After its previous plan to revamp the nation’s four refineries and transform Nigeria from a net importer into a net exporter of refined petroleum products failed to materialise by May 2023, the Nigerian National Petroleum Company Petroleum (NNPC) Limited has again set a fresh deadline to realise that aspiration.
The Group Chief Executive of the NNPCL, Mele Kyari, said on Monday in Abuja that the country was now ready to make that aspiration a reality by 2024.
Unlike in the past, Kyari was careful this time not to gamble with the exact date to give himself an elbow room to manoeuvre in case the promise did not fall through.
Shortly after his appointment in 2019, Kyari identified as part of his agenda the full rehabilitation of the nation’s four refineries located in Port Harcourt, Warri and Kaduna latest by December 2022, to end the regime of fuel importation and expenditure of foreign exchange on payment of subsidy on petroleum products.
“We will deliver on the rehabilitation of the four refineries within the life of this administration and support the private sector to build refineries,” Kyari said in his maiden speech on assumption of office.
“We will deliver this through the building of strategic partnerships to ensure Nigeria becomes a net exporter of petroleum products,” he assured.
In March 2021, the then Minister of State for Petroleum Resources, Timipre Sylva, announced the approval by the Executive Council of the Federation for the release of $1.5 bn for the refinery rehabilitation exercise.
Sylva said the repairs would be carried out in three phases spanning 18, 24 and 44 months, to cut down on the cost of processing petroleum products and the volume of fuel imports, to boost the country’s economy.
In March 2021, the Minister said after the rehabilitation of the Port Harcourt Refinery was stalled for over two years, the approval for the release of the money would allow the process to proceed as planned.
The plan, he said, was to start with the rehabilitation of Port Harcourt Refinery, whose first phase was scheduled for completion within 18 months, to reinstate 90 percent of its nameplate production capacity.
The second phase of the plan was expected to be completed within 24 months, while all the final stages were to be completed in 44 months.
To realise the plan, the former minister confirmed that an Italian company, Tecnimont, SPA, was approved by FEC as the contracting firm to handle the repairs, while a professional operations and maintenance company was to be established on completion of the repairs, to operate the refinery for effective maintenance culture.
To ensure the rehabilitation of the other refineries in Warri and Kaduna, Sylva said a $1billion funding facility was being structured by the federal government through the NNPC and Africa Export-Import Bank (AFREXIMBANK).
Defending the plan for the rehabilitation of the refineries with $1.5bn, Kyari said in March, 2021 that building a brand new refinery would cost the country a whooping $12bn., which the government could Ill-afford.
In April 2021, Kyari announced the award of the engineering, procurement, construction, installation and completion (EPCIC) contract to Tecnimont SPA for the rehabilitation of the 210,000 barrels per day capacity Port Harcourt Refinery.
He said similar contracts for Warri and Kaduna Refineries were scheduled for award by the NNPC in June 2021.
The exercise approved by FEC, he explained, was a complete rehabilitation of the refineries and not the usual turnaround maintenance (TAM) undertaken by previous administrations.
Under the approved arrangement, Kyari said the NNPC was going to undertake a complete rehabilitation of the refinery to make it work at optimal capacity on completion of the programme.
“During the rehabilitation, by the 18th month, part of the plant would begin to produce petroleum products, particularly gasoline.
“In rehabilitation, the refinery would not be shut down completely, as segments of the plant would continue to function, while the repairs are ongoing. Once that segment is completed, the repair work would move to the other segments.
“As the repairs continue within the four-year period, the contractor would continue to scale up until the rehabilitation exercise is completed.
“What it means, in a technical sense, is that in 18 months, we will see normal production of products coming from that plant. We will follow the process plant by plant until we are completely done,” Kyari explained.
It is not clear what percentage of this plan was realised, as reports from industry sources say nothing seems to suggest the production capacities of all the refineries have improved since then.
In May 2022, three years after his promise, Kyari told members of the House of Representatives Adhoc Committee investigating the state of the nation’s refineries that the main cause of the deterioration and near collapse of the facilities was as a result of the poor execution of previous TAM and other factors over the years.
In October, 2022, Sylva, while providing an update on the rehabilitation exercises, said the rehabilitation of the Warri refinery was scheduled for completion latest by the end of the first quarter of 2023, contrary to previous assurances by handlers of the repairs of the Port Harcourt Refinery, Tecnimont, that the plant would commence fuel production by December 2022.
At the signing of the Memorandum of Understanding (MoU) between the NNPCL and Daewoo Group of South Korea for the rehabilitation of the Kaduna Refinery in Seoul, South Korea, former President Muhammadu Buhari adjusted the deadline for the completion of the rehabilitation of the Warri refinery and the restoration of fuels production to the first half of 2023.
Amid inadequate public information on the details of the ongoing rehabilitation of the refineries, Kyari has again given an assurance on Nigeria’s readiness to become a net exporter of petroleum products in 2024 without an update on the repairs.
Speaking during the Energy Labour Summit organised by the oil industry workers under the aegies of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja on Monday, Kyari said the 2024 target was in line with the government’s aspiration to deliver immediate benefits of local supply of petroleum products, while creating export revenue.
“Today, we export 100 percent of our productions. No resource-dependent country does this. That is why we must deliver on our mandate. I don’t want to tell you we are going to revamp our refineries. That is too much of PowerPoint talks. So, it will be done and you will see it. I don’t want to speak about it.
“We are tired of speaking about it. I will not give you a date so that people don’t get angry again. What we must achieve is that this country must be a net exporter of petroleum products, and this is within sight,” Kyari said.
What this means, Kyari explained, was that Nigerians would have sufficient volumes of petroleum products in the country and for export.
Regardless, the NNPCL GCEO maintained that local refining capacity would not necessarily bring down the local price of petrol, which, he pointed out, was controlled by the international price benchmarks.
He called for the deployment of an inclusive and just energy transition such that resource-dependent countries like Nigeria could be protected and allowed to effectively utilise their resources to develop the necessary infrastructure to create shared prosperity for tomorrow.
Stressing the need for a shift in focus, especially in mass transportation, Kyari said there was the urgent need to mainstream the usage of compressed natural gas (CNG) in the energy sector to further align with the federal government’s policy on gas as the choice energy transition fuel.
“Government is putting money into this and NNPC is investing with partners. We believe in 2024 the revolution will become very manifest and people will have access to cleaner and cheaper fuels.
“It’s already happening, a number of buses have been converted and a number of state governments have bought buses that are running on CNG. We are carrying out significant projects that will bring CNG into the market with our partners and we believe that this will work for our country,” he said.