Bad Management Cause Of Refineries Non-performance – NNPC GMD

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Mallam Mele Kyary, NNPC GMD

Bad management spanning a period of 25 years is responsible for the poor state of Nigerian refineries, Mallam Mele Kyary, Group Managing Director of Nigerian National Petroleum Company (NNPC) Limited, said on Tuesday.

Kyari spoke when he appeared before the House of Representatives Adhoc Committee investigating the state of refineries in the country on Tuesday.

Femi Gbajabiamila, House of Representatives speaker, had on January 26, constituted the adhoc committee mandating it to work with NNPC, the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, and other relevant stakeholders to obtain the needed information in order to carry out the assignment. The Committee therefore in two seperate letters, on 24th February 24 and March 17, 2022, requested the GMD of the NNPC for a Status Report on the Nation’s Refineries.

Addressing the lawmakers, Kyari while apologising for being absent in their previous sittings, assured the Committee that total rehabilitation of the refineries was currently underway.

He said the NNPC followed due process and the Federal Executive Council (FEC) granted approval for the overhaul of Port Harcourt Refinery and a contract of $1.55 billion was awarded.

With the approval, Kyari said work was currently ongoing in Port Harcourt refinery and that work would also be kick starting soon in Kaduna and Warri refineries.

Said Kyari: “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. 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. The panels were clearly in situation where ordinary maintenance will not solve the problem. We have degredation of monumental proportion that we met and of course, the only way you can do this is to conduct a full turnaround maintenance.

“We have a very different concept of the rehabilitation process we have started. It will 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 obtained anywhere in the world and that process is also going on and we will have 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 and 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”.

The GMD further said that there was sufficient Premium Motor Spirit (PMS) to meet the demand of the country, adding that there was a total of 2.8 billion litres of PMS available and sufficient enough to meet nation’s demand for the next 48 days without importation.

Kyari blamed the current fuel scarcity in the country on hitches that occurred as a result of the recent public holidays, explaining that when such glitches occur, there is a lot of panic buying which is what is causing the queue at the petrol stations.

He however said they had done everything possible so that people did not stay too long in the stations.

Kyari also said that the relevant authorities were taking steps to ensure that parallel marketers popularly known as ‘black marketers’ did not take advantage of the situation, adding that once supply was maximised, the black marketers would disappear effortlessly.

Earlier in his remarks, Ganiyu Johnson Chairman of the committee, said the committee had a mandate to determine the amount so far spent on turnaround maintenance.

The lawmakers resolved that the NNPC should provide the survey report, commercial evaluation report, proof of waivers granted by FEC, procurement documents and other relevant documents.

In his ruling, Ganiyu adjourned the hearing to June 3 and mandated that the GMD should appear with all the relevant documents.

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