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Experts preach against govt’s plan to spend $2bn on refineries’ maintenance

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Experts preach against govt's plan to spend $2bn on refineries' maintenance

Experts have described as a waste of resources government’s proposal to spend about $2 billion for turn around maintenance (TAM) of Nigeria’s three refineries any moment from now.

A special committee set up by the Ministry of Petroleum Resources, to take a closer look at the state of the refineries and advise on their fate, reportedly turned in its report supporting retaining the facilities as public assets.

It added that each of the refineries should be rehabilitated for improved maximum performance from present below 20 per cent capacity production.

But experts have faulted any recommendation that will see government spending more resources on the old fashioned refineries, given the fact that modern technology development no longer supports the ring-oriented system.

In his comment, Dr. Solomon Emezon, of the Business Department, University of Lagos, said the best approach to the refineries is for government to open up more windows of opportunity for as many investors as possible to build their refineries.

“Common sense makes it imperative that spending more scarce foreign exchange on the old refineries amounts to deliberate waste of money that could have been deployed to other areas that will have direct impact on the revival of the economy, particularly the power and real sectors.

Other analysts said the technology for the Kaduna refinery in particular is so obsolete that no amount of money spent on it will see it produce up to 30 per cent capacity.

However, an official of NNPC said before May 2016, only Warri refinery was active, with 19 per cent production; Warri was off and came back with 10 per cent, while Kaduna was out of production until May 2016.

Read also: Nigeria drops to 3rd category in Sovereign Wealth Funds reclassification

He said the earlier plan was that if the capacity of the refineries were improved, Nigeria would save $200 million it spends importing refined products monthly.

“It was when it became apparent that this projection of government was hitting the rock that a committee was empanelled to advise,” he said.

He confirmed that the committee report further stated that the revenue losses of the three refineries sharply dropped from the 5.54 per cent in July to 2.63 per cent in August.

However, it was learnt that President Muhammadu Buhari, doubling as the substantive Petroleum Minister, was yet to approve the report as it affects spending money for the TAM before recession is over.
By Emma Eke….

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