The Nigerian National Petroleum Corporation (NNPC) is very sure of beating its 2019 deadline for ending the importation of petrol. It drums the message into the ears of whoever cares to listen.
At the sidelines of the Offshore Technology Conference in Houston, Texas, U.S.A., Maikanti Baru, group managing director of NNPC, represented by Saidu Mohammed, COO of Gas and Power, was very emphatic about the corporation’s ability to meet the 2019 deadline for ending petrol imports.
He admitted that the nation’s four refineries were in very bad shape. They only manage to reduce Nigeria’s shameful dependence on imported fuel by chipping in five to six million litres of petrol daily. Baru hinted that the federal government plans to raise Nigeria’s refining capacity. Officially, petrol consumption in Nigeria at the moment stands at 37 million litres per day.
A new refinery in the north would complement the one in Kaduna which has been crippled by decades of clumsy management, corruption and bureaucratic bottleneck. NNPC hopes to raise the capacities of Nigeria’s four refineries to 750, 000 barrels per day (bpd) at the cost of $6 billion.
The year 2019 is just 20 months away. The planned refinery in the north and upgrading the capacities of the existing refineries to 750, 000bpd cannot justify NNPC’s optimism about ending fuel imports by 2019. The search for at least $10 billion for the huge projects has not even started. In fact, that is why NNPC was in Texas last week.
Even if the money is raised now, it would take a minimum of three years to execute the project.
Work on Aliko Dangote’s mega refinery in Lagos started in 2015. It is expected to come on stream in 2019. That would be more than three years of intensive work and uninhibited cash flow for the project.
NNPC lacks the financial muscle and management acumen to exhibit such precision in the management of complex projects. Consequently, the ambitious plan is not the reason for the corporation’s optimism about the 2019 deadline.
Even the modular refineries planned for the Niger Delta may not come in time to enable the corporation meet the tight deadline.
About four years ago, the Department of Petroleum Resources (DPR), licensed 27 firms to build refineries in Nigeria. Twenty-two of them are modular refineries which could be built within one year. The 22 proposed modular refineries would have combined capacity for 1.4 million barrels of crude oil per day. Last year there were reports that four of them have been given license to construct (LTC). That is the final stage of approval that enables the proprietors to mobilize to site. Some were even known to have mobilized to site. Yet, nothing has happened so far from that end.
Last week at the same venue where Baru emphatically stressed the invincibility of the 2019 deadline, Seriake Dickson, the governor of Bayelsa State promised to build nine modular refineries in his state.
Dickson’s plan is apparently designed to key into the federal government’s job-creation plan for hundreds of illegal refinery operators in the creeks of Niger Delta through the construction of modular refineries. That too is a good plan. But no one sees any of the gun-silencing promises of the federal government coming on stream by 2019 to ensure that NNPC meets its ambitious deadline for ending fuel imports.
The four refineries in Port Harcourt, Warri and Kaduna would need extensive, cash-guzzling and time consuming turnaround maintenance (TAM) and expansion programmes to key into a comprehensive plan that would make NNPC realize the deadline of ending fuel imports by 2019.
The truth however, is that Africa’s largest economy would almost certainly end petroleum products imports by 2019. It could even happen by the last quarter of 2018. Ironically that deadline would not be met through NNPC’s time-consuming and cash-guzzling plans.
Dangote, Africa’s richest man has a similar deadline for ending petroleum products imports as NNPC. NNPC is probably gloating over Dangote’s deadline, which is even more realistic. Dangote is working assiduously towards meeting the deadline. NNPC is only talking and changing policies on refineries ownership every month while Dangote works silently. NNPC might just be waiting to key into Dangote’s plan with the hope of taking the credit when the business mogul finally delivers on target. Experience has shown that NNPC’s plans are on shifting sand. Government is very reluctant to privatise the refineries.
Last month, the U.S. ambassador to Nigeria visited the site of Dangote’s mega refinery in Lagos and was impressed with the pace of work. The ambassador was convinced that Dangote meant business when he said that the first drop of refined fuel would trickle out of the plant by the end of 2018 and that the giant plant would come on stream by the first quarter of 2019.
Dangote’s plant would be refining 650, 000 barrels of oil daily. When it comes on stream, Nigeria would not only end the importation of refined petroleum products, but would also no longer import petrochemical products and some grades of fertilizer.
That is Nigeria’s only hope at the moment. Dangote is capable of delivering on target because unlike NNPC, he is working towards meeting the deadline.
NNPC is probably gloating over Dangote’s deadline, which is even more realistic. Dangote is working assiduously towards meeting the deadline
