The refineries Turn Around Maintenance (TAM) is one of the worst corrupt dealings entrenched in the Nigeria’s oil and gas sector. The deal is characterized with lack of transparency between government officials and their cronies. Over $20bn billion spent on TAM without a functional refinery in existence.
Agents of these corrupt act do not feel the consequences for their action, and if they continue to be set free, they will not change their actions and Nigerians will continue bear the predicament.
As the corruption ranges, Nigerian state is under pressure to explain to her citizens why refineries are not working for decades.
In 2015, the state via respective media said it has fixed the refineries and they are functioning optimally. Unfortunately, in 2017, the state admitted that the refineries aren’t working and set a committee to review and oversee the fixing and repairs of the refineries by 2019.
In the current oil and gas sector reform national debate, the citizens and the ruling class must understand that petroleum debate is so central that it has the capacity to shape the state polity. For instance, the discourse on how to address petrol issue played a fundamental role in the People’s Democratic Party (PDP) exit from power in 2015. And, it also has the capacity to influence the outcome of the 2019 presidential election.
In recent time, the state has resorted to the excuse of none availability of funds to fix the refineries and build new ones as justification for the refineries not functioning. However, there are indications that private sector wants to invest in the crude refining, although, this is yet to yield the desired outcome. One of them is the Orient Petroleum Refinery (OPR) in Anambra State. It was designed to produce 55,000 barrels of refined products daily. Mr. Goodluck Jonathan, former Nigerian president commissioned the project in 2012. Six years later, the refinery is yet to commence operation. Another is Dangote Oil Refinery and Petrochemicals. It is to commence production by 2018 with 500,000 barrels daily production capacity. Our hope is that it meets its deadline and comes into operation this 2018.
Mr. Goodluck Jonathan, former Nigeria’s President promised three Greenfield refineries as a core focus of his Transformation Agenda. Mr. OlusegunAganga, the former Minister of Trade and Investment, on behalf of Nigeria signed a memorandum of understanding, MoU, between the Nigerian National Petroleum Corporation, NNPC, and some foreign investors under an American-Nigerian joint venture to build six modular refineries at the cost of $4.5billion (about N700 billion).
Report from the Special Task Force on national refineries revealed that the number of licenses issued to investors to build refineries in Nigeria has increased to over 28, and in all, none of the licensees has the capacity to operate a refinery. The report further revealed, of the 42 oil refineries operating in Africa, the three in Nigeria are the worst in terms of efficiency and capacity utilization.
The coming of Mr. MuhammaduBuhari, the Nigerian president awaken the hope that the state refineries will be fixed. The state made no pretense over that. By November 2017, Mr. Buhari ordered NNPC management to immediately return the four refineries to efficient functionality.
In response to Mr. Buhari directive, Mr. NduUghamadu, General Manager, Public Affairs Division in a press statement said, all Nigerian refineries will work fully in 2017. This will be achieved because the four refineries will undergo comprehensive rehabilitation.
Contradictorily, Daily Trust reported NNPC to have set up 8 committees to fix refineries before 2019. Mr. MaikantiBaru, the Group Managing Director on inaugurating the committees charged them to ensure that the refineries return to efficient capacity by 2019.
Nigeria continues to be the only Organization of Petroleum Exporting Countries (OPEC) member that is wholly dependent on the importation of refined petroleum products. This has continued to be the situation despite OPEC stipulation of 80 percent domestic needs in refined petroleum products must be met by domestic refining capacity among member countries. This is to ensure that among the member countries, on the average, only 20 percent of domestic use is imported. Thus, Nigeria being an OPEC country, to what extent have we satisfied this clause? We absolutely failed in this regard.
It becomes fundamental to interrogate why Nigerian oil and gas sector has remained eternally dilapidated. The only answer is corruption. A pointer case is, over $20bn has been spent on Turn Around Maintenances (TAM), and nothing to show for it. And we continue to import over 80 percent refined petroleum product.
On the assumption of office in 2015, Mr. Buhari, the Nigerian president assigned the Nations minister of petroleum to himself. He argued, the huge task of addressing the corruption in the country’s oil sector compelled him to assign such task to himself.
However, evaluating the oil and gas sector under the current Buhari regime takes one to a hopeless situation. It does appear, the rot in the sector is so systemic that Buhari has lost idea completely on what to do. Although the arguments have been that since Buhari was a former Head of State, Petroleum Minister, and having established four refineries in the past, being a president will give him the opportunity to address the rot eternally. Unfortunately, unfolding events have proven this line of argument wrong.
We erroneously allowed the President to have arrogated huge responsibility he cannot handle to himself. Yes, we did. Mr. Buhari is not a petroleum engineer, a technocrat and a specialist in the oil and gas sector. Thus, why are we surprised that we are not seeing results? We would have pushed for the president to appoint a person with a reputable knowledge in the economics of oil and gas. When that happens, the sector will be properly managed and some of the major challenges will be addressed.
Although there are numerous solutions that have been proffered, the only one that will address the issue is political will. Since Abacha’s exit, none of the regimes including that of Mr. Buhari have shown the political will to address the rot in the oil and gas sector.
What we have seen is every presidency bringing his cronies and arrogating experts’ title to them to justify why they will be allowed to pilfer the state in the guise of managing the sector. All the clamor for a holistic reform in the oil and gas sector that will lead to effective delivery has been abandoned by the state, hence we continue in the mess.
Audu Liberty Oseni:
Publish What You Pay-Nigeria.
libertydgreat@gmail.com
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