This was even as NNPC stated that it had lifted the embargo earlier placed on 113 vessels, banning them from engaging in crude oil and gas loading activities in any of the terminals within Nigerian territorial waters.
In a statement by NNPC in Abuja, Group Managing Director of the corporation, Mr. Ibe Kachikwu, stated that the Fluid Catalytic Cracking Unit, FCCU, and the fuel section of the refinery would be brought back to life within this period to ensure that Nigerians continue to enjoy uninterrupted supply of petroleum products.
Kachikwu, who stated this during a facility tour of the Kaduna Refining Petrochemical Company, KRPC, said the refinery will get a turn around that will make it commercially sustainable.
He said: “All the component units of the refinery, including the FCCU and the fuel section, will be fully rehabilitated for resumption of crude supply to the plant.
“You will soon have a different company; we must do all it takes to make this company a success.”efining & Technology, Mr. Dennis Ajulu, expressed optimism in the ability of NNPC to rise above its challenges and reposition itself on the path of profitability.
Managing Director of KRPC, Engr. Saidu Mohammed, said staff of the company were fully aligned to the vision of commercialization and that they would support Kachikwu in that drive.
THE announcement by the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Dr. Ibe Kachikwu, that the nation’s four refineries would not be sold, has continued to draw knocks, as well as commendations from different strata of the country’s economy.
According to him, “Government does not run refineries anywhere in the world. For the eight years I was in the Petroleum Committee of the Senate, I said that without the sale of the refineries we will not make any headway in the industry. “Have we been ever told how much government has made from the refineries all this while? We have always been regaled with the issue of subsidy. In fact, by now, we should be talking of having more refineries,” he said.
On the unbundling of the Pipelines and Products Marketing Company, PPMC, Maeba said that the best measure to take is deregulation, as the private sector is in the best position to run the business of petroleum products.
Also commenting, former Board Chairman, Nigerian Extractive Industry Transparency Initiative, NEITI, Mr. Ledum Mitee, would rather the government opted for commercialisation of the refineries, instead of privatisation due to distortions peculiar to Nigeria in the privatisation of government assets.
“There is always a clear distinction that is almost always distorted in the Nigerian situation between commercialisation and privatisation of public assets. When it comes to the refineries, I would always go for commercialisation which most often times, approximates in practical terms to giving our common wealth to cronies at ridiculous prices
“As I always ask rhetorically to the assertion that these refineries cannot be run profitably or viably unless sold, are those buying them going to run them on charity?” he asked. As regards the unbundling of PPMC, Mitee said that there is always unanimity of views that NNPC needs to be unbundled.
He said: “I think the current GMD is right in giving priority attention to that process. However, I am sure that the process of NNPC reform should be mainly driven by NNPC itself “I would also add that instead of one PIB, we should be looking at a couple of laws so that needed reforms are not held down by disagreements on one area of proposed reform.
For the President, National Union of Petroleum and Natural Gas Workers, NUPENG, Comrade Igwe Achese, the decision to hold on to the refineries is a wise one. “We have often said that the refineries are not for sale. We support privatisation which means bringing in partners. NNPC’s refineries are national assets that should not be mortgaged, but we support the removal of subsidy,” he said.
As regards the unbundling of PPMC, the NUPENG President said, “It is a welcome development. It will checkmate corruption, inefficiency and fraud.”
It was learnt on Sunday that the corporation had also engaged an international accounting firm to ascertain the exact amount due to government on the Strategic Alliance Contracts entered by Nigerian Petroleum Development Company, where up to $2.46bn (N484.6bn) of government money would be recovered.
In a report submitted to President Muhammadu Buhari by its new management, detailing the corporation’s successes so far, the Group Managing Director of the NNPC, Dr. Ibe Kachikwu, stated that the firm had commenced its performance measurement and benchmarking.
He added that the corporation had started what it described as value for money review of the NNPC and the JV companies covering the period of 2008 to 2013.
The Senior Special Assistant to President Buhari on Media and Publicity, Mr. Garba Shehu, in a statement on Sunday, disclosed that the NNPC report indicated that the new measures might lead to further cost recovery for the firm.
