BY OBUTE JAMES
The House of Representatives on Tuesday called on President Muhammadu Buhari-led Federal Government to immediately handover the moribund and obsolete public refineries in the country to private companies who are ready to resuscitate them.
The House Resolution was sequel to a motion of matters of urgent public importance by Hon. Awaji-Inombek Abiante who represnts Andoni/Opobo/Nkoro Federal Constituency of Rivers State.
Read Abiante’s motion below:
“MOTION BROUGHT UNDER MATTERS OF URGENT PUBLIC IMPORTANCE ORDER 8, RULE 4
“CALL ON THE FEDERAL GOVERNMENT TO SAVE NIGERIANS FROM THE RECURRING HARDSHIP OF PETROLEUM PRODUCTS SCARCITY ”
Recall that exploration for crude oil commenced in Nigeria in 1937 when Shell D’ Arcy was granted the sole concessionary rights over the whole territory of the country and crude oil was first discovered in commercial quantity in Oloibiri in present-day Bayelsa State in 1956 when the company (Shell D’ Arcy) drilled the first successful well.
“Also recall that in the same year (1956), Shell D’ Arcy changed its name to Shell-BP Petroleum Development Company of Nigeria Limited and continued its exploration and exploitation activities in Nigeria without hindrance. Thus, in 1958 the first cargo of crude oil was shipped in February, 1958 through the oil tanker ship Hemisfusus to Britain.
“Further recall that as the economy of the nation grew, demand for petroleum products was met by importation. Shortly after independence, the Shell-BP Petroleum Development Company saw an opportunity to meet the products need of the country; hence it embarked on the construction of the first refinery in the country, Port Harcourt Refinery. The 38,000 barrels per day (bpsd) Shell-BP Refinery was completed and commissioned in 1965.
“Aware that the Federal Government of Nigeria initially acquired 50% shareholding under a participatory agreement with Shell-BP, and later increased its shareholding to 60% in 1972 which prompted the refinery to be registered as the Nigeria Petroleum Refining Company (NPRC), but it remained as a Joint Venture (JV) Company under private sector control and management. The premier refinery was debottlenecked in 1972 and a Naphtha Catalytic Refining Unit (CRU) added, thus increasing its capacity to 60,000 bpsd.
“Also aware that the Federal Government acquired the remaining 40% shares in 1978 under an outright buy out, and renamed it NNPC Refinery, Port Harcourt. It was thereafter fully Nigerianised and came under Government control and was manned mainly by professionals who were recruited from the private sector-International Oil Companies (IOCs) – to grow capability for Nigeria to be an active player in the fast developing Oil Industry in Nigeria.
“Further aware that in order to meet up with high demand for refined petroleum products as a result of increasing population and economic activities; the Federal Government of Nigeria constructed three additional refineries namely: the Warri Refining and Petrochemical Company with a capacity of 125,000 bpsd, commissioned in 1978; the Kaduna Refining and Petrochemical Company with a capacity of 110,000 bpsd, commissioned in 1980; and the New Port Harcourt Refinery with a capacity of 150,000 bpsd, commissioned in 1989.
“Observes that the aforementioned refineries have become moribund and obsolete, and in an effort to resuscitate them, the Federal Government of Nigeria have spent a whopping sum of $26.5b (the Guardian, 21 March, 2021) on their Turn-Around Maintenance which has not yielded any positive results.
“According to experts the amount spent so far on the Turn-Around Maintenance of these moribund refineries is capable of building three new refineries of the same size going by the cost analysis of refinery projects across the world.
“Also observes that the whooping sum of $26.5b (the Guardian, 21 March, 2021) that have been wasted on the Turn-Around Maintenance of the moribund refineries in 2021 should have been used to solve the problems bedeviling critical sectors such as Education, Health and Road networks across the country.
Worried that the non-functioning of the refineries has resulted in payment of fuel subsidy, importation of bad fuel, and the resurgence of long queues at filling stations across the country which has seriously impacted negatively on the well-being of Nigerians.
“Further worried that if the moribund refineries remain under the control of the Federal Government, coupled with the inefficiency of the Agencies of Government in charge, it will be a great disservice to Nigerians who continue to bear the brunt.
“Notes that during the tenure of President Olusegun Obasanjo, machineries were put in place to commence the process of privatization of the Nation’s refineries with a view to ensuring its efficiency and save the Nation from unnecessary wastage of foreign exchange earnings on Turn-Around Maintenance and operating loses.
Also notes that subsequent governments reversed the decision taken by the Obasanjo administration on the privatization of the refineries, hence the situation the country finds itself today.
“Further notes that apart from the reported $26.5b, these refineries have in recent years reported operating loss of N778.71bn (Punch Newspaper, 19 March, 2021) on these critical assets which can clearly be termed as wasting assets.
“Believes that having wasted billions of dollars over the years, the Federal Government of Nigeria cannot successfully execute the Turn-Around Maintenance of the moribund refineries, hence it will be better for the Government to seek alternatives with a view to ensuring their resuscitation.
“Urge the Federal Government of Nigeria, the Federal Ministry of Petroleum Resources and the Nigeria National Petroleum Company (NNPC) to set machinery in motion to hand over the refineries to International Oil Companies operating in Nigeria or other competent private organization(s) with a view to resuscitating them and make them function again;
“Mandate the Committees on Petroleum Resources and Public Procurement to ensure compliance.”