The fate about to befall or has already befallen the nation’s flagship refinery, Port Harcourt Refinery and Petrochemical Company at Alesa Eleme, Rivers State, South South Nigeria, may be captured under three hypotheses. The rather shocking plan by the Nigerian National Petroleum Corporate Limited to switch the running of the refining facility to private hands portrays a picture of either a policy somersault or suspicious and questionable afterthought. Better still, an eventual outcome of crafty political scheming and gimmick.
Before last week, Nigerians had looked forward to the announcement that the ailing is back to work. And fully so.
The expectation followed the affirmation late in December by the Minister of State for Petroleum Resources, Heineken Lokpobiri, and the NNPCL that the mechanical and rehabilitation works have been completed at the Area-5 of the plant, with 60,000 barrels of crude oil refining capacity per day.
However, the hope was dashed on Monday last week with the change of gear by the NNPCL. After the turnaround exercise, the NNPCL announced that it was set to hire “respectable and legitimate” companies to operate the Port Harcourt Refining Company. NNPCL justified its action, saying that the move is “to ensure reliability and sustainability towards meeting the nation’s fuel supply and energy security obligations.…”
As posted on its official website, the scope of the deal to the successful bidder would include: refinery business processes – long-term and short-term planning for production and operations, production and operations execution, monitoring, reporting, and optimisation of operations, maintenance execution, environmental management, health and safety and minor projects, among others.
As a condition to bid and win by the private entity, the oil corporation announced a minimum average annual turnover of at least $2 billion for the fiscal years, ending in: 2019, 2020, 2021 and 2022! And in a move to impress it that it was in for a real deal, NNPCL announced that for the purpose of testing it, it had started supplying crude oil to the first refinery.
There are administrative, policy and political issues that call for concern in the emerging operational transfer of the oil refining facilities. Port Harcourt Refinery commenced operation in 1965 in Nigeria’s oil-rich Niger Delta region. The complex is located about 25 kilometres east of Port Harcourt, the Rivers State capital. In March 2021, during the tenure of the immediate past administration, the Federal Government voted $1.5 billion for the renovation and modernisation of the refinery.
If the new move is aimed at optimising productivity, then we need to flashback into relevant political history. This is to ascertain whether there is really a difference in what is about to play out and the long advocacy being canvassed but being countered by certain political gladiators in the past.
Former Vice President, Atiku Abubakar, is a known voice on privatisation of the nation’s refineries. The candidate of the Peoples Democratic Party in the 2023 polls was unequivocal about this. No wonder, his reaction came barely 24 hours after the Federal Government made its plan public.
Abubakar on his X handle last Tuesday tweeted: “I have always advocated for far-reaching reforms to reposition Nigeria’s oil sector and, indeed, other sectors of our economy. In particular, I had consistently called on the Buhari’s administration to break its monopoly in all infrastructure sectors, including the refineries, and give investors, both foreign and domestic, a larger role in funding and management.
“My position has been well laid out in The Atiku Plan (2018) and My Covenant With Nigerians (2022). But our suggestions fell on deaf ears. First, they refused to privatise the refineries. They left them idle for years while paying humongous staff salaries. Then, they contracted a loan of US$1.5 billion for rehabilitation.
“Now, the current administration wants to turn the rehabilitated refinery to private concerns for operation and maintenance! Without prejudice to the terms of the agreement between the NNPC and the private operators, it would undoubtedly have been better if the NNPC had sold the refinery, pre-rehabilitation, to avoid the burden of debt. It must explain to the satisfaction of Nigerians what benefits its newly discovered approach to privatisation will confer on Nigeria and Nigerians.”
Still on the former VP and his privatisation drive, Abubakar has been audacious and consistent. His last week’s post was the reverberation of his long stance on the best approach he believes many of the moribund public entities could be revived, make them functional and add value to the nation’s economy.
During last electioneering, Abubakar’s presidential campaign train on December 5, 2022 was in Lagos. At the Tafawa Balewa Square, Lagos, the venue of the rally, Abubakar reiterated that he would earmark $10 billion from the refinery sales to empower the small and medium-scale enterprises of young Nigerians. He recalled and said: “People are asking me where am I going to get $10 billion? If I privatise Port Harcourt refinery, Warri refinery, Kaduna refinery, I am going to get the money.”
