NNPC Refineries: Marketers back Tinubu, Reject Obasanjo’s Proposal

Petroleum marketers have thrown their weight behind President Bola Tinubu’s determination to revive the nation’s moribund refineries, rejecting former President Olusegun Obasanjo’s position that the facilities will never work again.

The Independent Petroleum Marketers Association of Nigeria and Petroleum Product Retail Outlet Owners Association of Nigeria supported Tinubu’s position that the refineries would work again.

In an interview with our correspondent, the National President of the Petroleum Product Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, said he believed Tinubu would succeed in restoring the refineries, arguing that Nigeria should not abandon strategic national assets because previous rehabilitation efforts failed.

The marketers’ position comes amid a renewed debate over the future of the Port Harcourt, Warri and Kaduna refineries, following Tinubu’s recent declaration that the facilities would return to operation and would be made profitable.

The President had, while receiving the leadership of the Nigeria Union of Petroleum and Natural Gas Workers at the Presidential Villa, Abuja recently, said the refineries would be revived but stressed that mere operation would not amount to success.

“The refineries you mentioned are going to come back to work. We’re just building a very firm research and structural reworking of the economy of it. An ordinary flame and smoke of a refinery doesn’t mean it’s working until it’s profitable and yields the value for which it is built,” Tinubu said.

Tinubu also said he would not dwell on the circumstances surrounding previous rehabilitation efforts, accepting responsibility for the inherited assets.

“I am not a man who looks back because I have accepted the asset and liability of my predecessor, no matter what has happened in the years past. It is my responsibility now to fix it and make it work for the largest common value of our population. I take responsibility for that, and I’m going to do it,” he stated.

But Obasanjo has consistently opposed the continued government ownership and operation of the refineries, insisting that public-private partnership offers a better model for managing major national assets.

Speaking recently, Obasanjo said, “One of the lessons that I learnt is that PPP works,” citing the Nigeria Liquefied Natural Gas project, where the private sector holds 51 per cent and the Federal Government 49 per cent. He said of the NNPC-managed refineries, “I said to people that it will never work.”

The former president based his position partly on an experience during his administration when he approached Shell to take a 10 per cent equity stake and operate the refineries. According to him, the oil major declined, citing the small size of the plants, poor maintenance and corruption around their operations.

Obasanjo also recalled that Alhaji Aliko Dangote had offered $750m for a 51 per cent stake in two of the refineries during his administration, but the transaction was subsequently reversed by the late former President Umaru Yar’Adua following pressure from the NNPC.

He said the country had subsequently spent about $16bn on the refineries, describing the expenditure as being only $4bn short of the cost of building Dangote’s much larger refinery.

However, Gillis-Harry said the views of Obasanjo should not prevent the Federal Government from making another attempt, arguing that the age of the Nigerian refineries was not a sufficient reason to abandon them.

“Well, when Tinubu wanted to become President, he went to the former President, and he told him he could not be President. And today he’s President and doing exceedingly well. So if Tinubu says he wants to make the refinery work, I believe in him that he will do it.

“So, the refinery will work, and there’s no reason why it shouldn’t work. Because the age of our refineries isn’t as old as some of the refineries in the Caribbean areas and South America. So if those refineries are working, there’s no reason why we shouldn’t pay attention to our assets and make them work,” he noted.

The PETROAN president acknowledged that the huge sums previously spent on turnaround maintenance without achieving sustained production remained a major concern.

“That is the bad news, because the size of money that was spent ordinarily should make those refineries work. And they didn’t work. So then the president wants to try again,” he said.

Asked whether he feared that another round of spending could go the same way as previous investments, Gillis-Harry rejected the concern, arguing that the financial management structure had changed.

“No. You know about the executive order that is now redirecting the NNPC’s expenditure profile. And those of us who are regulars watching will do differently this time and ensure that we consider everything that we need to,” he said.

He urged Nigerians not to abandon the refineries, particularly in view of the vulnerabilities exposed by international conflicts and disruptions to energy supplies.

“Let Nigerians rise up. We can’t throw away our assets that are as important as that. You can see what this war in Iran and Israel and America has cost us. So we need to look at things from a different paradigm,” he stated.

Gillis-Harry said PETROAN’s position was that the refineries could still become viable if the government improved financial management and brought in competent technical partners.

“PETROAN’s take is that with a little bit more effort, more clarity and efficiency in financial management, we should make the refinery work. Get the right technical team and right technical partners, and there’s no reason why we shouldn’t have a working refinery,” he added.

Similarly, the Independent Petroleum Marketers Association of Nigeria backed President Bola Tinubu’s position that the nation’s moribund refineries would resume operations, saying the current approach to their rehabilitation differs from previous efforts.

The National Vice President of IPMAN, Hammed Fashola, maintained that although Obasanjo was justified in doubting the refineries based on the huge sums previously spent on turnaround maintenance without results, Tinubu was also right to believe they could be revived.

Fashola said the new approach, which he described as straightforward and devoid of corruption, had given marketers confidence that the refineries could finally work.

“The current President, who said that the refineries will work, is right, because the approach now is different from what we used to have before. The approach now is very straightforward and devoid of any form of corruption,” he said.

He said the involvement of a consortium of engineers in the rehabilitation was particularly encouraging, as the arrangement would require the technical partners to provide funding and subsequently take a controlling interest in managing the facilities.

“With the consortium of engineers that are handling it, it’s like a win-win arrangement. They will bring in their own money, according to information that we heard, to make sure the facilities start working, and I think they are going to get a control percentage; that is, they will manage the place. So that gives us some hope that it will work,” Fashola stated.

The IPMAN official, however, acknowledged the basis for Obasanjo’s scepticism, citing the country’s experience with repeated turnaround maintenance.

“Well, former President Olusegun Obasanjo, who said that they can never work again, is right to say that, because of the past experience and what we have passed through in terms of turnaround maintenance and all that, and the kind of money that is drawn into it without any result,” he said.

The marketers’ position contrasts sharply with that of energy expert Dan Kunle, who has argued that the Federal Government should stop rehabilitating the old refineries with public funds and instead privatise them.

Kunle told The PUNCH that Tinubu had enormous opportunities to open up the upstream, gas infrastructure, agriculture and other sectors rather than continue concentrating government resources on facilities he described as technically insolvent.

“The fundamental mistake that I see is that the interest of certain people in those old refineries is a misplaced interest,” Kunle said.

He argued that the refineries had repeatedly failed under successive administrations despite assurances that they would be restored. Kunle insisted that profitability, rather than merely getting the plants to produce fuel, should be the ultimate test.

“Those refineries will never work. If they ever work, they will not work at profit. They will remain problematic,” he stated.

He urged Tinubu to privatise the facilities and allow investors to commit their own funds to their rehabilitation.

The contrasting positions have left the Tinubu administration with the challenge of proving that the latest attempt will be different from previous rehabilitation programmes.