Editorial: Don’t Rehabilitate Port Harcourt Refinery with $1.5 Billion!

Last Wednesday, the Buhari administration approved the sum of $1.5 billion for the immediate rehabilitation of the largest refining firm in the country, the Port Harcourt Refinery. The decision does not seem to be popular with those who know better.

The move by the administration has been receiving severe knocks. Former Vice President Atiku Abubakar, described the decision as “suspicious.” The 2019 Peoples Democratic Party (PDP) presidential candidate is wondering if there was a public tender before the cost was announced, or if any due diligence was performed.

According to him, “we cannot as a country, expect to make economic progress if we continue to fund inefficiency, and we are going too deep into the debt trap for unnecessarily overpriced projects. Our national debt has grown from ₦12 trillion in 2015 to ₦32.9 trillion today. Surely that is shocking enough to cause us to be more prudent in the way we commit future generations into the bondage of bonds and debt.”

For Governor Nyesom Wike of Rivers State, the approval by Abuja smacks of politics. But, the approval is sequel to a memo by Minister of State for Petroleum Resources, Timipre Sylva, on its rehabilitation, which was presented to the Federal Executive Council and its subsequent approval.

According to Sylva, the rehabilitation of the refinery which was awarded to an Italian company, Tecnimont SPA, will be done in three phases of 18, 24 and 44 months, pointing out, ‘’the first phase will be completed in 18 months which takes the refinery to a production of 90 percent of its capacity, the second phase will be completed in 24months, while the final phase will be completed in 44months. The contractor approved by the council is an Italian E and EPC company who won the bid to handle the rehabilitation project.’’

 Sylva assured that the maintenance which is a recurring challenge for the nation’s refineries was elaborately discussed in council, adding that a professional will be employed to manage the refinery after the rehabilitation

But Governor Wike is insisting that there is really nothing to jubilate about the approval because similar promises had been made in the past, particularly during election transition period that never materialized, pointing out, ‘’there is a different between mere approval and actual release of the $1.5 billion for the rehabilitation.

“I am not going to jubilate because the Federal Government said they have approved $1.5billion for the rehabilitation of Port Harcourt refinery. Thank God they said so, but let us wait and see the outcome of it at the end of the day.

“We have had these promises and nothing has happened. And so, I don’t want to start to sing hallelujah. Let us wait and see based on the approval and the statement made by the Minister of State for petroleum. We will hold him accountable to it.”

According to Wike, before the Buhari administration assumed office in 2015, his party, All Progressives Congress (APC) promised to fix refineries in the country, and wondered how the administration which now has barely two years to the end of its tenure  can fix the refineries it neglected since 2015.

“They said, Nigerians if you give us (APC) the opportunity to remove this (PDP) government that told you it (refinery)will work, we are going to make it (refinery) work. And since 2015 it has not worked. Now we are going to the next transition, you are now coming to tell Nigerians you have made this approval. It’s the same thing with the Ogoni clean-up. It has always come up when we are going for election.”

Founder of Stanbic IBTC, Atedo Peterside, is not comfortable with move by Abuja to rehabilitate the Port Harcourt refinery. Peterside who is the Co-chairman of the Nigerian government’s Vision 2050 committee, is calling on the administration to halt the rehabilitation plan.

Peterside who was also on the National Council on Privatisation (NCP) between 2010 and 2015, said the decision should be subjected to “an informed national debate”, insisting that the Buhari administration should halt the $1.5billionn approval for repair of the refinery and subject the ‘’brazen and expensive adventure to an informed national debate.”

Many experts are even of the opinion that the refinery should be sold “as it is” by the Bureau of Public Enterprise (BPE) to core-investors with proven capacity to repair it with their own funds.

Lending his voice to the criticism, Emmanuel Onwioduokit, a professor of economics at the University of Uyo, is wondering why the federal government should be bothered about rehabilitating the refinery instead of building a new one.

Onwioduokit asked how much it will cost to build a modern refinery saying the cost of a refinery is estimated at $15 billion. “What is the wisdom in using $1.5 billion to rehabilitate a refinery that is over 30 years old. How much does it take to build a modern refinery of similar capacity?

‘’The cost of the largest refinery being constructed by an individual is estimated at $15 billion including fertilizer and pipeline. Otherwise the refinery alone is estimated at $10 billion. Who did this to our beloved country’’, the professor said.

