Nigeria: Why Nigeria's Refineries Are Not Working, Says Rehabilitation Underway - Kyari

11 May 2022

Group Managing Director (GMD) of the Nigerian National Petroleum Company (NNPC) Limited, Mr. Mele Kyari, yesterday told the House of Representatives Adhoc Committee investigating the state of refineries in Nigeria that 25 years of bad management was responsible for the poor state of the country's refineries.

Speaker of the House, Hon. Femi Gbajabiamila, had on January 26, constituted the adhoc committee to work with NNPC, the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, and other relevant stakeholders to obtain the needed information for the assignment. The committee, in two separate letters, dated February 24 and March 17, 2022, requested the NNPC boss to present a status report on the state of the country's refineries.

Addressing the lawmakers, the NNPC GMD apologised for being absent in the committee's previous sittings, but assured that total rehabilitation of the refineries was underway.

Kyari said NNPC followed due process and the Federal Executive Council (FEC) granted approval for the overhaul of the Port Harcourt Refinery. He said a contract of $1.55 billion was awarded for the job.

With the approval, Kyari said work was presently ongoing at the Port Harcourt refinery and would also commence soon at the Kaduna and Warri refineries.

Kyari explained, "We recognise that today none of our refineries is operating for the very obvious reason that through the work of this committee, you will find out why they are not operating.

"We will hide nothing from you. We will also tell you where we are as we speak today. Needless to say that the refineries were essentially not properly managed overtime, not just today, but in the last 20 to 25 years.

"The turnaround maintenance processes were clearly mismanaged overtime. I have said this over and over. And when we took over, it was very obvious that what you are dealing with was not a turnaround maintenance. We were dealing with total rehabilitation.

"The panels were clearly in situations where ordinary maintenance will not solve the problem. We have degradation of monumental proportion that we met and, of course, the only way you can do this is to conduct a full turnaround maintenance."

Speaking further, Kyari said, "We have a very different concept of the rehabilitation process we have started. It will be financed by banks. That is the difference between what you had in the past, where you do halfway work and never complete what you were trying to do and banks always will put conditions for lending not just about payment but ability to pay from your cash flow.

"And part of the requirements is also to include O and M component, which means that maintenance contracts will be part of this deal, otherwise they will not lend us money. It means we have to have continuous sustained operations of the refineries to establish O and M contractor.

"This is what obtains anywhere in the world and that process is also going on and we will hand over these refineries at the end of the exercise with the optimisation of our existing staff, but also a third party to run it for us. We believe that at the end of this exercise, the refineries will come to their full capacity, at the very least 90 per cent of their installed capacity.

"Of course, no refinery runs at 100 percent. That is not technically practical, but we will do minimum of 90 percent of their installed capacity."

The GMD further assured Nigerians that there was sufficient petrol to meet their demand. He said there was a total of 2.8 billion litres of petrol available and that was sufficient to meet country's demand in the next 48 days without importation.

Kyari blamed the current fuel scarcity in some parts of the country on hitches that occurred as a result the public holidays of Workers Day and Eid el Fitre. He explained that when such glitches occurred, there was usually a lot of panic buying which he said was causing the long queues at the petrol stations.

The NNPC boss said his team had tried to ensure people did not stay too long at the filling stations.

Kyari also said the relevant authorities were taking steps to ensure that "black marketers" did not take advantage of the situation, adding that once supply is maximised, the black marketers would disappear.

Earlier in his remarks, the chairman of the committee, Hon. Ganiyu Johnson, said the committee had a mandate to determine the amount so far spent on turnaround maintenance of the refineries.

The lawmakers resolved that NNPC should provide the survey report, commercial evaluation report, proof of waivers granted by FEC, procurement documents and other relevant documents.

Ganiyu adjourned the hearing to June 3 and mandated that the GMD should appear with all the relevant documents.

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