Interestingly, this approach, to Abubakar’s then main rival, the candidate of the All Progressives Congress and now President, Asiwaju Bola Ahmed Tinubu, is not the way to go! Barely over a month after, Tinubu, while in Ondo State, South West Nigeria, carpeted his challenger and rubbished whatever idea he deemed fit as the magic wands to put life back into the ‘dead’ refineries. On January 8, 2023, Tinubu described Abubakar as “Mr Privatise”.
He berated him, contending that he didn’t want to do the brave and hard work required to build a better nation. Tinubu said: “Instead, he would rather sell your birthright to the highest bidder and run away with the proceeds. He cares little that his policies and actions will impoverish you and leave you with nothing.” For these reasons, he warned voters to reject his rival and vote against him.
The policy debate is just over a year. Now that there is disconnect between the campaign’s outbursts and the programme about to be executed, can we ask: What has changed overtime that has necessitated the government’s reversal?
As mentioned earlier, if the President, his ruling APC and kitchen cabinet got to the present level without serious thought, then we are likely to suffer the effects of a policy somersault. However, if the action is deliberate and the President, as well as his think tank, realised the present move ahead of time, but only pretended and undermined workable strategy, just to score political point, then we can conclude that the ruling party used “gbajue” (deceit) to confuse the public and secure votes. The contradiction provokes suspicion and calls for questions.
That said, on the subject in view, issues relating to law and laid down procedures are also very key. The desire for a new dawn and to make the old NNPC a real profitable entity informed the idea of the Petroleum Industry Bill. It was delightful that former President Muhammadu Buhari signed what is today described as Petroleum Industry Bill, 2021 into law on August 16, 2021. The signing came with many expectations and hopes.
Part V of the law, which focuses on the NNPCL, beginning from Section 53, provides for the incorporation of a commercial and profit-focused Nigerian National Petroleum Corporation Limited under the Companies and Allied Matters Act. This is to be done within six months from the commencement date of the Bill, when passed into Law. The Bill vests ownership of the Corporation in the Ministry of Finance Incorporated (and Ministry of Petroleum Incorporated) on behalf of the Federation to take over assets, interests and liabilities of the Nigerian National Petroleum Corporation. The end goal of this restructuring is to pave the way for the eventual sale of shares of the Corporation to Nigerians. Such transfer and sale of the shares are to be approved by the government and endorsed by the National Economic Council.
Again, the effect of the restructuring on the Corporation in terms of its assets and liabilities is that the assets, interests and liabilities not transferred to NNPC Limited will remain with NNPC until extinguished or turned over to the government. Consequently, the Corporation shall cease to be in existence. This means that NNPC Limited is to take over the NNPC and so NNPC will cease to exist. Thus, assets, interest and liabilities in NNPC are to be transferred to NNPC Limited. Failure to do so will mean that such assets, interests and liabilities will be extinguished when NNPC ceases to exist.
By Section 57 of the PIB, the effect of the restructuring on the employees of the Corporation is that upon the incorporation of NNPC Limited, all employees of NNPC are to be deemed employees of NNPC Limited. Also, the terms and conditions of their employment must not be less favourable than when they were in the NNPC.
In addition to the restructuring, especially with respect to the Minister of Petroleum, the PIB provides that the Minister retains the power to “formulate, monitor and administer the Federal Government’s policy over the petroleum industry”. However, the PIB requires that the Nigerian Upstream Regulatory Commission provides recommendations before the Minister can exercise the power to grant or revoke licences as was previously stated in the Petroleum Act.
Having established the above, this administration owes Nigerians the explanation and clarification if what is about to happen to Port Harcourt Refinery is not privatisation. If not, what is it?
Secondly, we align with the fundamental question asked by the former VP that having realised that the running of the refinery is to be transferred to private hands, why use the public money to fund the turnaround maintenance? Agreed, the NNPCL has demanded for a year-on-year strong capital base of the prospective bidders, but why can’t the eventual winner take full responsibility for assets and liabilities? We just hope nothing is fishy.
Thirdly, we restate that the provisions for restructuring of our refineries are contained in the PIB, 2021. Therefore, the best way to go is for this government to summon the courage, eat the humble pie and take a right step towards the right direction.
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Having realised its central position in our economy, we have advocated for viable and functional refineries. Therefore, we call for strict adherence to the provisions clearly outlined by the PIB, 2021, especially with respect to the status, equity acquisition and fate of employees.
Our position was drawn from the penchant to accrue everlasting fortunes from national entities like NNPCL, achieve a viable economy and everlasting industrial peace. We therefore declare that except the government comes out clearly, the direction it is driving presently, on the issue in view is vague and looks suspicious. The government has the responsibility to clear the public’s doubt and win its confidence.
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