OrderPaperToday – The Nigerian National Petroleum Company (NNPC), has adduced poor turn-around maintenance previously conducted over the years as reason for the dysfunctional state of the nation’s four refineries.
NNPC’s Group Managing Director (GMD), Mele Kyari, made the disclosure on Tuesday, while speaking to journalists in National Assembly, when he appeared before the House Ad-hoc Committee Investigating The State Of Refineries In Nigeria.
The NNPC helmsman who has consecutively shunned the Committee’s invitation added that the turn around maintenance exercise was mismanaged and as such did not yield the desired results.
According to him; “We have a responsibility to the shareholders of this company, all the 200 million Nigerians on whose behalf we execute the programmes of this company. We owe it a responsibility to be open, transparent and accountable to the shareholders ably represented by this National Assembly.
We recognise that today, none of our refineries is operating for the very obvious reason that through the work of this committee, you will find out why they are not operating. We will hide nothing from you. We will also tell you where we are as we speak today.
Needless to say that the refineries were essentially not properly managed overtime, not just today but in the last 20 to 25 years. The turnaround maintenance processes were clearly mismanaged overtime. I have said this over and over.”
“We clearly admitted that those turnaround maintenance were not properly done in the past, leading to where were are.
And when we took over, it was very obvious that what you are dealing with is not a turnaround maintenance. We were dealing with total rehabilitation. Let me put it in context. When you have a car and you continue to allow the brake pads to wear off, it will get to the brake disc and you continue to drive, there is a day when you replace the brake pad, it will go done after 3 or 4 days.
This is just the simple relationship that happens leading to where we are.
When panels were clearly in situation where ordinary maintenance will not solve the problem. We have degradation of monumental proportion that we met and of course, the only way you can do this is to conduct a full turnaround maintenance.”
“Before I took responsible, we shutdown some of them for obvious technical reasons. First, the refineries even if they do operate, they take a hundred dollar crude and produce a seventy dollar product.
There is no refinery anywhere that works this way. Refineries margins are very thin and the reasons are very simple because many of the plants and facilities and process in the units are not operating optimally and because of that you degrade value and at the end of the day, you are better of not operating those plants until you are able to put back into full functional work.
That’s how we started the process of making sure that we have the best of class engineers. I cannot remember all the details but surely we started the process to select the best of class of contractors that will help us so that at the end of the day, we have a full rehabilitation of these refineries.
We did not abridge any process. We took through all the processes of governance to make sure that we have the right contractors in place and I am very happy that at the end of the day we have put in place, the Federal Executive Council has approved the contract for the Port Harcourt Refinery and Warri Refinery.
Needless to say that even when you have the refineries, you must have the pipelines. I can tell you that as we speak now, the pipeline from Escravos which will feed Warri and ultimately, Kaduna refineries cannot carry the two refineries. This is for many reasons, the act of vandals.”
Similarly, Kyari explained the new concept put in place for the ongoing rehabilitation of the refineries.
He therefore assured that if completed, the Port Harcourt will come on full stream followed by Kaduna and Warri Refineries.
“Mr. Chairman, needless to say that the rehabilitation work must also be complemented by the replacement by the pipeline network.
We have a very different concept of the rehabilitation process we have started. It be financed by banks. That’s the difference between what you had in the past where you do halfway work and never complete what you were trying to do and banks always will put conditions for lending not just about payment but ability to pay from your cash flow.
And part of the requirements is also to include O and M Component which means that maintenance contracts will be part of this deal, otherwise they will not lend us money. It means we have to have continuous sustained operations of the refineries to establish O and M contractor.
This is what obtains anywhere in the world and that process is also going on and we will hand over these refineries at the end of the exercise with the optimisation of our existing staff; but also a third party to run it for us.
We believe that at the end of this exercise, the refineries will come to their full capacity at the very least, 90 percent of their installed capacity. Of course, no refinery runs at 100 percent. That is not technically practical but we will do minimum of 90 percent of their installed capacity.”
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“None of them is running today. Work is ongoing in Port Harcourt refinery. As you wish at the right moment, you can go and physically see the amount of work that is going on which is also included in the submission that I made to you and we are also kick-starting the Kaduna and Warri immediately.
Our target is not just proceeding with this but to scale rehabilitation of the Kaduna and Warri Refinery. It is going to be a different framework with Kaduna and Warri but technically you can actually work and part of the refinery will be working also, you can also be making rehabilitation.
We planned to concurrently proceed with this so that at the end of the day, as Port Harcourt refinery comes up, some minutes of Kaduna and Warri will also come up until we will continue with the process until we are able to take full closure and total rehabilitation of the refineries.
Mr. Chairman, we are available to give you any data that you want either on what we are doing today or what has transpired in the past. Be assured that there is nothing that we have that we can’t hand over to you to ask any questions,” he said.
Speaking earlier, Chairman of the Ad-hoc committee, Johnson Ganiyu (APC, Lagos) said the Committee’s mandate was to meet with the relevant agencies to profer solutions to the periodic fuel scarcity that usually disrupts economic activities.
“We are again here today as members of the National Assembly and representatives of our people with the constitutional duty to demand accountability from those in positions of authority on behalf of the people and nation Nigeria.
The Committee therefore provides this opportunity for the Hon. Minister of State for Petroleum Resources, the GMD of NNPC, the Operators of the Refineries and Contractors to let us know the problems besetting our refineries in order to proffer solutions for a sustainable future and for the benefit of all Nigerians,” he said.
In his ruling, the Chairman adjourned the meeting to June 3, asking the GMD to ppear with all supporting documents that will aide the probe.