The move by the Buhari administration to blow up $1.5 billion, which translates to some N600 billion is quite worrisome, and does not show any strategic thinking in the face of widespread hardship by the citizenry. If properly challenged, N600 billion can go a long way in lifting a greater majority of the Nigerian people out of abject poverty.

That amount can equally assist greatly in narrowing the country’s debt burden which has ballooned from ₦12 trillion in 2015 to ₦32.9 trillion today. We are joining well-meaning Nigerians in calling on the Buhari administration in shelving its plan of squandering $1.5 billion on a dead refinery.

Africa Housing News is also worried that the plan is coming amidst a disturbing and controversial price increase in the pump price of petrol that was later reversed. It is equally scandalous that a major oil-exporting country in Africa with four government-owned refineries, is currently importing virtually all its refined petroleum products.

Now is the time to place the refineries in the hands of private operators just like it was done to the Power Holding Company of Nigeria (PHCN), popularly regarded as NEPA by the Nigerian people. Privatise the refineries and free Nigeria from the burden of wasting scarce funds on their rehabilitation.

The Port Harcourt Refining Company (PHRC) Limited is in business to optimally process hydrocarbon into petroleum products for the benefit of all stakeholders. The company’s vision is to be an innovative international hydrocarbon processing company of choice.

It is made up of two refineries. The old refinery commissioned in 1965 with current nameplate capacity of 60,000 barrels per stream day (bpsd) and the new refinery commissioned in 1989 with an installed capacity of 150,000 bpsd. This, brings the combined crude processing capacity of the Port Harcourt Refinery to 210,000 bpsd. It has five process areas – Areas 1-5. The new refinery is made up of Areas 1-4 while the old refinery is Area 5.

Area 1 is made up of the Crude Distillation Unit (CDU), where kerosene and Automotive Gas oil (AGO) are produced as finished products. Other intermediate products from CDU are Straight –Run Naphta (SRN). Straight Run Gasoline (SRG) used for PMS blend, Liquefied Petroleum Gas (LPG) and Atmospheric residue (AR). Vacuum Distillation Unit (VDU) where AR (CDU bottoms) are further processed under vacuum, or significantly less than atmospheric pressure to produce high –vallue products without cracking like vacuum gas oil (VGO) fccu feedstock and light as gas oil.

Area 2 is made up of Naphtha Hydrotreatung unit (NHU), where naphtha is hydro-desulphurised; the Catalytic Reforming Unit (CRU), responsible for upgrading naphtha to reformate which has a higher octane value for PMS blend; the kero Hydrotreating Unit (KHU) where kero is treated to make it acceptable for aviation use: Area 2 also has the Continuous Catalyst Regeneration Unit (CCR), which constantly reactivates the deactivated catalyst from the reformer. Other units in Area 2 include, the Hydrogen Purification, Fuel Gas Vaporizer, Sour Water Treatment and Caustic Treatment units.

Area 3 is made up of a Fluid Catalytic Cracking Unit (FCCU), where Vacuum Gas Oil (VGO) and heavy diesel oil (HDO) are cracked to obtain more valuable products, like FCC gasoline used as pms blend and Light Cycle as blend component for LPFO and LPG. Other units in Area 3 include the Gas Concentration, Gas Treating and Mercaptan Oxidation units.

Area 4 has three process units namely Dimersol, Butamer Isomerisation and Alkylation units. The units are designed to produce high octane gasoline blend component.

Area 5, which is the old refinery, is made up of the Crude Distillation Unit (CDU); the Platform Unit (CRU), the LPG Unit, as well as utilities section.

The refinery is self sufficient in power and utilities generated from the Power Plant & Utilities. There are four (4) turbo-generators each with a capacity of 14MW of electricity per hour and four (4) Boilers, capable of generating 120 tons of steam per hour each. The section also generates cooling/service water, plant/instrument air and nitrogen.

The refinery has a pool of maintenance personnel that take care of routine, programmed and emergency repairs of equipment. There is also the Supply Chain Management Department that oversees the procurement and storage of needed spare parts and chemicals.

PHRC produces the following products:- Liquefied Petroleum Gas (LPG), Premium Motor Spirit (PMS), Kerosene (aviation and domestic), Automotive Gas Oil (AGO – diesel), Low Pour Fuel Oil (LPFO) and High Pour Fuel Oil (HPFO). It produces UNLEADED gasoline that meets international standard, and also has in-house firefighting capabilities.