No contract with Oando, ENI on Nigeria’s existing refineries, Kachikwu says; pledges transparent bid process

Agip Head office in Lagos
Agip Head office in Lagos

The Minister of State for Petroleum Resources, Ibe Kachikwu, said the federal government was aggressively pursuing the refineries improvement programme to realise its agenda to end fuel importation by 2019.

The minister also clarified that neither Oando nor Agip had been handed over the right of maintenance and running of any of the refineries, saying a transparent bidding process will be held.

His statement comes days after the Senate rejected an earlier announcement that Agip, a subsidiary of the Italian oil giant, Eni, had committed to repairing the Port Harcourt refinery, as part of a $15 billion investment that includes building a 150 thousand barrel per day refinery and a power plant.

The minister, who was briefing journalists in his office in Abuja on Thursday, said the country was facing an emergency situation in the petroleum sector requiring urgent attention.

“When I made the comment that I want to see us exiting fuel importation by 2019, and that I will leave if I don’t accomplish it, it was to energise everybody to the fact that 2019 is not a play game.

“We need to work hard for that to happen. We need the cooperation of everybody, including the National Assembly, Presidency, and other agencies, like the Bureau of Public Procurement, BPP, to speed up the process. We are in an emergency situation. We need to plan ahead to ensure that fuel supply continue to be available,” he said.

To sustain the current uninterrupted fuel supply in the country in the last two years, the minister said government spent about N3.4 trillion on the importation of about 20 million metric tons of petroleum products between January and December last year.

Besides, he said, about 30 per cent of the total foreign exchange allocation from the Central Bank of Nigeria went into importation of petroleum products, apart the logistics of the importation and distribution programme.

The domestic refining capacity from the four refineries located in Port Harcourt, Warri and Kaduna, Mr. Kachikwu said, stood today at about six million litres out of a total national daily fuel consumption of 35 million litres.

With these statistics, he said, government decided to make a move to end fuel importation, while improving the refining capacities of the refineries to about 100 per cent.

Consequently, the minister said, he was at the head of a technical committee set up to identify the companies interested in financing the upgrade and repair of the four refineries on concessionary basis.

Companies interested in participating in the process, he said, would be invited to formally declare their interest after their records have been assessed, in terms of financial, engineering, downstream capabilities.

Dispelling speculations that government planned to sell the refineries, Mr. Kachikwu said serious considerations were being given to the option of inviting their original builders, which have the designs and engineering outlay, to handle the repairs, while identifying those interested in providing the financing.

Denying speculations that Oando PLC had been handed the running of the refinery in Port Harcourt, the minister said the search for the financiers of the repairs were still in progress, as the technical committee was yet to summit its final report.

Given the technical nature of refineries upgrades, he said, only few companies with the necessary capabilities, including financing, engineering and technical expertise as well as marketing reach would be allowed to handle the job.

“We will require about $1.12 billion (about N352.24 billion) to handle the work, excluding the cost of pipeline repairs from South to north and from Escravos to the West.

To move the country closer to its target, Mr. Kachikwu said a new 15,000 barrels per day capacity refinery by Nigerian Agip Oil Company was being planned for Brass in Bayelsa state.

He said a meeting was held on Thursday with other fuel producers, as part of a four-pronged strategy to close the supply gap.

The strategies included boosting the refining capacity of the four NNPC refineries; co-locating refineries to the existing ones, to share facilities like pipeline and storage facilities, while developing other greenfield refineries, like the Dangote Refineries, targeted at realizing the 2019 deadline.

“I am committed to 2019 deadline. I think 2019 is achievable. We are going to work hard at it. Everybody has a role to play to make it work. The press has to sensitize the society to accept the need to achieve this,” he said.

On the achievement of the present administration, the minister said the downstream deregulation problem had not only been largely addressed, the upstream joint venture financing problem has been resolved.

Again, he said, government had tackled and addressed the militancy issues in the Niger Delta region.

“Government is targeting issues that are critical to the employment generation in this country. Getting the country’s refining capability on tract, to stop our continued importation, is key.

“There is an urgency in this sector that needs to be addressed. If we do, we will create the right jobs, right skill sets, investment environment, and produce more supply to the downstream sector,” the minister stated.

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Bassey Udo is PREMIUM TIMES’ Business & Economy Editor. He has covered finance, energy, oil, gas & extractive industries for over a decade. He is a winner of the Wole Soyinka Award for Investigative Journalism, and the Thomson Reuters Foundation (Wealth of Nations) Award for Business Reporting. Bassey is an alumnus of the U.S. International Visitors Leadership Programme. Twitter: @ba_udo

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