The report, according to Shehu, also revealed that after an extensive investigation of the various toxic crude oil for refined products swap contracts, a total sum of $420m had so far been reconciled in favour of the NNPC and was now due for recovery from the legacy OPA/SWAP contracts.
“Out of the reconciled amount, the sum of $277m has been recovered in lieu of products and the recovery effort is still ongoing,” the statement added.
According to the report, the NNPC GMD stated that he was committed to the continued review of all existing contracts and addressing those that were not favourable to the corporation.
It noted that significant cost reductions were also expected to ensure that the corporation remained profitable in the prevailing low crude oil price regime.
The NNPC upstream operations are in joint partnerships with major oil companies. These multi-national exploration and production companies are operating predominantly in the onshore Niger Delta, coastal offshore areas and lately in the deep waters.
As with many other developing countries, the multinationals in Nigeria have been operating under what is called a concession system, with the NNPC being the concessionaire, while the companies are the operators.
The NNPC also is responsible for the management of the exploration bidding rounds for oil and gas. The multinational oil companies operate in partnership with the corporation under Production Sharing Contracts.
The statement from the Presidency on Sunday did not name the joint venture partners from which the corporation plans to get the funds.
Some of the international oil companies that are JV partners of the NNPC include Shell, Agip, Mobil, Chevron and Texaco.
Kachikwu, in the statement from the Presidency, said progress was being made towards bringing back the nation’s refineries to full production, noting that the management of the NNPC was working to actualise this before the end of 2015.
The report noted that if the refineries were completed as scheduled, it would help Nigeria save about $1bn worth of foreign exchange from fuel import substitution annually.
It said additional total savings of over $500m would be made from the petrochemical products of the Kaduna Refinery and Petrochemical Company annually.
The report also disclosed that efforts at repositioning the NNPC had started yielding result to the nation’s economy.
For instance, it stated that gas supply to the power plants had improved significantly from about 630 million to 861 million standard cubic feet per day, which had resulted in a more steady power supply.
“Indeed, the report revealed that gas supply for power and peak generation have in recent times reached a historical high of 876 million standard cubic feet per day and 4,782 megawatts, respectively,” the statement added.
Rather than selling the refineries as being expected, the Group Managing Director of the NNPC, Dr. Ibe Kachikwu, said joint venture partners with established track records of success in refining would be invited to support the running of the refineries to make them more efficient.
Kachikwu made the disclosure during an official tour of the Okrika Jetty and the Port Harcourt Refining Company Limited, PHRC, in Rivers State, yesterday.
The NNPC boss also disclosed of plans by the corporation to unbundle the Pipelines and Products Marketing Company Ltd, PPMC, into three companies
Recall that for decades, the Federal Government has been constantly urged to privatise the four state-owned refineries with combined capacity of 445,000 barrels per day to make them more efficient and profitable.
The refineries were bugged down by lack of proper Turn Around Maintenance, TAM, which left them almost comatose for decades, leading to huge wage bills on petroleum products importation.
Ironically, colossal sums were wasted by successive governments on TAM, which did not make much difference in the refineries operations. For instance, the late Gen. Sani Abacha, was said to have awarded a major contract of $215 million in 1997 for the Kaduna Refinery, while the Abdulsalami Abubakar administration in 1998 set aside about $92 million for the refineries.
During his tenure, former President Olusegun Obasanjo, between 1999 and 2003, also awarded contracts estimated at between $254 million and $400.4 million for the rehabilitation of the refineries and pipelines while in 2007, another $54 million went into the TAM for Kaduna refinery alone.
Again, former President Goodluck Jonathan commenced a $1.6 billion phased TAM, scheduled to begin in January 2013 and ending October 2014, but which commenced in October 2014 and now rescheduled to end in March 2016.
Attempts by Obasanjo to privatise two of the refineries in the past also failed, as the decision was revoked by his successor, late President Umar Musa Yar’Adua.
Obasanjo in a recent television interview recalled that the two refineries in Port Harcourt were sold to business mogul, Aliko Dangote, leading a consortium of investors in a $750 million deal.
