerians are just suffering unjustly because a cabal in the NNPC have hijacked fuel supply.”
He told the Senators that some IPMAN members have paid for petroleum products as far back as 2010 and 2011 and have not lifted any product.
But PPMC Area Manager, Emmanuel Anam countered Olisah. He told the committee that some of the supposed oil marketers “have no filling stations and those who have filling stations, we have programme batches. What they are complaining about is kerosene and not PMS.”
Anam had earlier told the committee that he was unaware of the marketers’ complaints.
Not satisfied with the pace of work at the PPMC loading bay, the committee directed the management to extend loading of trucks from the usual 6pm to 9pm.
He backed it up by calling for the prosecution of fuel hoarders rather than the Department of Petroleum Resources (DPR) just sealing their filling stations. Abe issued this directive against the backdrop of some petrol stations hoarding rather than selling fuel, thus compounding the hardship of commuters.
Earlier, the committee had called on Governor Rotimi Amaechi to intimate him of the purpose of the visit with a plea for him to use his good offices to reverse the Japanese travel ban on the Niger Delta.
The Japanese government had issued a travel advisory to its companies not to travel to Nigeria’s Niger Delta region which in turn has stalled the Turn Around Maintenance ( TAM) of the Port Harcourt refinery.
Components of the TAM for the Port Harcourt refinery is valued at $463 million with the TAM alone valued at $146 million.
Japan Gasoline Corporation, which originally built the refinery, was invited for the TAM of PHRC at the cost of $146 but declined based on the travel advisory restriction by the Japanese government to the Niger Delta.
The company later recommended Tecnimont of Italy which is yet to commence operation because of the advisory.
It was gathered that even the site verification by Tecnimont is yet to commence. The Italian company, Daily Sun gathered, insisted that “they must visit site before giving Nigeria a quotation. We are pushing them and we hope they stick to their earlier schedule.
“We hope that by the end of May, everything will be settled.” With pre-fabrication of tubes done in France, the placement of order of TAM equipment is expected to land in Nigeria on October 31, 2011 while, with all things being equal, the refinery is expected to begin operation on December 22, 2012.
Officials of Port Harcourt refinery were optimistic that TAM would commence on October 1, 2012 while planned completion is November 2012 and commissioning is December 2102.
This information did not go down well with Senator Lanlehin who quickly whipped out his ipad and queried why Nigeria, which hopes to give Technimont $463 million worth of business is not listed as a business partner on its website address. There was no reply from NNPC officials.
And so, during the courtesy call on the governor, Senator Abe pleaded with him to intervene in reversing the travel ban mitigating against the refinery’s TAM during an oversight tour of the refinery yesterday.
Said Abe: “There are so many opportunities that can come if the (petroleum downstream) sector is deregulated and properly accounted for. We also want to solicit your help; part of the challenges we are having with the Turn Around Maintenance (TAM) is that there’s a travel advisory against the Niger Delta and because of that, contractors who built the refineries, who have been asked to come back to do the TAM are afraid to do so, saying that they won’t come to Nigeria even though that’s against the principle of the Federal Government’s policy of getting the original manufacturers of the refineries to do the TAM.
Please help us to intervene with the Japanese government in view of the travel advisory they are issuing against the Niger Delta.”
In his reponse, Rivers State Governor Rotimi Amaechi said that only full deregulation of the petroleum downstream sector and passage of the Petroleum Industry Bill (PIB) will ensure that Nigeria gets the much-needed investors in the sector.
Governor Amaechi also pleaded with the National Assembly to draft and initiate the process of passing into law its own version of the PIB so as to accelerate reform in the nation’s oil sector.
You know the problems, please find a solution to the problems. We’ve talked about the PIB and problems in the upstream and downstream and upstream sector. There’s nothing precluding NASS from drafting its own PIB.
There’s been no law regulating the oil sector and nobody cares…The oil sector is a very difficult sector where our money is spent without the law. The money must be spent transparently.
The National Assembly must pass the PIB. I’ve been in the Legislature and I know that the National Assembly can initiate a bill. Please, can the NASS initiate it’s own PIB?
Lack of petroleum laws is hindering development in the Niger Delta…Oil companies are not investing because they are waiting for the PIB. Without a deregulated economy, you won’t have a refinery as those who want to invest won’t come into the industry, he said.
The rot in the Port Harcourt refinery was equally evident in its control room. It was obvious to discerning minds that with no petroleum products to pump to the disused pipelines, the workers simply had no work to do. In fact, in the control room, all the three wall clocks had stopped working long ago.
The rot was also glaring in the dilapidated premises of the Port Harcourt Refinery Company (PHRC).
As it was with Kaduna, with a staff strength of 1,032, N13.2 billion was paid as staff and benefits in 2011, said the Managing Director of the Port Harcourt Refinery Company (PHRC), Engineer Anthony Ogbuigwe.
It is curious that while Engineer Ogbuigwe had his approval limit raised from N500, 000 to $2 million (limit raised during the administration of late President Umaru Yar’Adua), the same management could do nothing to rehabilitate the premises which generates millions of dollars and naira for Nigeria.
