•Dangote
Experts in Nigeria’s oil and gas industry, have reacted to claim by Africa’s richest man and President of Danagote Petroleum Refinery, Alh Aliko Dangote, that the Nigeria National Petroleum Company (NNPC) Limited’s refineries can not work despite spending $18 billion on their maintenance.
Speaking when he hosted members of the Global CEO Africa, who visited the Dangote Petroleum Refinery, last Thursday, Dangote disclosed that his 650,000 barrels per day, bpd, refinery was constructed after the government of late President Umar Yar’adua declined to sell the refineries to him, reports Saturday Vanguard.
He said: “The refineries that we bought before, which were owned by Nigeria, were doing about 22 per cent of PMS. We bought the refineries in January 2007. But we had to return them to the government because there was a change of government.
“And the managing director at that time convinced Yar’adua that the refineries would work. They said they just gave them (refineries) to us as a parting gift or so. And as of today, they have spent about $18bn on those refineries, and they are still not working. And I doubt very much if they will work. The turnaround maintenance is like you trying to modernise a car that was built 40 years ago, when technology and everything have changed. Even if you change the engine, the body will not be able to take the shock of that new technology engine.”
FG should sell refineries to private investors — CPPE
However, in an exclusive interview with our correspondent yesterday, Dr. Muda Yusuf, the Chief Executive Officer, Centre for Promotion of Private Enterprise, CPPE, said: “I agree with what Alhaji Dangote has said to a large extent. The truth of the matter is that the prospects of those refineries working efficiently and competitively is quite dim because of their age, because of the technology, and because of the prospect of the refineries being able to compete, especially in the light of what is happening, with the increase in domestic production that we are now seeing from Dangote.
“The prospect is even dimmer if the management continues to be in the hands of the NNPC. Look at how much we have spent trying to resuscitate the refineries. We are talking of billions of dollars, which ordinarily could have been used to even build new refineries. And yet, there has been no results. So fundamentally, if the business model remains as it is, there is no way it can work.
“But if there’s a change in the business model, maybe through privatisation, through the coupling of the refineries from government and from the bureaucracy, there may be a fair chance of those refineries working, but there has to be a fundamental change in the business model. Otherwise, we will keep throwing good money away. So, we need to caution the new management of NNPC as to how much of the nation’s resources they should be committing to the refineries.
“Refinery business ordinarily should just be left to the private sector so that the government can concentrate more on ensuring the proper regulatory framework. The amount of government resources that has been wasted on those refineries are mind boggling, we need to put a closure to that and open a new chapter. That’s, I think, is what needs to be done. And luckily, now we have the reform of the downstream sector. We have the PIA, which has created a much better environment for private investments in this space.”
Dangote to revolutionise refining business — OGSPAN
Similarly, the National President of Oil and Gas Service Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, said: “Alhaji Dangote is right. The NNPCL refineries will die naturally.
When the Dangote Refinery was not available, did they fulfill their mandate to the public? They destroyed the refineries while embarking on the importation of petroleum products. Dangote said his refinery has come to revolutionise refinery business in West Africa. The refinery can meet our national demand in Nigeria and West Africa.
“Can NNPCL refineries compete with Dangote Refinery? The answer is No. If it cannot complete, then it is dead. They don’t have the capacity to match Dangote Refinery. This is business, it is not social service.”
Only NNPCL Board can determine fate of refineries — Prof Wumi
On his part, Wumi Iladere, a Professor of Economics, said: “It is a speculative opinion based on subjective truth and not an assertion based on fact. The decision is not only technical and on economics but also governance. Thus, it is for the NNPC Limited Board to decide. It is not for other parties, including the Federal Executive Council according to the law.”
