President Approves Privatisation of Four Refineries

Goodluck Jonathan has directed the Bureau of Public Enterprises (BPE) to commence the process of the privatisation of the nation’s four refineries. Director General, BPE, Mr. Benjamin Dikki, disclosed this Friday in a statement signed by the agency's spokesman, Mr. Chigbo Anichebe. The four refineries to be privatised include the Port Harcourt Refining Company Limited (PHRC) I; Port Harcourt Refining Company Limited (PHRC) II; Kaduna Refining & Petrochemical Company Limited (KRPC) and the Warri Refining & Petrochemical Company Limited (WRPC).

The BPE also revealed that President Jonathan had approved the constitution of a “Steering Committee on the privatization process of the refineries that would involve all relevant stakeholder ministries and agencies.”

The Steering Committee, which is chaired by the Minister of Petroleum Resources has 13 members including Minister of Finance, Minister of Power, Minister of Labour, Minister of National Planning, Minister of Mines and Steel Development and Minister of Justice/AGF. Others include Chairman of the Extractive Sub- Committee of the NCP, Special Adviser to the Vice President on Economy, Group Managing Director of NNPC, Director General of BPE, NNPC’s Group Executive Director (Refineries), MDs of Refineries Scheduled for Privatization and Director (Oil and Gas), BPE who is the Secretary of the committee. The BPE in the statement said: “The directive we have is to conduct the privatization process transparently, complying with due process and international best practice.

We are expected to improve on the high standards set in the power sector transaction, which has received accolades all over the world as being very transparent.” The BPE said the privatization of the refineries was in line with President Jonathan’s Transformation Agenda and in furtherance of the economic reform programme of the present administration, “which seeks to catalyze and provide an enabling environment for the private sector to be the drivers of economic growth in the country.”

The Steering Committee’s terms of reference would be to, among other things, advise the National Council on Privatisation (NCP) on the best way to privatise the refineries in a manner that would enhance the gains of the privatization programme of the Federal Government; review the diagnostic reports and recommendations of the transaction advisors and make recommendations to the NCP, propose modalities and make recommendations to NCP on labour matters to ensure the successful privatization of the refineries.

The Steering Committee is also to “generally oversee the process and make recommendations to NCP for the successful privatization of the refineries and carry out any other ancillary activities relevant to the attainment of the goals of the Federal Government in the reforms and privatization of the nation’s refineries.” Details of the transaction structure and time table are expected to be announced after the meeting of the Steering Committee. The four refineries to be privatised have a combined installed refining capacity of 445,000 barrels per day (bpd) and are linked to a comprehensive network of pipelines and depots strategically located throughout the country to supply petroleum products. The PHRC is made up of two refineries, located at Alesa Eleme near Port Harcourt with a jetty for petroleum product import and export. The jetty is located about 7.5 kilometres away from the refinery complex.

The first complex of the refinery with 60,000bpd capacity and tankage facilities were acquired by the Nigerian National Petroleum Corporation (NNPC) from Shell in 1983 while the second complex, a new 150,000bpd export refinery was subsequently built in 1988 and commissioned in 1989 to bring the current combined installed capacity of PHRC to 210,000bpd. KRPC and WRPC have capacities of 110,000 bpd and 125,000 bpd respectively. Works on KRPC was completed in March 1989 with the completion of the linear alkyl benzene process plant while WRPC being the first Nigerian government wholly owned refinery was commissioned in 1978. The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and National Union of Petroleum and Natural Gas Workers (NUPENG) have officially kicked against the planned privatisation of the refineries. PENGASSAN and NUPENG jointly staged a protest against the plan at the headquarters of NNPC recently in Abuja and asked the government to within one week retract its recent disclosure of the sales which was made known recently by Petroleum Minister, Diezani Alison-Madueke .

The unions stated that such privatisation plan by the government would not be acceptable to it in view of its claims that it ran contrary to provisions in the yet-to-be passed Petroleum Industry Bill (PIB) currently before the National Assembly for consideration and passage. President of PENGASSAN, Babatunde Ogun, stated in his address that the unions view the planned sales with some suspicions especially with provisions in the PIB for the creation of a vibrant National Oil Company as well as the ongoing refurbishment of the same refineries through TAM.

However, Alison-Madueke said: “The intent is to ensure that government does not sell the refineries when we do privatise in the worst possible state to ensure that we get some commercial value for these refineries. We will kick off the privatisation rounds; we will have all the due negotiations with the unions to ensure that we are all working together to ensure that it is a win-win situation for all parties at the end of the day.

“But it goes without saying that over the last 20 years, government has not done too well at handling major infrastructure and government should not be in the business of handling infrastructure. Let the private sector come in and let us see competitive efficacy in the handling of these major entities in the interest of our economy.”