Buhari And NNPC: Did The Minister Say It’s Cheaper To Import Petrol than Refine Locally? By Ifeanyi Izeze

Certainly, it is now very clear that the Minister of State for Petroleum, Ibe Kachikwu, is completely oblivious of the rules of the new arena he has come to play. His demeanour since he came onboard indicates that he was not properly tutored that the rules of the game in Mobil where he came from are completely different from what obtains in the political arena where he now plays. Somebody should him and fast too that there is a huge difference between functioning in the political/government space and sitting down in an office to do the legal side of upstream oil business.
Does this minister actually think of the serious political consequences of most of the things he says on the government he is serving? Haba! This was the same man who told us last September that any refinery that does not work full-stream (100 percent installed capacity) would be scrapped by December (2015). Today how many of our three refineries are operating even at 50 percent installed capacity? Early in the year he told us the Kaduna Plant is running at 60 percent installed capacity.
Meanwhile, he forgot that his same NNPC told us that after the Turn Around Maintenance of the Kaduna plant, on the point of streaming the plant, it was discovered that the crude oil feedstock supply trunkline from the Escravos had 78 breaches between Warri and Lokoja. The question is: if Kaduna had operated at 60 percent as the Minister said, where did it get the crude oil it was refining because we were not told the breaches have been fixed? How long can we continue like this as a nation.
How do you reconcile that the Minister of State for Petroleum whose government has been celebrating the stoppage of subsidizing importation of fuels could few day later be saying “at the moment, importing Premium Motor Spirit, PMS, also known as petrol, is cheaper than producing the product in the country’s refineries?” could it be he was he speaking the mind of the substantive Minister of Petroleum, his boss? Time will tell!
It was in Abuja while addressing newsmen that Kachikwu stated that until the upgrade and total refurbishment of the refineries are concluded, as well as ensuring that the pipelines are fixed, it would be uneconomic and very expensive to produce petrol locally.
According to him, local refining of petrol would make much more economic sense if all the refineries undergo full set of repairs and Turn-Around Maintenance (TAM), and when new refineries are set up in the country through co-locative initiative.
His words: “Most modern refineries are configured in such a way that your stock of PMS outage is a lot higher, 70 to 80 per cent. So when we do import the product, we actually save money; we get it less expensive than when we do it here.
“But having said that, the reality is that until we have alternatives in terms of co-locative refineries which we are looking at; until we finish the total refurbishment to improve and upgrade the refineries, it does not make sense to use it with some of the deficiencies.
“This is because distribution is key. If you have product in Kaduna for example, pumping into the north becomes easy as opposed to moving, as we do whenever we have a crisis – trucks all the way from Lagos and Oghara, out to the north.”
Kachikwu further said “even if the current set of refineries were working on a 100 per cent basis, they would only be able to account for 20 million litres of PMS per day, about 50 per cent of the country’s total consumption. This means that the country would still resort to importation to meet up with the shortfall.” So is this a new discovery or the lies can no longer cover the truth?
According to the minister, “The way the refineries are configured right now, and until a full set of repairs and TAM are done, they are configured on the basis of 50 per cent of PMS and 50 per cent other products. So even if they were producing on a 100 per cent basis, which they are nowhere near producing right now, PMS output would be less than 20 million litres. Our consumption is closer to 40 million. So we will still have, literarily, 50 per cent gap.”
How can government be telling us is cheaper to import petroleum products? That is apparently giving us no hope. So the minister is telling us that other countries will buy crude oil from Nigeria, transport it to their place, refine it, transport it back to Nigeria and sell it to us at a cost that will be cheaper than when we refine it here? What magic are those countries using and why can’t Nigeria employ such magic? More so, this is coming after the NNPC told us few days ago that our Refineries made profit of over 5 billion naira in the month of January 2016. How do you reconcile this?
If the minister doesn’t, let him know now that Nigerians don’t expect our present government and set of leaders to be saying this to us now. These were the same excuses the past leaders kept giving. Even if the refineries are not working in full capacity as at present, is there even a long term plan to fix and/or upgrade all of them to get optimal yield? Do we have a sincere long term plan of building new ones whether turnkey or modular?
So, if those who built the refineries in their own generation configured it 50-50 PMS and other products, good and fine, they have done their part and gone. Now is it not the duty or rather turn of those who are there now to do something about the design defect (if it is true) by upgrading the Plants and/or seriously setting out to build better ones that will be better configured as obtained in modern times?
Whether what Kachikwu said had some truths or not is immaterial in the context of his statement. We know that right now our refineries are not functioning anywhere near sustainable or rather impressive capacity utilisation. Then couple with paucity of funds to do any meaningful mega turn around or upgrade amongst other setbacks, it will cost a hell load of resources and time fixing the problems in the refining subsector.
But, is he aware that the party he is serving in its government dragged Jonathan in the mud because his government could not refine our crude oil locally and relied almost 90 percent on offshore bridging through all sorts of opaque transactions that came to be known as crude-for-product-swap fraud? If you blamed the previous government for that failure and now you are advocating for the same arrangement, is the present government going to apologise to the previous one and to all Nigerians that they were quick to blame their predecessor? You see?
How can Kachukwu now convince us that he has not joined the cabals working against our national interests in the oil sector? Those that rule Nigeria including Buhari and his team are different from those that run the country and dare not toil with them or they run down your government. It happened under Jonathan and we are beginning to see it happen under the present Buahri-led government whether anybody wants to believe this or not.
My pastor used to say that “excuses always diminish a man but in this case- diminish a government.” God bless Nigeria!

Ifeanyi Izeze lives in Abuja and can be reached on:
iizeze@yahoo.com; 234-8033043009

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