However, the late Yar’Adua cancelled the sale due to “pressure” and refunded the money to the Dangote consortium.
Managing Director, PHRC, Dr. Bafred Audu Enjugu, disclosed that the ongoing phased rehabilitation of the refinery cost a little less than $10 million, adding that the job was holistically carried out by indigenous engineers without any foreign support.
Although Kachikwu did not give details about the joint venture arrangement, he noted that the ongoing phased rehabilitation of all the state owned refineries would be given an accelerated vigour with the aim of reducing petroleum products importation.
He added that at full capacity, all the refineries could supply only 20 million litres of premium motor spirit otherwise known as petrol on a daily basis.
PPMC and pipelines operations
With regard to unbundling the PPMC, Kachikwu also said the marketing subsidiary of the NNPC was being split into three to ensure lean, efficient and profitable operations.
He said the split would be along the lines of: a pipelines company that would focus primarily on the maintenance of the over 5000 kilometers pipelines of the Corporation; a storage company that would maintain all the over 23 depots, and; a products marketing company that would market and sell petroleum products.
He added that efforts are in top gear to fix all the crude and petroleum products pipelines in the country.
He disclosed that the military will also be enlisted in the protection of the pipelines, with the Nigerian Air Force to providing aerial survey, the Nigerian Army Engineering Corps fixing damages, while the Police and the Nigerian Navy will provide marine surveillance for the network of pipelines.
He said the move will ensure that the right sets of skills are rightly positioned and the numbers of leakages in terms of pipeline breaks and products losses are reduced to the barest minimum.
On her part, the Managing Director, PPMC, Mrs. Esther Nnamdi-Ogbue, assured that the company would think outside the box to provide solutions to all the challenges confronting it.
Speaking at a one-day seminar on Security in the Gulf of Guinea, organised by the Gusau Institute in Abuja, Dr Kachikwu said the fight to stop oil theft was not only for the NNPC but also all Nigerians, as the effect of crude oil theft was on all Nigerians.
8 months deadline
“A lot is happening. More challenges are going to be there but we are going to be able to solve the problems. We have given ourselves eight months within which we will hopefully completely eradicate the issue of oil theft in Nigeria. It is a focus that is very firm, very determined and in the process, you are going to find individuals who constitute some of the highest level of personnel in this economy.
Group General Manager, Group Public Affairs Division of the NNPC, Mr. Ohi Alegbe, who disclosed this, noted, however, that the refinery is expected to be reopened for operations on Tuesday.
According to him, the decision to shut down the Warri refinery was taken because there was insufficient crude oil in the system.
“They are supposed to have at least a 25-day sufficiency in the supply of crude. So because of the depletion in the volume of crude they have had to temporarily shut down.
“It was shut down on Monday. This is a temporary measure and it should be up and running by Tuesday.”
The NNPC, had a few days ago, stated that after proper evaluation and in line with the terms of contract for the delivery of crude oil to the nation’s refineries in Warri, Port Harcourt and Kaduna, the Corporation has cancelled the current contract due to exorbitant cost and inappropriate process of engagement.
The NNPC had stated that this measure is aimed at reducing cost and strengthening the operational efficiency across its value chain.
As a stop-gap measure, the NNPC said it has engaged NIDAS Marine Limited, a subsidiary of the NNPC, to provide crude delivery service on negotiated industry standard rate pending the establishment of substantive contract.
The NNPC, however, explained that it resorted to the delivery of crude oil to the refineries by marine vessels following incessant attacks on the Bonny-Port Harcourt refinery pipeline and the Escravos crude pipelines by vandals and oil thieves resulting in the complete unavailability of the pipelines in 2013.
“We have also commenced a rigorous and transparent process of securing capable and competitive contractors for the delivery of crude oil by marine vessels to Port Harcourt and Warri/Kaduna Refineries pending the restoration of the crude pipeline infrastructure,’’ the corporation added.
The NNPC further disclosed that it had obtained the permission of President Muhammadu Buhari to kick-start the tendering process for the 2015/2016 Crude Oil Term Contract for the evacuation of Nigeria’s crude oil equity from the various crude and condensate production arrangements.
