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Performing below 15% after repairs pushing NNPC to sale refineries as scraps

Another season of debate on whether to sale or not to sale some refineries that have remained unmanageable after all manner of refurbishments is back at the table of the Nigerian National Petroleum Corporation (NNPC).

Weekend, NNPC chief operating officer, Refineries, Anibor Kragha, in his presentation at the 2017 Association of Energy Correspondents of Nigeria (NAEC) conference held in Lagos, presented a doomy; saying the corporation is under serious pressure to privatise refineries, performing barely 15 percent of their installed capacity after their recent refurbishment.

Though he did not give future details on the selloff plan, he was however, smart to quickly maintain that “selling the assets in their current state would not be in the best interest of the country”.

In his analogy, Kragha averred that “If you inherited a car that has been abandoned for almost 30 years, you would want to clean it up a little, refurbish it before you consider selling, otherwise you may not get the right value for the asset, it is similar with the refineries”.

But giving further explanations, the Minister of State for Petroleum, Dr. Ibe kachukwu argued that “In optimising local refining capacity, the first thing we did was to initiate steps towards revamping our own refineries in Port Harcourt , Warri and Kaduna. The refineries are not to be concessioned nor sold in whole or part because the current state, optimal value would not be obtained”.

“On the concept for co-location of refineries, we have moved from our initial model, which involved co-locating brownfield refineries with the existing refineries to the co-location of brand new (greenfield) refineries. The overall concept remains the same – pipelines, jetties, and where possible, storage tanks would be jointly invested in and shared.

Continuing, he added that federal government had sought externally for resources to finance the rehabilitation of the existing refineries, “which was a very tall order, telling someone to invest about $1bn in the refineries rehabilitation with no equity, and wait for incremental volumes of refined products to recoup their investment.”

“Nigeria is engaging the original builders of the refiners, engaging partners with finances to fund the repair work on the refineries. The plan, according to the minister, is for the management team comprising the original builders, financiers and the NNPC, to steer the operation of the refineries over a period of 5-6 years to breed incremental liquids for recouping investments.

However, throughout his argument, Kachukwu failed to give a clear time frame on when, how and if the refineries would be sold at the end of the six years after all.