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Posts tagged ‘Refinery’

Major marketers back privatisation of refineries.



The Major Oil Marketers Association of Nigeria has supported the move by the Federal Government to privatise the nation’s refineries, saying it is a step in the right direction.
The Secretary General, MOMAN, Mr. Obafemi Olawore, during a press briefing in Lagos on Tuesday, urged the Federal Government to ensure that the privatisation process was transparent and open to both local and international bidders with requisite technical knowhow and financial muscle to transform the ailing refineries.
He said, “I support the privatisation of the refineries and the reason is that it will bring in private sector efficiency. However, the privatisation should have some basic ingredients. Unlike the one that was done 24 hours before former President Olusegun Obasanjo left office, this one must be transparent, competitive and open to international bidders.
“It should attract not only the serious bidders that know about running refineries, but those that have the money. If you make it private, people can buy the refineries and start stripping the assets. But if you make it open, competitive and international, investors who will come will be people who are serious and have the financial muscle to turn around the refineries.”
The nation has four refineries with a combined capacity to process 445,000 barrels per day but they have been marred by sub-optimal performance over the years due to poor Turnaround Maintenance, among other factors.
The Federal Government has said it planned to privatise the refineries in the first quarter of this year.
The MOMAN secretary also condemned pipeline vandalism, saying it was a major hindrance to the Nigerian National Petroleum Corporation’s efforts at ensuring efficient supply of petroleum product in the country.
Olawore said, “If there is no vandalism, the NNPC can sufficiently meet the petrol demand of the country.  This is because the product that will fill up the pipelines alone is about 500,000 metric tonnes, which is about 500 million litres.
“Meanwhile, we need only about 40 million litres a day. If you divide 500 million litres by 40 million, you probably will get about 12 days’ stocks stored in the pipeline network.”
If not for vandalism, he said the country’s pipeline network could serve as strategic storage if functional.
He further said that a near fuel scarcity was recently averted following the payment of subsidy arrears by the Federal Ministry of Finance.

Source: Radio Biafra.


PENGASSAN and NUPENG Oil Workers Give Conditions For Sale Of Refineries.


The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas (NUPENG) workers have renewed their threat to shut down the oil sector if the federal government goes ahead with its plan to privatise the refineries.According to them, selling the refineries without their participation would amount to shaving their heads in their absence.The oil workers also insisted that the transaction should follow due process to ensure that the most competent investors emerge as the core investors.The two oil workers unions that spoke in their reaction to the setting up of a steering committee by President Goodluck Jonathan to oversee the process, also told Thisday yesterday that the Petroleum Industry Bill (PIB) must be passed as a pre-condition for the sale of the refineries.General Secretary, National Union Petroleum and Natural Gas Workers (NUPENG), Mr. Isaac Aberare, said the union was yet to be officially informed of any stakeholders’ committee set up by the government.Aberare, who spoke in a telephone conversation with Thisday, reiterated the union’s decision to embark on a nationwide strike until government rescinds its decision to privatise the refineries.He hinted that NUPENG and its sister union- the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) would soon meet to fix a date for the execution of the planned industrial action.“Government must engage labour unions in the sector to discuss the model for the planned privatisation. We were not informed about any committee being set up. If government sets up a committee without involving the labour then, they have not met our demand.“At the intervention meeting with the Minister of Power shortly after our protest, we emphasised that government should retract the plan to privatise the refineries and engage the unions but up till now, they have not met nor informed us of any meeting

.“The leadership of NUPENG and the PENGASSAN will soon meet and take a decision on the execution of our planned protest. It is at that meeting that a date will be fixed for our protest,” Aberare said.The two unions had officially kicked against the planned privatisation of the four refineries since the pronouncement was made few weeks niyi

Source: Radio Biafra.

Jonathan Approves The Sale Of All Functional Refineries In Nigeria.


The Bureau of Public Enterprise, on Friday in Abuja announced that President Goodluck Jonathan had approved the privatisation of the nation’s four refineries.This is contained in a statement signed by the Head of Public Communications of BPE, Mr Chigbo Anichebe.It quotes the President as saying that privatisation of the refineries was in keeping with the economic reform programme of his administration.“This is in keeping with the transformation agenda, which seeks to catalyse and provide an enabling environment for the private sector to be the drivers of economic growth in the country.’’The four refineries are Port Harcourt Refining Company Ltd. I, Port Harcourt Refining Company Ltd. II, Kaduna Refining and Petrochemical Company Ltd. and Warri Refining and Petrochemical Company Ltd.It said that the President also approved the constitution of a Steering Committee consisting of stakeholders from relevant ministries and agencies for the privatisation process.According to the statement, the Steering Committee will advise the National Council on Privatisation , headed by Vice President, Namadi Sambo on the best way to privatise the refineries.“The committee will review the diagnostic reports and recommendations of the transaction advisors and make recommendations to the NCP, propose modalities and make recommendations on labour matters to ensure a successful privatisation.“They will also oversee the general process, make recommendations, carryout any other ancillary activities relevant to the attainment of the goals of the Federal Government in the privatisation of the nation’s refineries,’’ it said.The News Agency of Nigeria reports that the Steering Committee is chaired by the Minister of Petroleum Resources.Other members of the committee are the Minister of Finance and Coordinating Minister of the Economy, the Minister of Power, Minister of Labour​​, the Minister of National Planning, Minister of Mines and Steel Development and Minister of Justice.