According to the NNPC, the process which would commence with the advertisement of the Crude Oil Term contract in both National and International print media for a period of one month has been carefully structured to weed out ‘briefcase companies’ and rent seekers.
While all the affected stations had N87 per litre on their pumps as the selling price, the pumps were under-dispensing Premium Motor Spirit, also known as petrol, with almost one litre lost by buyers for every 10 litres bought.
The affected stations include Mobil at Owode bus-stop, Ikorodu; So Super Limited (Sahara), Ogolonto, Ikorodu; General Oil Limited, Ketu; Walesaf, Owode-Idera bus-stop, Ikorodu, and HS Petroleum at Ketu.
At Mobil, 150 litres of water were also found in 30,000 litres of PMS in one of its tanks.
Two pumps were sealed at MRS station at Alapere, Ikorodu road.
At the Nigerian National Petroleum Corporation station, Irawo bus-stop, Ikorodu road, three of its pumps were sealed for under-dispensing.
At Ibeju-Lekki, Kaz Oil, Lakowe; Forte Oil, Gulf road, Lakowe; Ona Ara Oil and Gas Station; Forte Oil, Molete; Wakass, Igando-Oloja; Forte Oil, Abule Folly Ibeju, and Forte Oil, Oribanwa were all sealed.
The Forte Oil station at Oribanwa was sealed for hoarding 24,000 litres of PMS and refusal to open pumps for testing by the DPR officials.
Kaz Oil, whose pumps read N86.50 per litre at the time of the visit, under-dispensed petrol by 0.8 litre for every 10 litres, thereby making the public buy the product above N90 per litre.
Ona Ara Oil and Gas station, where there was no one to attend to the DPR inspectors, was sealed as the officials believed the pumps were switched off and abandoned on the news that the DPR was at the nearby station, Kaz Oil.
At Forte Oil along Gulf road, Lakowe, two of its pumps were under-dispensing by 0.98 litre and 1.06 litre for every 10 litres.
Wakass and Forte Oil at Molete filling stations were closed down for short-changing buyers by 0.82 litre and 0.95 litre respectively for every 10 litres.
At Forte Oil, Abule Folly, the pumps were under-dispensing by as much as 1.26 per litre for every 10 litres, meaning that a buyer who was there to buy 10 litres got less than 9 litres.
The Zonal Operations Controller, Lagos, DPR, Mrs. Chioma Njoku, in an interview with newsmen at the end of the exercise, said the affected stations would be made to pay a fine of N100,000 each.
She said, “Some of them engage in manipulating their pumps that under-dispense to the public, which is a way of over-charging the buyers and they bear the brunt of it when caught.”
The NNPC, GMD said: “Subsidy creates distortion in government revenue distribution as a result of round-tripping and unnecessary carryover of expenditures every year in a way that is difficult for government to control or sustain.”
He disclosed this while presenting a keynote address titled “Energy Crisis and Sustainable Development in Nigeria: The Way Forward”, at the National Association of Energy Correspondents (NAEC) Conference held at the Eko Hotel & Suites, Victoria Island, Lagos, yesterday.
The NNPC boss, who was represented by Mrs Bolanle Ashafa, Acting Managing Director of Nigeria Engineering and Technical Company (NETCO), said deregulation would encourage domestic private sector participation and inflow of foreign investments.
He contended that deregulation will also provide a fair deal for Nigerians from the abundant petroleum resources, through fair product prices for consumers, full cost recovery, and reasonable margins for operators.
He said: “Subsidy accounted for 20 per cent of the federal government budget in 2013. Implementation of the policy will entrench efficiency in product usage, product availability and effective competition among investors, hence ending products shortage.
“However, critical enablers such as security of supply and distribution infrastructure must be assured to guarantee the availability of the petroleum products at affordable prices.”
Kachikwu said that the corporation was fully committed to reforming existing refineries, to boost domestic petroleum products supply.
He said that the refineries had been re-streamed, but were yet to attain optimal capacity in production.
