The Nigerian National Petroleum Company Limited on Thursday celebrated the signing of an agreement between it and Deawoo for the rehabilitation and Maintenance of the Kaduna Refinery and Petrochemical Company which has been out of service for 15 years.
This decision has jolted a number of stakeholders in the industry who felt that it would have been better for the refinery to be completely upgraded, rather than rehabilitating it with such huge sum of money. Upgrading the refineries, they said, would bring it close to a near new plant. The instrumentation and control systems would have completely been changed.
Some stakeholders say this is a celebration of 19th-century technology in the 21st century, and asked the company to reconsider this deal in the overall interest of the Nigerian economy.
Upgrading, they stated will enable the refinery to be faster, cheaper, could increase its production by about 40 percent and the equipment would live longer while cost per product yields will be less.
A refinery upgrade is a process of introducing the newest technology in some parts of the refinery. As part of its refinery upgrade, the company is modernizing the instrumentation and control systems
The purpose of an upgrade is to, essentially, improve (or ‘upgrade’) the quality of an oil product so that it flows more easily and is more valuable.
This is done by breaking very large oil molecules down into smaller ones, mostly by using high heat and pressure.
But rehabilitation, on the other hand, means the replacement of certain obsolete equipment that may no longer be on the shelves for purchase, or the original manufacturers may have stopped manufacturing such equipment and it has to be manufactured on demand at very huge expense.
Rehabilitating the refineries may not allow for maximum performance and efficiency. Consequently, when they break down in the future the refinery management would start to look for that old equipment.
At this particular time, the stakeholders felt if Nigeria as nation was serious it should have gone with modern trends. Some of the stakeholders who are very knowledgeable about the workings of refineries told Business Standards that there are refineries that have spent over 100 years across the globe, yet they are still working optimally and efficiently.
“It is because they are constantly being upgraded in tune with modern trends”, a former worker of Kaduna Refinery and Petrochemical said,
Speaking at the event, the Group Chief Executive Officer of the NNPC, Mele Kyari, stated that the deal was in pursuit of the national oil firm’s statutory responsibility of ensuring energy security for the country.
Kyari said that one of the key elements required for growth as a nation is energy sufficiency, explaining that there’s no way to happen without fully functional refineries and petroleum products made available.
He added that Nigeria understands the issues around energy transition, but explained that here in the country; the liquids were desperately needed to ensure economic growth and development.
The NNPC boss noted that he was conscious of the fact that the four refineries in three locations were currently down and undergoing some form of rehabilitation, with Port Harcourt currently on course to come on stream in the first half of this year.
According to him, Warri has also been scheduled for revamp while Kaduna was also getting the required attention to restore Nigeria’s capacity to complement the Dangote refinery. “We are hopeful that this year, we will have self-sufficiency in gasoline supply,” he explained.
He stated that while there are security issues in the country, it will in no way disturb the work progress on the refinery site, urging the contractors to reach out for any help they might require.
In his comments, the Executive Vice President, Downstream of the NNPC, Adeyemi Adetunji, said the event marked a milestone in the history of KRPC considering that the last Turn Around Maintenance (TAM) on the refinery occurred about 15 years ago.
He stated the project was framed after extensive engagement with Daewoo on the quick-fix strategy to repair and re-stream KRPC and operate it on a sustainable basis at a minimum capacity utilization of 60 percent.
“This project shall be executed in three work packages as a maintenance services contract by Daewoo E&C Nigeria Limited at an estimated maximum cost ceiling with a duration of 21 months.
“The quick-fix strategy guarantees the fastest route to re-streaming WRPC and KRPC for in-country production of refined petroleum products.
But reacting to this development, Kunle Olubiyo, President of the group, Nigeria Consumer Protection Network in a statement made available to Business Standards Saturday, described the deal as mischievous, misdirected and outright waste of public funds.
According to him, the former Minister of state for Petroleum Resources, Ibe Kachukwu,in 2015 invited the original companies that built the Kaduna Refinery, Warri Refinery and Port Harcourt Refinery with a view to resuscitating and guaranteeing supply that would meet up the 50% domestic obligations in line with OPEC benchmarks..
The project, he said turned out to be a huge gimmick and failure.
He reasoned that NNPC pre-enactments of the Petroleum Industry Act was not envisaged to be a market competitor or market player that would help sustain market monopoly.
He added that the NNPC has failed Nigerians and the entire nation woefully.
“The NNPC is simply trying to cash out and mop up funds. It should have waited for the incoming administration to take a decision on that.
“NNPC as it were and in its present forms is a total economic failure and has let Nigerians down. We had expected NNPC to bury its head/face in shame. This is an insult and abuse of the sensibility and sensibility of the public, citizenry, and Nigerians as a whole. This is outright irresponsibility.
“For over 15 years, NNPCL has remained unproductive, increasingly expanding over bloated worker force. It has remained a parasitic drain in the Nation’s Well being and scarce resources, It has increased the cost of funding its over-bloated bureaucracies and a clog in the wheel of progress in the post-Petroleum Industry Act energy ecosystem”.
He implored President Muhammadu Buhari to issue a presidential directive to NNPCL to reverse itself on the maintenance contract in the overall public interest.