The chairman of the Extractive Sub Committee of NCP, Special Adviser to the Vice President on Economy, Group Managing Director of NNPC​​ and Director General of BPE​​ were named as members.The Group Executive Director (Refineries), NNPC, the Managing Directors of the refineries are also members while the Director of Oil and Gas Department, BPE, will act as Secretary of the committee.Meanwhile, the Director General of the BPE, Mr Benjamin Dikki, pledged the commitment of committee in carrying out the exercise.“The directives we have is to conduct the privatisation process transparently, complying with due process and international best practice.“We are expected to improve on the high standards set in the power sector transaction, which has received accolades all over the world as being very transparent,” he said.

Source: Radio Biafra.

Why Nigeria’s refineries are not working, and how best to privatize them.


It is with delight that I read about government’s plan to privatize our national refineries/petrochemical plants. Industry experts have been clamoring for some time now for this event to occur. I believe it’s an idea whose time has finally come, and would usher in an era of expansion of the downstream petroleum industry in Nigeria whereby new refineries/petrochemical plants would be constructed and existing ones rehabilitated and debottle-necked (i.e. expanded).

Industries that derive feedstock from refineries and petrochemical plants could be established by private companies, such as ammonia and fertilizer companies, etc. Let’s briefly examine the state of play in our refining/petrochemical sector, and to appreciate why the government has decided to privatize these.

Nigeria’s three refineries are over-aged and new refineries are yet to be constructed. For instance, the newest refinery (i.e. the new Port Harcourt refinery) was commissioned in 1989 which is roughly 24 years ago. All national refineries have been operating inefficiently for the past 15-20 years.

Average capacity utilization is in the range of 18 -25%, thereby placing our national refineries at the bottom of the ladder among African refineries. The age of the refineries is not entirely the cause of low capacity utilization. The poor performance of the refineries may be attributed to factors such as wrong business model, inadequate governance structure, poor maintenance/rehabilitation regime, supply chain constraints, etc. The most critical of these factors is the structure of the business model and this is why.

NNPC (a monopoly organization) has several subsidiaries, and the relationship between these is sometimes unclear and awkward. This is the case with the relationship between PPMC and NNPC refineries. PPMC supplies all crude feedstock to the refineries (i.e. single supplier). PPMC evacuates all refined products (i.e. single off-taker). PPMC owns and repairs all pipelines carrying crude oil to the refineries and those evacuating refined product (i.e. single pipeline owners and maintenance company). The refineries are paid a processing fee by PPMC, so there is no incentive to keep costs down. To make matters worse, repairs and maintenance budgets are approved along lines of a ‘complex chain of command’ which commences from the Federal Executive Council level to NNPC board, and then goes further down the ‘food chain’. Therefore, the refinery managers have no control whatsoever over their businesses. They are wholly dependent on PPMC for their survival. Any negligence or sabotage of PPMC pipeline operations has an immediate and direct impact on the efficiency and performance of the refineries. The foregoing provides the logic behind calls for privatization of NNPC refineries.

Next step would be to call in the Bureau of Public Enterprises (BPE) and reputable consultants to assist in defining the guidelines for privatization. It has been suggested that some critical ideas be incorporated into a privatization programme for the refineries to ensure the protection of vital national interests and guarantee efficiency and sustainability. First, government will have to divest majority shareholding (at least 51%) to the private sector within the framework of existing legislation. Private investors must include a core foreign investor with background and experience in petroleum refining, requisite technical and financial capability, and vision and commitment. As soon as normal operations are resumed, government will be expected to off-load the bulk of its percentage holding to industry stakeholders and the general public and retain a small percentage (golden shares) for the national oil company. The core foreign investor will assume the role of operatorship. The refineries should be free to source their crude feedstock and sell to multiple off-takers. Incentives should be provided to attract the right caliber of investors e.g. tax holidays, import duty and VAT exemption, etc. Meantime, only short-term basic repairs should be carried out to enable the refineries sustain reasonable operations and keep their employees engaged until the privatization exercise is completed.

