Why $1.5 billion to revamp over 50-year old Port Harcourt refinery is a waste
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FOLLOWING the Federal Executive Council (FEC) meeting on Wednesday, Timipre Sylva, the Minister of State for Petroleum Resources, announced that the federal government had approved 1.5 billion dollars to rehabilitate the more than 50 years old Port Harcourt refinery in Rivers state. However, records and opinion by petroleum experts and economists have indicated that rehabilitation is a waste of public funds.
During a press briefing, Sylva told journalists in Abuja that the government had approved an Italian contractor, EEPC company, who had won the bid to handle the rehabilitation project stipulated to last 44 months in three phases.
The announcement raised concerns among Nigerians who wondered why the government would spend such amount on reviving the refinery despite being caught up in the web of unemployment, low trade output, infrastructural deficit, huge debt, among others.
According to the Nigerian National Petroleum Corporation (NNPC), Nigerian refineries have continued to gulp public funds and record consistent losses for years. For five years, three refineries in the country recorded losses of 1.6 trillion naira in five years.
Reacting to the government’s announcement, Bongo Adi, an economist and Senior Lecturer, Lagos Business School (LBS), said the government’s plan is a step in a very wrong direction.
Adi said this on Thursday during a telephone interview with The ICIR while answering questions on the rationale behind the dead refinery’s revival.
The economist said it is like the government taking its own vomit by deciding to commit the nation’s finance into what he described as a waste pipe. He added that none of the Nigerian refineries has been able to meet the country’s demands for petroleum products.
“The last audit report by the NNPC showed that Kaduna refinery had not made any dime, yet it costs us billions of naira for staff payment, and that has been ongoing for several years now.
“… I don’t think that a government that has competent people thinking for it would embark on such a wasteful project at this point in our material existence,” Adi stated
He noted that most refineries have become obsolete, and maintaining them or replacing the faulty parts has become increasingly costly from all indications. Hence, they are no longer economically efficient.
Adi further stated that it is unfortunate that the government keeps making one mistake after another and continues to be insensitive to the feelings and issues bothering Nigerians, like the rate of unemployment and lack of infrastructure.
According to Adi, what Nigerians would have expected from the government is to unbundle the petroleum assets and sell them to the private sector who can take them up and revamp them.
Like Adi, former vice-president of Nigeria, Atiku Abubakar had also called for the privatisation of the Nigerian refineries. Responding to reports that the federal government, Atiku said it is an imperative factor to enhance Nigerians’ service delivery and efficiency.
“For decades, I have championed the privatisation of our economy and full deregulation of our oil and gas sector, amongst other sectors, for greater service delivery and efficiency,” Atiku said.
Atiku noted that he was chairman of the committee that sold some of the federal government’s assets that enabled the country to ‘exit the debt trap and secure financial independence during his time as the vice president.
However, the Nigerian government’s position differs as the refinery’s rehabilitation has already been contracted and is set to begin.