The House of Representatives on Tuesday quizzed the Group Managing Director of Nigerian National Petroleum Cooperation (NNPC) Limited, Mr Mele Kyari over the $1.55 billion contracts for the rehabilitation of the Port Harcourt Refinery.
In his opening address, Chairman of the Ad-Hoc Committee on the State of Refineries in the country, Hon. Abiodun Johnson explained that the investigative hearing was aimed at determining the actual cost of rehabilitating the refineries.
“This very important investigative hearing on the state of refineries in the country to determine the actual cost of rehabilitation and what is needed to bring them back to maximum refining capacity.
“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 noted.
While responding to various questions from the lawmakers, Kyari who argued that NNPC followed due process, disclosed that the Federal Executive Council (FEC) granted approval for the overhaul of the Port Harcourt Refinery and a contract of $1.55 billion was awarded.
He however affirmed that various reforms and Turn Around Maintenance (TAM) carried out by successive administrations on the refineries over the past 25 years were not properly done.
He said: “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 have very responsible 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 over time, not just today but in the last 20 to 25 years. The Turn Around Maintenance processes were clearly mismanaged over time. I have said this over and over.
“We clearly admitted that those turnaround maintenances 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 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 to lead to where we are.
“We panels were clearly in a 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 full turnaround maintenance.
“Before I took responsibility, we shut down some of them for obvious technical reasons. First, the refineries even if they do operate, 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 processes in the units are not operating optimally and because of that you degrade value and at the end of the day, you are better off not operating those plants until you are able to put back into fully 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 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.”
While speaking on the lingering fuel scarcity in Abuja and other parts of the country, the NNPC helmsman assured Nigerians that there is sufficient Premium Motor Spirit (PMS) to meet national demand.
He explained that there is a total of 2.8 billion litres of PMS in the country, sufficient to meet national demand for the next 47 days even without importation.
He however blamed the current fuel scarcity in the country on hitches that occurred as a result of the public holidays of Workers Day and Eid-el-Fitri.
“During the holidays, truck drivers could not present trucks in most of the depots and because of that, there are some glitches around loadout in the depots.
“We have corrected this, all trucks loaded out at the maximum today; we believe this is a very temporary thing, we believe with 150 trucks coming into Abuja today and another 150 coming into Abuja tomorrow, the scarcity will soon go away,” he opined.
While assuring that the long queues will soon vanish, Kyari explained that relevant authorities are taking steps to ensure that parallel marketers popularly known as ‘black marketers’ do not take advantage of the situation.
He, however, said that once supply is maximised, the black marketers will disappear effortlessly.
The committee resolved that the NNPC should provide the survey report, commercial evaluation report, proof of waivers granted by FEC, procurement documents and other relevant documents.
While ruling, Hon. Johnson who adjourned the hearing to June 3, 2022, mandated that the NNPC Group Managing Director provide all the relevant documents on various contracts awarded among others.