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Stakeholders decry secrecy in transactions

By Kelvin Ebiri (Port Harcourt) Adamu Abuh, Azimazi Momoh and Kingsley Jeremiah (Abuja)
04 March 2018   |   4:41 am
Despite probes going on at both chambers of the National Assembly, are indications that the Federal Government may go ahead with the concession...


• NAOC/Oando May Win Concession Of P’Harcourt Refinery
• Senate Awaits Reps’ Probe On $1.8b For TAM

Despite probes going on at both chambers of the National Assembly, are indications that the Federal Government may go ahead with the concession of the country’s ailing refineries, just as Nigeria Agip Oil Company (NAOC)/ENI, and Oando Plc might eventually get the nod for the Port Harcourt Refinery Company (PHRC) to

The Guardian was informed that the aforementioned companies ought to have concluded the deal with the Ministry of Petroleum Resources in July 2017, but the process was stalled because the National Assembly said the transaction was shrouded in secrecy.

Sources at the refinery disclosed to The Guardian that the executive and legislative arms of government may have resolved their differences, which had stalled the concession of the ailing refinery to the two companies, based on an agreement to repair, operate and maintain the refinery.

An official of Petroleum and Gas Senior Staff Association of Nigeria (PENGASSAN) in Port Harcourt, who pleaded anonymity said besides the NAOC/Oando deal, no other companies are known to have indicated interest to rehabilitate the ailing refinery.

“We are sure that it is these two companies that the government wants to concession the refinery to. I recall that during the just concluded Nigeria International Petroleum Summit in Abuja, the Minister of State for Petroleum hinted that the government will soon announce winners of the bid. But our problem with government over the years has been secrecy. Nigerians need to know the terms of the concession, and this is fundamental. We need to know how much it will cost to repair the refinery,” he said.

The Port Harcourt Refinery has not been given serious maintenance for close to 20 years, and attempts by the Federal Government to privatise the facility in the past has been resisted by both PENGASSAN and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), who have often blamed the lack of TAM on attempts by government officials to sell off the refinery as scraps to their cronies.

It will be recalled that an Italian firm, Maire Tecnimont had been proposed to carry out the TAM at $297m during the Goodluck Jonathan era, but the transaction was not concluded. As at 2015, the management of the refinery had allegedly spent about $10m on the rehabilitation of the refinery.

Stakeholders in the oil and gas sector have continued to bash the Nigerian National Petroleum Corporation (NNPC) for lack of transparency in the handling of current efforts to revamp the country’s ailing refineries.  Indeed, most stakeholders are uncomfortable with the entire arrangement, especially plans to pay the companies with the oftake of the refined product.

Oil majors, including Vitol, with Italy’s Saipem, General Electric and Sahara Group and MRS Oil Nigeria Plc are expected to be part of the first consortium, which would overhaul the Warri and Kaduna refineries.

The second group included global commodities trader, Trafigura, Italian oil major Eni, Spanish refiner, Cepsa and Oando.

Spokesperson of the national oil company, Ndu Ughamadu, while reacting to the claims of secrecy in the arrangement, denied any such thing, and maintained that the bid process has been open and transparent.

He did not give details of the deals, especially the beneficiaries, cost of repair works, and the contract span, but maintained that discussions were ongoing and details would be announced in a couple of weeks.

Head of Energy Research at Ecobank, Dolapo Oni, is one of those, who is not shocked at the level of secrecy surrounding the bidding process.

According to him: “The NNPC has always been a very opaque organisation, and so there is a bit of secrecy in the sense that there are a lot of things we still don’t know about the entire arrangements. We need to know the details, which are still unknown as at now.”

While the immediate past President of the Nigerian Association of Petroleum Explorationists, Abiodun Adesanya, lauds the fact that the country would not spend cash to fix the ailing refineries, he fears that the process could lead to corruption as officials would inflate figures in the name of exchanging products for services.

He added that even when government funds the repairs through NNPC, “there is usually inflated prices and undelivered scope of work. What is very important is that there has to be a certification that the refinery will be fixed not just for it to work until they recover their money, but to last for a reasonable period of time.

Adesanya advised that the concession should be done with an audited process that would ensure sustainability and free of exploitation, otherwise the country would be cheated, stressing that unless there is a watertight arrangement, the country would return to the status quo in the long run.

The Director, Centre for Democracy and Development (CDD), Idayat Hassan is of the view that the Federal Government government seems not to be clear on the best way to address crisis that has befallen the refineries.

“The process should not be shrouded in secrecy and the ongoing discussion with investors should be made open and engaging. Outright sale will be better, despite the huge amount spent on TAM, it is in no way commensurate with the output, instead there has been a decline in the last two years.”

The Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), Auwal Musa Ibrahim, said as far as the entire process is concerned, the country is violating international declarations that encourage openness, transparency and citizen participation in dealings of natural resources.

He said the declarations state that there must be openness, especially publishing details of contract arrangements on natural commodities. So, “it is not enough to enter into an agreement with companies that will do these works without the citizen knowing. That will create suspicion and it is in the best interest of government that citizens know the details so that they can both monitor government and the commitment of those companies,” Ibrahim said.

Meanwhile, the House of Representatives has thrown its weight behind ongoing moves to fix the refineries.

The chairman of the House Committee on Petroleum Resources (Downstream), Mr. Akinlaja Joseph, maintained that the initiative would not only ensure availability of product, but would forestall increase in pump price.

Reiterating the House’s opposition to the privatisation of the refineries, he said that both his committee and the Garba Datti-led ad hoc committee of the House would probe the the decision to engage a consortium of firms to carry out the repairs of the refineries.

He expressed surprise over government’s decision to carry out another round of repairs on the refineries, which were at various levels of production over six months ago

The Senate yesterday said it awaits the outcome of the probe by the House of Representatives on plans by the Federal Government to invest $1.8b on a fresh TAM on the four Refineries. According to it, the outcome of that probe would determine its action on the matter.

The House of Representatives is probing the viability of continually investing public funds in the refineries.

Chairman of the Senate Committee on Petroleum  (Downstream), Kabiru Marafa, disclosed that the earlier decision of the Senate not to duplicate efforts on matters being handled by the lower chamber remained valid.

He, however, expressed the belief that the investigation would produce a fruitful result.