Source: Radio Biafra.

FG must be stopped from selling refineries — Oil workers.


WORKERS in the oil industry have explained their resolve to frustrate the sale of the four government refineries, saying well-meaning Nigerians must join hands with organized labour to ensure that the refineries are not handed over to fronts and cronies of the Presidency.

Under the umbrella of the National Union of Petroleum and Natural Gas Workers, NUPENG, and its Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, counterpart, the workers insisted that government officials deliberately sabotaged the Turn-Around Maintenance, TAM, and supply of crude to the refineries to have reasons to sell the refineries to their cronies.

Operating under the aegis of NUPENGASSAN (a fusion of NUPENG and PENGASSAN), the unions proposed the option of strategic

partnership between government and Organised Private Sector, OPS, or the modified Nigerian Liquefied Natural Gas, NLNG, model with a national oil company, NOC, as owners of the four refineries holding a 49 equity share, while core investors hold 51.

“This planned outright sale is uncalled for, inimical to economy and Nigeria as a nation. It will only benefit the officials of government who are pushing for the sale as their fronts and cronies are already being positioned to buy the refineries as scrap. We have said no to it and we will continue to say no. If government refuses to listen to voice of reason, we will have no other option to do the needful (shut down the sector) to protect these assets for generations unborn,” PENGASSAN president, Comrade Babatunde Ogun, said.

“We (NUPENG and PENGASSAN), made our position on this known for a very long time. Even in our position paper on Petroleum Industry Bill, PIB, we also started what should be done to the refineries. As soon government woke up and made known this repulsive planned sale of the refineries, NUPENG issued a statement denouncing it and we also issued a statement advising government to jettison the idea to avoid unnecessary industrial unrest in the sector. The planned sale is anti-Nigeria, anti-people and will not benefit the drivers and their cronies.”

It would be recalled that while reacting to the announcement of the planned sale of the refineries in 2014, Ogun threatened that the workers would resist the privatisation of the refineries because it was against national interest.

He insisted that government should deal with the problem of pipelines vandalism that hamper supply crude oil to the refineries as well as carry out TAM and see whether the refineries would not work.

According to him, the issue of the privatisation of the refineries had been on the front burner since President Olusegun Obasanjo regime, when the government through the Bureau for Public Enterprises hastily sold the refineries, recalling that because of public outcry, the sale was reversed by the late President Umar Yar’Adua.

Source: Radio Biafra.

Domestic Refining of PMS Now Over 10.2m Litres Daily – NNPC.


By SaharaReporters, New York

The Nigerian National Petroleum Corporation today announced that production of premium motor spirits at its three refineries in Kaduna, Warri and Port Harcourt has reached a combined level of 10.23m per day.

The Group Executive Director (GED) for Refining and Petrochemicals, Engr. Anthony Ogbuigwe, told journalists during a briefing that the Kaduna Refining and Petrochemical Company is currently running at 65%; Warri Refining and Petrochemical Company at 63%; and Port Harcourt Refining and Petrochemical Company at 66% of installed capacities.

Mr. Ogbuigwe also revealed that the refineries are currently producing 5.53m litres of dual purpose kerosene daily and 8016m litres of automotive gas oil, diesel daily.

“I can tell you with every sense of responsibility that contrary to the news making the round, all our refineries are doing very well. The major components and various units of Fluid Catalytic Cracking Units, (FCCU), Crude Distillation Unit (VDU) and Vacuum Distillation Unit (DDU) of all the refineries are working well,” he said, adding that all three refineries have been running consistently for over three months.

He explained that the stability that has characterized the supply of petroleum products to motorists in the country is attributable to the good performance of the refineries.

Mr. Ogbuigwe maintained that the scheduled turn around maintenance for the refineries is on course, with the Port Harcourt refinery receiving five shipments of the required TAM equipment and components.

The GED took the opportunity to criticize the incessant pipeline vandalism and crude oil theft in the country, describing the menace as a big threat to the nation’s oil and gas industry.

He called on all the stakeholders in the petroleum sector and Nigerians in general to team up with the NNPC in finding a lasting solution to the problem to enable the refineries run without shutting down.

Guinea clears China Power Investment $6 bln alumina project.

CONAKRY (Reuters) – The government of Guinea on Friday cleared a project by state-owned China Power Investment Corp to invest nearly $6 billion in an alumina refinery in Boffa, some 120 km (75 miles) west of the capital, a statement from the government said.

The project for the 4 million tonne per year refinery, which also includes a deep water port and a power plant in the mineral-rich west African state, was given the green light during a cabinet meeting on Friday.

“The council of ministers authorized the issuance of an environmental compliance certificate forChina Power Investment’s project,” the statement said, clearing the last hurdle before the construction phase.



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