Refineries: Probe that scam called TAM
It is still curious why no anti-corruption agency has launched any probe into the apparently dubious turn-around maintenance (TAM) contracts that have never turned around Nigeria’s four refineries over the years. That is why no one was surprised the other day about the stoppage of another round of TAM put at $1.8 billion by the House of Representatives.
The Lower House ordered the Nigerian National Petroleum Corporation (NNPC) to stay action on the planned TAM to enable its committee to conclude work on the veracity of the deal.
Chairman of the House Ad-hoc Committee, Garba Datti Mohammed, who briefed journalists on the order, explained that the House is keen on proffering a lasting solution to the epileptic supply of petroleum products in the country.
Mohammed noted that it is unfortunate that Nigerians have been subjected to suffer the harrowing problems associated with fuel scarcity despite the huge monies expended on the TAM of the nation’s refineries over the years. This is the crux of the matter.
That action is in public interest, as that contract seems to have become a slush fund for some public officers despite all the noise about zero-tolerance for corruption.
There is indeed no sense in expending huge money again on a process that has not yielded any positive result for the nation.
This newspaper will support even expansion of the probe by the House of Representatives. Therefore, the inquiry should ask for files on TAM since Nigeria began importation of fuel on a massive scale. There is no question about this: fuel subsidy has been part of the reasons Nigeria’s development plans through budgets cannot stimulate economic growth because a lot is often budgeted for fuel import, a monumental reproach for an oil producing country.
Specifically, at the core of this disconnect is the state of Nigeria’s four refineries that have not been functioning for about three decades. Yet, the nation is always made to bear the financial burden of regular “turn-around maintenance” that has never yielded any benefits. Clearly, TAM has become a huge scam that must be investigated.
It is baffling that our refineries operate at about 10 per cent capacity following decades of poor maintenance. Consequently, the country depends on importation for needed petroleum products. What is worse, fuel import has other unintended consequences including painful traffic inside the country’s economic capital, Lagos importers have had to pass through as the only two poorly maintained sea ports working are based there. Besides, there are fears that most of the over-head bridges that have had to harbour most of the fuel tankers waiting for their turns in Lagos may have been weakened, after all. The bridges may require their own turn-around maintenance sooner than later.
Indications are that Nigeria’s refineries are the worst in Africa not withstanding that the cost of TAM expended is nearly the total cost of building the refineries. A total of $1.853 billion were spent in building the refineries. It has been revealed that over $1.6 billion may have been spent on maintenance of the four refineries since 2000.
Nigeria’s Port Harcourt refinery just like the others in Kaduna and Warri, have witnessed the worst maintenance. The only publicly known TAM carried out on the Port Harcourt refinery was a routine maintenance on the facility in 2000 (19 years ago).
Minister of State for Petroleum, Ibe Kachikwu, admitted recently at a gathering of oil chiefs in Abuja that no conclusive turn around maintenance has been done on our refineries over the last 10 to 15 years. Which is why the plants are left in a “far dilapidated” condition. Dr. Kachikwu, who was first recruited in August 2015 to manage the NNPC from ExxonMobil where he was Executive Vice President, (Africa Operations), lamented that our refineries have not been maintained at the same level like those in the neighbouring countries.
Citing Ghana and Cote D’Ivoire as examples, Kachikwu noted that their refineries that are about the same age with Nigeria’s are working at 90 per cent capacity. Thus, at the heart of Nigeria’s refining problem is lack of transparency in maintenance culture. Curiously, no one is even in detention for this economic sabotage.
Algeria’s Skikda refinery built in 1983, currently Africa’s largest refinery with daily production of over 320,000 barrels has reportedly been enjoying full-scale maintenance. Five years ago, the Algerian state oil firm Sonatrach closed the refinery for six months to carry out improvement work.
South Africa’s SAPREF Durban refinery built 52 years ago with a daily production capacity of up to 180,000 and Egypt’s Mostorod Refinery with 142,000 daily production capacity, are ranked above Nigeria’s plants due to their world-class maintenance culture.
It is not surprising that experts say that refineries cannot be run properly in Nigeria because of the way the governance system is directly dominated by public servants. Elsewhere, private companies run refineries for the government. The companies understand the market and how a refinery is supposed to be efficiently managed.
But in Nigeria, the refineries are owned and run by government in a curious monopoly through a corruptible state corporation, the NNPC. This newspaper believes in the private sector involvement in running the refineries. And that is why the Dangote’s $9 billion multi-purpose refinery under construction in Lekki, Lagos represents this new thinking. It is time to ask questions why all the wasted TAM funds have never been ‘turned around’ to build modern refineries.
It was unfortunate that in 2007, the then outgoing Obasanjo administration sold two of Nigeria’s four refineries to two reputable private investors, Aliko Dangote and Femi Otedola for $750 million. But unfortunately the succeeding Yar’Adua administration revoked the sale and refunded the proceeds in a curious twist. Since then, the decrepit refineries have been gulping TAM money without benefits.
Again, why is maintenance of refineries, a schedule of business venture a news story? It is a news story because it is part of our expenditure profile, a metaphor for siphoning public funds without improving critical infrastructure.
Most countries have refineries and do their maintenance as part of normal schedules in operations without noise making. Meanwhile, it is inscrutable why this administration has not been serious about reform of the oil corporation, NNPC, even through the Petroleum Industry Governance Bill (PIGB). The bill now in four parts is too important to be left to the whims and caprices of the crisis-prone National Assembly. This kind of tardiness is not expected from President Muhammadu Buhari who promised the nation three years ago that he would restructure the NNPC. Which was why not many raised any eyebrows when he made himself the Petroleum Resources Minister three years ago. This is the time to hold him to account for what he has done with the portfolio, in this connection.
In other words, the current scam associated with refineries cannot be settled unless the NNPC’s structure is dealt with. That again is the crux of the matter.
All told, the House of Representatives should walk its talk about the $1.8 billion TAM fund: stop and probe the deal. No amount of maintenance by government will revive the refineries. The refineries should be sold to private investors without delay. That is the only way the cabal within the state’s oil corporation that arm-twisted the late President Yar’Adua to reverse the sale of two refineries in 2007 and has been benefiting from multi-million dollar TAM till date will lose steam. Yes, the scam called TAM must be stamped out now!
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