“Removal of price control mechanisms is deemed imperative to ensure full growth of the sub-sector, by allowing private stakeholders to complement the effort of government in developing the industry,” he said.
The cause of the explosion which started the fire that was put out next day by the Nigerian National Petroleum Corporation, NNPC was attributed to a scuffle between groups of vandals over ownership of a particular section of the NNPC owned pipeline, during which a shot fired by a member of the rival faction, hit the pipeline.
That incident was not the first of its kind in recent times at Arepo. Infact, that area has become a haven for criminal activities by vandals who seem to have thrown caution to the wind as they vandalise pipelines and siphon petroleum products, without fear of molestation by security agents.
Information showed that these vandals who are drawn from different parts of the country could be militants in disguise . From all indications, they seem to have taken over the entire creeks at Arepo.
The NBS, in its Foreign Trade Statistics for the Second Quarter of 2015, also stated that Nigeria recorded total merchandise trade of N4.372 trillion and a trade surplus of N1.4 trillion in the month under review.
It is instructive to noted that the amount the country earned from petroleum products sale in the second quarter of 2015, was 56.8 per cent of the country’s N4.49 trillion 2015 budget.
Also the amount earned from the export of petroleum products accounted for 57.5 per cent of Nigeria’s total merchandise trade and 87.3 per cent of total export.
In its classification of petroleum products export in the period under review, the NBS data revealed that the country exported petroleum oils and oils obtained from bituminous minerals and crude oil valued at N2.121 trillion; liquefied natural gas valued at N260.7 billion, while liquefied petroleum gas and other gaseous hydrocarbons valued at N66.41 billion was also exported.
Others are: liquefied propane — N43.88 billion, partially refined oil including crude oil having gone primary refinement —N13.577 billion and liquefied butanes — N6.15 billion.
Specifically , giving a breakdown of Nigeria’s merchandise trade, the NBS stated that Nigeria’s total export stood at N2.879 trillion, while total import stood at N1.49 trillion, thereby, leading to a trade surplus of N1.39 trillion.
The value of total merchandise trade, according to the NBS, was 0.5 per cent less than the total of ₦4.393 trillion recorded in the first quarter of 2014 and 34.3 per cent or N2.287 trillion less than the amount recorded in the second quarter of 2014.
In addition, the report stated that at N2.879 trillion, Nigeria’s total export appreciated by 8.0 per cent or N214.1 billion when compared with the value of exports in the first quarter of 2015, while it represented a decline of N1.8 trillion or 38.5 per cent when compared with total exports of N4.682 trillion recorded in the second quarter of 2014.
Continuing, the report stated that, “Other products exported by Nigeria include vehicles, aircraft and parts thereof; vessels among others at ₦250.6 billion or 8.7 per cent; Vegetable Products at ₦36.7 billion or 1.3 per cent, and Prepared foodstuffs; beverages, spirits and vinegar; tobacco at ₦24.6 billion or 0.9 per cent of the totals respectively.”
Furthermore, the report stated that Nigeria’s major export destination was India, with export trade of N406.1 billion or 14.1 per cent of total export.
Other top export destinations in the period under review were: Spain, Netherlands, South Africa and Brazil with ₦297.4 billion or 10.3 per cent, ₦296.3 billion or 10.3 per cent, ₦240.9 billion or 8.4 per cent and ₦147.8 billion or 5.1 per cent of the total exports respectively.
In the area of imports, the report said, “The value of Nigeria’s imports stood at ₦1.493 trillion during second quarter 2015, a decrease of 13.6 per cent from the value of ₦1.728 trillion recorded in the preceding quarter.
“Year-on-year, analysis showed that import trade was lower by ₦484.0 billion or 24.5 per cent.
“Nigeria imported goods mostly from China, United States, India, Belgium and Netherlands, which respectively accounted for ₦336.5 billion or 22.5 per cent, ₦143.6 billion or 9.6 per cent, ₦115.4billion or 7.7 per cent, ₦83.4 billion or 5.6 per cent and ₦ 80.9 billion or 5.4 per cent of the total value of goods imported during the quarter.”