July 20, 2016.

The House of Representatives committee on Privatization and Commercialisation yesterday stopped the planned bid by the Nigerian National Petroleum Corporation (NNPC) to acquire a $400 million loan for the upgrade of the four refineries in the country.

The committee headed by Hon. Ahmed Yerima said the NNPC was breaching Section 11 (g) of the Public enterprises ( Privatisation and Commercialization) Act 1999, which gives the National Council on Privatisation the power to do such
Members of the committee said the NNPC should suspend outrightly the proposed restructuring/Privatisation of the four refineries because of the breach of the regulations in the Bureau of Public Enterprises (BPE) as well as the Presidency’s delay in inaugurating the National Council on Privatisation (NCP).

The committee said it would formally communicate President Muhammadu Buhari on the need to adhere to due process and avoid pitfall of commercialisation and privatisation exercises that were made in the past.
It noted that breach of policy guidelines and extant regulatory framework and undue rivalry among Government agencies is giving investors concern.
According to NNPC document submitted to the Committee and obtained by our Correspondent, “in 2015, the refineries posted combined losses of N82 billion and processed only 8 million barrels of crude in total.”
At the meriting yesterday, the failure of the NNPC management to present documents showing the approval allegedly given by the President for the proposed improvement of the refineries’ capacity utilisation to 80% within one year on the basis of the subsisting ownership structure, made members of the committee angry.
Also the $50 million agreement signed by NNPC with a Chinese company, without any clear work plan got the disapproval of the lawmakers.
Group Executive Director (Refineries) Anibor Kragah, who spoke for NNPC, said the report on the privatisation of the refineries, was not true.
According to him, the “proposed investment proposals do not involve commercialisation or any transfer of ownership, assets, shares or control of the three refineries NNPC owed refining companies and are fully aligned with the current administration’s drive to ensure that the midstream and downstream sectors of the Nigerian Oil and Gas industry become self-sufficient in refining of petroleum products in the shortest time frame to ensure the country’s economic growth.
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“The need to rehabilitate the refineries is also in alignment with the aspirations of the National Assembly as communicated to NNPC at several engagements.”
The refineries, he said, have recorded very poor performance over the last decade (30 per cent average capacity utilisation vs. global benchmark of 90 per cent ).
He said NNPC does not need to subject the process to BPE approval, adding that that “BPE also shared its concerns on the viability of utilising JV arrangements for the rehabilitation exercise and the potential implications of the proposed activities on any FGN privatisation plans in future.”

The exercise, Kragah said, has been put on hold in line with the directive of the House, adding that the Corporation has so far placed tender for investors to expressed interests.
Vincent Akpotaire, BPE acting Director General however denied knowledge of the process, saying the privatisation of the refineries has always been part of the Bureau’s work plan tagged ‘potential transaction’.
According to him, due to the political mood at the time due to the death of late President Umaru Yar’Adua, previous exercise for privatisation of 51 per cent equity stake of both Kaduna and Port Harcourt refineries to Bluestat Oil Services Limited (preferred bidder) for $561 million and $160 million were truncated.


Sales of the refineries were cancelled and the bid money refunded with accrued interests paid to the two bidders.
He said there is the need to review the funding challenges in the oil and gas sector,
“The glaring inefficiencies in the sector coupled with the bureaucratic nature of NNPC that the JV model has a gloomy future is very unlikely to succeed given the that it is the same agency and people that have been unable to run the refineries that will be called upon to regulate and supervise the joint venture operations.” Akpotaire said.
Chairman of the committee on commercialisation and privatisation, Ahmed Yerima in his ruling directed BPE to take over the process and also directed NNPC to suspend all the activities put in place.

He said without the relevant regulatory agencies, the committee House will not support the project.

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Make then carry that money give dangote make e take add complete him refinery.

Nonsense.

If company dey run at loss, sack the managers. We reward mediocrity in nigeria.

How is it that we have so many people occupying sensitive positions in Nigeria who cannot follow due process?

It is sad.

They should sell at least 2 of the refineries and then we can compare performance of the privatized and government controlled refineries to know our next course of action. But then, these are refineries that some elites get their daily bread from, so it wouldn't be so easy.

Buhari is the minister of petroleum, but I doubt he has what it takes to resolve the problem with our refineries. The state of our refineries is like the pre-privatization power sector. Had GEJ not privatized the sector, between 2013 and now, we'd have spent over $4b and have nothing to show for it. We may not be seeing the effects of privatization yet, but at least the government is not wasting billions with nothing to show.

Like the petroleum and kerosene subsidy, anything that involves the government would be mired in corruption and held in chains by the various cabals.

IMHO, if we can't wrestle control from the cabal, then sell the properties. At the very least, we wouldn't have to worry about sinking money into the wrong hole with nothing to show for it, essentially 'dashing' money to people for nothing.

-Lord

We are so good at turning every little procedure into rocket science. #underlyingselfishinterests

989900E:
We are so good at turning every little procedure into rocket science. #underlyingselfishinterests

Spot on.

As we dey patiently waiting for Dangote own to finish
They please use patience and wait too